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I have been offered a small ice cream business today from a woman who needs to leave the country for family issues. 5 years in business and had an increase every year. She has no proof of income and told me she does not record all sales, as this is a cash business. Wonderful high traffic location and she is asking $20K and told me to make her an offer. Also offered to finance 10K with 10K down. Rent is $997 month, utilities average $350. Her marketing is horrible and I know my family can double this business. My question to all is, with fair credit where should I go first to borrow at least the 10K ? She is closed for the winter months and want to close before March.

Any leads will be greatly appreciated.

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sales. I would check the nature of the business because right now with rising food prices, nicities such as seperate icecream is a declining business right now.

While it seems the rent is reasonable will the building owner raise the rent when you go to take over?, will the utilities go up with rising energy?

I know you have taken these into account. Check for liabilities associated with taking over a cash business that may have not reported income and such.

If it all checks out I hope only the best for your future business.

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Yes, doing your due diligence on purchasing a business is the difference between buying a profitable business and buying a nightmare.

It is always a red flag when the seller does not have financials to back up their statements. A pro-forma is not a reflection of reality. You want to see the current lease, any franchise agreement if applicable, bank statements showing income and expenses and business tax returns at a minimum. If her business is all cash -and she has no supporting documentation, then she should take much, much less as a sales price and you may not even want the business. If you do, assume worst case senerio for your figures and go from there.

If I can give one more piece of advice: consult a CPA that knows how to analysis business financials. Beware if there is no documentation. If there is documentation, don't assume that it accurately reflects reality. Be careful. Good luck.

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Also, check into permits and zoning too...if there's going to be a zoning change, it could force you out of business or force a relocation into an area that's not as profitable.

One more thing, since ice cream is considered a food product, you may need to obtain health dept clearance and/or be subject to inspection from time to time.

Edited by 1stStep
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  • 3 months later...

Some unsolicitied advice because I've experienced assisting a client-friend both buy and sell a cash business. All businesses SHOULD keep books, even if those books are not for tax records. It is routine. Prior to sale (during time where the offer may be revoked), cash business purchasers perform due diligence by being allowedto inspect the books of the business. No copies or pictures of the bookwork are allowed to be taken from the location.

In this way, no one can be "turned in" to anyone. And the bookwork is only subject to inspection by the potential purchaser after an agreement of sale has been signed. If even this simple little bookwork hasn't been maintained, it is highly suspect and I would proceed with extreme caution.

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