When looking to buy an existing retail business, it’s vital to do your research and make sure your decision is a profitable one. This article looks at the key considerations and most important stages before, during and after buying a retail business.
Why buy an existing retail business?
Pre-existing businesses typically have a loyal customer base. For many retail business owners or investors, the opportunity to buy an already successful store or brand allows them to bypass the initial opening stages and introduce new ideas to create the ultimate experience for customers.
How to buy an existing retail business
Modern Retail spoke with Daniel Prendergast, Managing Director of Luxury Home Design Group which owns Shabby.co.uk. Daniel shared his top tips for buying an existing retail business or brand.
What goes into choosing the right business to buy?
“For me the key objective was to find a business that aligned with our core strategy and values, supporting our mission to become the UK’s leading retailer of luxury home furnishings. To get to this position we need to diversify our product selection and our audience and the acquisition of Shabby was a major piece of the puzzle. We recognised that Shabby had grown its audience significantly due to its style ethos and product offering. Buying Shabby therefore helped us to accelerate our entrance into a wider range of product categories and introduced us to the supply chain that can help move the business forward. Acquiring a related business was always going to achieve much faster growth than if we were to move into these categories and source from scratch as we already have valuable data to work from.”
What are the stages of buying another retail business?
Daniel shared the four key stages of buying an existing retail business:
1) Identifying potential target businesses.
2) Making contact to build relationships and discuss potential deals
3) Due diligence on financials, systems, processes and people
4) The offer/deal
What would be your top tips for anybody looking to purchase an existing retail business?
It’s essential to have a great understanding of every side of the brand before you buy an existing retail business. Daniel shared his top tips to reduce risk and make the process run as smoothly as possible.
- Make sure that the business is a good strategic fit
- Carry out extensive due diligence on the business’ operational and financial performance
- Seek the advice of a good solicitor to help with contract terms and legalities
- Be ready to act fast and make swift decisions to complete a purchase
- Ensure team members have good communication to understand the reason behind the deal and to be prepared for a swift integration and execution
How important is it for brands to have a good reputation?
“Online reviews and social media recommendations are crucial to the reputation and brand awareness of all of our businesses and it was great to see that Shabby was so well supported by influencers such as Mrs Hinch, as well as its wider social media following. Of course, it is important that every single one of our customers experience a high level of service and we work hard to ensure that every order is dealt with to the highest level to maintain the reputation of our brands.”
What are your plans for Shabby Store and how can our readers stay up to date?
“We are currently in the process of reviewing and improving all of the systems and processes throughout the business, so that we can offer the high level of customer service that shoppers have come to expect. Beyond that, we will be rolling out new and exciting product launches throughout the rest of 2022 and beyond as we expand the brand offering. Customers can keep up to date by signing up to our regular email newsletter via the website (www.shabby.co.uk) or by following our social channels @theshabbystore on Instagram, @shabby.co.uk on Facebook and @shabbystore on Pinterest.”
Holly brings a wealth of experience in both print and digital publishing. As Modern Retail’s Content Editor, Holly is passionate about helping independent retailers to thrive in today’s ever-changing market.