Grocery store development - Posted by V
Posted by V on March 03, 2001 at 21:44:13:
I was so excited to find these forums, I initially posted to the wrong forum. Now, that I can breath again… Here’s the short version of my personal riddle if any one would care to give me any thoughts… I’d appreciate it.
First, some background…
I purchased a home with $200 on the table; sold it for 3X the money (with a lot of physical work & time into it after 3 years) within 1 week of placing it on the market (had a great realtor).
Next, everything went into a run-almost-out-of-business convenience store/ gas station (3rd day in business our til was $150-- that’s bad, very bad) We still have a long way to go, but 4 years later we Grossed 405,007 in 2000.
Current, here we are with children-- a 16 year old, a 16 month old and a 3 month old- running a small store which almost meets our needs, but not quite yet due to some pretty large credit card financing. I guess I was getting bored because…
I am now organizing a grocery store in a town which does not have one. The convenience store/grocery store/gas station which handled the business (property A) is in the process of going to do the foreclosure thing. As of yet, I can’t talk to them, I am not credit worthy and this is the wrong time of the year to pull out my cash flow.
This bankrupt business will do and has done well: Personal issues caused its present demise. While we attempted to make an offer before it came to this point, the owners climbed over a Mil with no financials and it’s definetly not worth that $ tag. It will now be tangled up for quite some time.
So, we-- because of this and having the experience of Gas-- have located a building (property B)which we can use soley to house the Grocery Store (at least temporarily). But the property which has sanitation issues which I am confident that can be solved, is 8k less than a 2 acre parcel with a 3bd home (albeit crumby) on it (property c). This would be with the new highway going through a perfect spot to build a brand new store-- someday which would be durable through the future. If we built small, it would/should lower our costs initially and we could do it in such a way to allow for expansion later.
Still, we have an agreed upon deal with the owners (verbally with handwritten faxes) for B, but they made a comment Thursday that they had no commitment with us and that another party was interested in the building. I have everything arranged for this new store with the exception of the Santitation Department’s problem. While Property C is a better deal, we have no money. If we start Property B, we would-- if given the time-- have money for either Property A and/or B. However, if we loose Property B because of ?, we wouldn’t have a home for the Grocery Store or money for either then A or C.
However, while we do not have any money, we do have equity in our current business(1997 purchase=125,000 + $10,000 inventory Property consists of 2 houses, mobile home park, rv camp, garage & cstore/gas station: 1999 appraisal= (I have problems with this and my banker agrees) $170,000: Today, I have put in some $20,000 extra and have $22,000± inventory) I owe just less than $108,000 on this property). I know what the (B) store did because we are but a few miles away from the town with our own store. I know what a new store can do even with all of its faults, difficulties and future competition. I have researched this thoroughly, have a good business plan with good numbers and I now have 4 years experience.
Also,I am trying to do this without stepping on any of the other in-town business people if for no other reason than I have to live here and would like to continue doing so. Although, I think it’s more due to the fact that business promotes business and there IS NO need to irrepairably harm any other business to begin another: There is plenty to go around. Besides, we are fun loving people who simply work our backsides off!
So far I have only run into 1 less than thrilled person as I introduce myself to the few business owners whom I do not personally know. (Many of them are my customers and we also share many of the same customers.) I know the town, its faults, its growth potential, the plans of many in busines, etc. In short, I have done my homework extensively, but I still have no money.
To further my indecision (I can’t do much but think until Monday-- can’t you tell?)I am supposed to have an appraisal on my personal home Monday in order to refinance from 13% to 8.5%: That would save me thousands, but… While I have faith in myself (36 hour days are not foreign to me,remember the coffe break), I don’t necessarily have faith that the bank will come through in my request for funding this new venture. I have attempted things in the past which give me this conclusion.
Such that as it is, I have an offer from the current mortgage holder (the friendly loan sharks) to pull out 10K from our present house mortgage (by default increased projected without a new appraisal) equity which would give some of the much needed capital for down payments, etc. Obviously, refinancing makes more sense, but we need the cash now. Any decision I make here will affect my Personal Balance sheets with the bank as well.
I am going to open up a Grocery store in this small town that needs one, but I can’t quite figure out which route to take because of the financial issues which if were not present… I’d arrange to build a new store on Property C, but that takes money. I don’t consider it to be a great risk here, but I don’t have the money or credit to pull it off. The potential cash flow is there, has been there and will only increase in the future.
So, here we are with a little of everything, a great business plan because of need & population and a lot of I am not quite sure what to do’s… Any one (if there is any one still awake after all of that… sorry) care to make any suggestions as to which route to take or what we should do that I haven’t thought of yet? Any constructive guidance would be greatly appreciated!