Mike AndesFounder, Augusta Lawn Care and Homeworks · Founder of Homeworks and Augusta Lawn Care

This liquor business does $1.6 MILLION in annual revenue! 💸

16 May 2023 · 1 min

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0:47

YouTube commentary by Mike Andes evaluating a liquor store for sale: he presents listed revenue ($1.6M) and asking price ($879k), questions the deal due to low reported cash flow (~$170k, ~10% margin), and runs loan scenarios showing high loan payments (9% interest on ~$800k) leaving modest take-home (~$50k). He concludes the purchase is high-risk with limited upside.

Questions this video answers

$1.6 million

$879,000

About $170,000 per year

About 10%

10% down

Chapters

This liquor business does $1.6 million in annual revenue and is for sale for 879,000. But I don't think it's a good business. I don't think it's a good deal. They say they cash flow about $170,000 per year in profit. That's only about a 10% profit margin. And on something like liquor, you should have a higher margin, especially if you only have one employee, you don't have a lot of overhead. If you buy this at asking price of $879,000 and you put 10% down on an SBA loan, that means you have a loan for $800,000. Nine percent interest on that loan is going to be about 121,000 doll payments on the loan. If I take the $121,000 of payments out of the $170,000 in cash flow, I'm only going to make about $50,000 in take home profit each year, and I'm assuming an $800,000 loan. That's a lot of risk for not much upside down.