Business Valuation for Selling a Convenience Store
Do you own a convenience store and want to take a profit from your store? If so, selling a convenience store is a great way to realize gains from the work you’ve put in to build your business. A business valuation for selling a convenience store is a great place to start if you are looking to sell. Whether you are in the market to sell now or in the future, a convenience store valuation from Peak will help you understand the value of your business.
Peak Business Valuation, a business appraiser, values hundreds of businesses for sale every year. We can provide you with a professional convenience store valuation. Our team of valuation experts can also help you know how to get the most out of the sale of a convenience store. Schedule a free consultation below to get started with Peak!
The Purpose of a Convenience Store Business Valuation
If selling a convenience store interests you, it is essential to understand the value of a store before selling. A convenience store valuation is an analysis of the financial standing of a store. Business appraisers use a convenience store’s financial documents, analyze key value drivers, and more to determine the store’s value. They also analyze the strengths, weaknesses, opportunities, and risks of the store. Using the information provided in the valuation will help you increase the worth of a convenience store and sell it for its maximum value.
Understanding the Fair Market Value of a Convenience Store
In a business valuation for selling a convenience store, business appraisers determine the fair market value of a convenience store. To do this, they use a combination of valuation methods that best fit the business. The most common valuation methods are the market approach and the income approach.
The market approach values a convenience store in comparison to similar stores that have recently sold. Valuation professionals use valuation multiples for a convenience store to assess its value. The income approach values the convenience store according to its cash flows and future income potential. This approach can also account for risk factors that impact future income projections. Read How to Value a Convenience Store to learn more.
Maximizing the Value of a Convenience Store
In addition to determining the market value, a business valuation for selling a convenience store analyzes the opportunities of a convenience store. Implementing these opportunities, or key value drivers, increases the value of a convenience store. Check out Value Drivers for a Convenience Store to learn more. Some key value drivers for a convenience store are:
Corporate Connection:
Convenience stores with a well-known corporate connection, e.g. 7-Eleven, have a higher value than individual stores. Partnering with recognized gasoline brands also increases store value and in-store foot traffic.
Varied Product Mix:
Convenience stores can also increase their value by having a wide range of offerings. Products such as smokeless tobacco, e-cigarettes, health-conscious offerings, and varied beverage choices attract a range of customers. Having products for everyone leads to increased sales.
Digital Presence:
A strong online presence and offerings such as online ordering or rewards apps can attract more customers. Doing so increases sales and thus increases the value of a convenience store.
Location:
With such a high saturation of convenience stores in local markets, strategic locations go a long way in increasing the value of a store. As the name suggests, customers frequently stop at the store that is most convenient to them. Having a visible presence will attract customers and increase sales.
Identifying Risks When Selling a Convenience Store
Understanding how to increase the value of a convenience store is important before selling. Likewise, it is also important to understand the risks associated with owning a store. Minimizing risk is essential to increasing the value of a convenience store. A convenience store valuation analyzes potential risk factors for a convenience store. Some common risks for convenience stores are:
Volatile Market Conditions:
The biggest customer base for convenience stores is travelers, especially road trip travelers. People are much more likely to go on road trips in times of overall financial security. During difficult market conditions, convenience stores may see a decline in sales. Having a loyal, local customer base will minimize the effects of changing market conditions.
High Competition:
Convenience stores operate in a highly saturated market. Things like location, price competition, and low barriers to entry lead to high competition for individual stores. Strategic locations and corporate partnerships can mitigate some of these threats.
Supply Chain:
Convenience stores operate on a high-volume, low-margin business model. This means that they are very reliant upon supply chains for the timely delivery of their products. When disruptions arise in supply chains, convenience stores feel the effects. Having a strong and diversified supplier mix can reduce this risk.
Unskilled Labor:
Convenience stores rely on unskilled labor for their employee base. This can be very volatile and create high turnover costs. It also can lead to increased wage expenses to keep employees. Having a skilled, loyal employee base creates long-term value for a convenience store.
Determining a Realistic Listing Price for a Convenience Store
An essential element in selling a convenience store is determining a realistic asking price. A price set too high will deter buyers. Conversely, a price set too low devalues your business and decreases profits. Using a valuation for selling a convenience store to set the listing price simplifies the process. Doing so will make sure that you are setting a fair price for a convenience store. Deciding on a Listing Price for your Business can help you learn more.
Peak Business Valuation provides convenience store valuations to store owners nationwide. We also work with business owners to help them understand the market value of their business and set realistic asking prices. With a convenience store valuation from Peak, you can be sure that you are fairly compensated for the sale of your business. Schedule a free consultation with Peak to learn more about how to value a convenience store.
Utilizing a Valuation Report When Selling a Convenience Store
One of the most important elements of a valuation for selling a convenience store is the valuation report. A valuation report is a summary of the valuation performed by professional business appraisers. This report includes the strengths, weaknesses, opportunities, and risks of a convenience store as well as the fair market value. Using a valuation report when selling a convenience store increases transparency and helps you make strategic decisions.
Conclusion
If you are interested in selling a convenience store, a convenience store valuation will help you greatly. With a valuation for selling a convenience store, you can better understand the value of your business and make better decisions during the selling process. You can also better prepare for risks and set a realistic asking price for a convenience store.
Peak Business Valuation is happy to provide you with a valuation for selling a convenience store. We value hundreds of businesses every year and work with convenience store owners to help them understand their business. If you are ready to get started or would like to learn more about how to value a convenience store, schedule a free consultation with Peak below.
