This is a great question to ponder. There are pro’s and cons against both and knowing of people that have done both, I will try to cover this topic in-depth. The reason I am covering this topic was that I have recently heard from a shop owner that was contacted out of the blue. Somebody wanted to buy adult shop.
Here’s How the meeting went.
A person managed to get the owner’s contact details made a meeting said they were interested. While the owner had not thought of selling they suddenly thought oh it would be nice to have a rest.
So they settled on a price and off they went to the meeting. At the meeting, this dude walked in and without even looking at the books made an offer. I’ll take your stock and take over your lease. So the Business owners looked at the dude and said um so you are offering nothing for the business. “That’s right” and if you don’t sell to me I will set up a shop and put you out of business.
The owners just stared at the bloke and said um thanks for the offer but we decline. The potential purchaser then proceeded to get upset because the owners did not take the deal and explained the problems the owners had with the business. But on the way out he said: “oh well you never know unless you give it ago”.
So should He buy Adult shop or Start your own.
Having been in the business for awhile and spoken to lots of owners both sellers and buyers as well as opening a shop from scratch I think I have some valid and useful insight.
So in buying a business, you will know the traffic and generally, the sales and people in that area know the business. Although some Sex Shops like many small businesses keep really shitty books.
Pros of Buying a functioning sex shop
- You know your starting income (minimum)
- You know the traffic (minimum)
- It already has the permits and is allowed to operate
- The owner can help you navigate trick laws that relate to Adult businesses
- You gain a list of suppliers
- The owner can also give you local knowledge, and hard gained experience
- You don’t have to open up and battle with competition which cost everybody
- Is the business easily found on google
- the website already up and running
Cons Of buying an established business
- The businesses might have a bad name
- The books might be creatively managed
- you get old unwanted stock
- New sexy fit out to your requirements.
I have known of people that have opened in competition to an established shop and they battled for years. cost everybody money and in the end, the newly opened shop closed.
So as you can see I am leaning towards an established sex shop. But what do you do, you could of coarse work out how much to open a shop advertise and get customers. Then decide how much money a battle with the other shop would be. Once you have a figure in mind have a look at your local competition and make your decision to start or buy.
If a shop is for sale just check the books, if there are no books check the till sales, this will be the bare minimum your new business will turn over. You may not be experienced in the Adult business or you might be an expert but you will have a bare minimum of figures to take to an accountant.
So if we go back to the story that started this. Here’s a different scenario. The potential buyer had the meeting and goes what do you want. The owner would give a figure ie $70 000 plus stock. So the buyer goes I need to look at the books. Here’s where it becomes dodgy no business owner will show their books to the potential opposition, out of the blue. They may tell you a turnover, and you need to take it from there.
But if you know the cost of a new shop, fit out, new lease licenses new stock etc $100 000 plus + advertising. You can then decide if it’s economical to buy a shop. In general, you can just make an offer. Obviously, your offer will depend on how much you want a shop. Now if you want to sell your sex shop or adult shop contact us we are happy to list in our new section.