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  • Oct 11th, 2017 1:16 pm
[OP]
Jr. Member
Oct 2, 2005
166 posts
8 upvotes

buying a convenience store

I'm thinking of buying a convenience store but don't know much about business. If I'm serious of buying a convenience store, what should I look for as in term of a "red flag"

If I was to buy the store, what other cost associate with the purchase that I'm not aware of? When I buy a house, I know I have to pay for land transfer tax,property tax and etc..

I never purchase a business.

If someone own a convenience store, please provide some insight of your day to day activities and overhead per month ? How much do you take home after tax?

Thanks.
10 replies
Deal Fanatic
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Jul 12, 2003
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Markham
Why don't you want to buy a business that you have no clue of how it operate?
It is very risky and may lose your investing money, no?
Retired Forum Moderator February 2009 - June 2015
[OP]
Jr. Member
Oct 2, 2005
166 posts
8 upvotes
thinking of leaving my job. Also, thinking of retiring in the long term.
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Jul 12, 2003
7908 posts
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I cant tell you much in the operation side, but are you going to hire someone as store keeper?
Think of you have to struck in the convenience store for 10+ hours most of the days.

Personally, it is one of a hell boring job to stay in an convenience store all day.
My aunt has a toy and gift store in a different city and all she do is to go the same place almost daily and stay there all day in a 250-300 sq ft of space all day long.
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Mar 31, 2008
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To be honest, I don't think you should if you have a stable job. I grew up with many friends as well as my uncle had a convenience store. My dad thought of it but decided against it.

As part of your due diligence, you have to make your own observations. I.e. sit in the parking lot and view. If you are a serious buyer, and the owner is serious about selling, they will allow you to spend a full day or so with them, so you can see the flow, type of customers, etc.

Any financials they provide, won't be completely accurate given that not everything is recorded correctly. When you take over the business, you also buy the inventory with it.

Small business 101
-You either own the whole building(s) (unlikely in Toronto as that would cost millions pretty much), more possible in the GTA, alot more likely in the smaller towns (this is actually where the money is).
-You buy the RIGHTs to lease the business. This is the most common where you see purchase prices in the tens or hundred thousands. That's right, you pay a big chunk of money just to have the right to pay the lease to the landlord, and take over the revenue stream and costs. But the landlord can choose not to renew the lease, or shorten it the next term from the standard 5 yr to 1 yr, + 6 months notice of eviction. So you could pay $50K to buy the lease term from the previous lessor only to be told by the landlord "sorry, once your lease is done, it's over. We are taking it over". So you have now lost the 50K value of the lease rights. This is happening all over Toronto due to skyrocketing prices and probably more and more in the GTA.

Convenient store is LONG hours. Vacation time? Family time? Forget it. Unless you hire a trusted helper which is not easy to find. That's why they're run by immigrants who have little concept of vacation time. Also very small margin. Let's say cost of a candy is 50 cents. You sell it for 55 cents (5 cent gross margin). If someone steals one candy, or you give it to your friend, you have to sell 10 more candies just to break even on that loss. Also better to get a van, because you'll be going to wholesale, costco alot to get products you need. If you think getting into a small business for long-term retirement is guaranteed, that is not a good way of thinking IMO. You could end up losing far more.

But like I said, there are places 2+ hrs away from Toronto that would have a higher prospect. You would of course have to move out and live there then.
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Aug 16, 2009
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leannoon wrote:
Sep 27th, 2017 12:21 pm
thinking of leaving my job. Also, thinking of retiring in the long term.
You will be buying a job that you will have to work 24/7/365. If you value your current lifestyle, please don't do it.
Deal Addict
Jul 30, 2015
1158 posts
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Toronto, ON
at1212b wrote:
Sep 27th, 2017 12:54 pm
To be honest, I don't think you should if you have a stable job. I grew up with many friends as well as my uncle had a convenience store. My dad thought of it but decided against it.

As part of your due diligence, you have to make your own observations. I.e. sit in the parking lot and view. If you are a serious buyer, and the owner is serious about selling, they will allow you to spend a full day or so with them, so you can see the flow, type of customers, etc.

Any financials they provide, won't be completely accurate given that not everything is recorded correctly. When you take over the business, you also buy the inventory with it.

Small business 101
-You either own the whole building(s) (unlikely in Toronto as that would cost millions pretty much), more possible in the GTA, alot more likely in the smaller towns (this is actually where the money is).
-You buy the RIGHTs to lease the business. This is the most common where you see purchase prices in the tens or hundred thousands. That's right, you pay a big chunk of money just to have the right to pay the lease to the landlord, and take over the revenue stream and costs. But the landlord can choose not to renew the lease, or shorten it the next term from the standard 5 yr to 1 yr, + 6 months notice of eviction. So you could pay $50K to buy the lease term from the previous lessor only to be told by the landlord "sorry, once your lease is done, it's over. We are taking it over". So you have now lost the 50K value of the lease rights. This is happening all over Toronto due to skyrocketing prices and probably more and more in the GTA.

Convenient store is LONG hours. Vacation time? Family time? Forget it. Unless you hire a trusted helper which is not easy to find. That's why they're run by immigrants who have little concept of vacation time. Also very small margin. Let's say cost of a candy is 50 cents. You sell it for 55 cents (5 cent gross margin). If someone steals one candy, or you give it to your friend, you have to sell 10 more candies just to break even on that loss. Also better to get a van, because you'll be going to wholesale, costco alot to get products you need. If you think getting into a small business for long-term retirement is guaranteed, that is not a good way of thinking IMO. You could end up losing far more.

But like I said, there are places 2+ hrs away from Toronto that would have a higher prospect. You would of course have to move out and live there then.
Another huge reason they're run by immigrants is because of free labor. Imagine a store making $60k. You hire a guy, suddenly you're making $30k a year or less or whatever. Hire your son, wife, your whole family, it's free. Even your wife's cousin's daughter might work their for free in return for sleeping in your house or maybe just out of courtesy. That kind of a setup works in immigrant families since they work as a unit. That'd never work in a white family raised in Canada, you'd have to pay, maybe except your wife. Your kids would also live in their own place.

And oh, one more reason - they always have a steady supply of new relatives/friends/friends of friends coming over, willing to work for cash at well below minimum wage.
Newbie
Aug 8, 2017
19 posts
2 upvotes
I'm thinking of buying a convenience store but don't know much about business. If I'm serious of buying a convenience store, what should I look for as in term of a "red flag"


Ohh God, what a horrendous mistake that may turn out to be.

If you think it's a dream, I suggest look around and get a job first at any other store like this in town FIRST. Do that for a couple years. Now you will not only know for a fact if it's the business you really dream about, but you will learn a LOT of things from the inside by first hand experience....

Even then, there is a big risk when you venture out on your own, especially the first couple years or so.
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Oct 24, 2016
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ON
The first question you have to ask yourself is how much importance do you place on your social life. If it is 0 to nil, then you can seriously think to go ahead otherwise forget it. Margins and customers are low so you can't afford to have employees run the show.

Many of the convenience stores that I have frequented are the mom and pop shows open 7 days a week, 10 or more hours a day. Does that appeal to you?
Isn't it great to live in the 21st century where deleting history has become more important than making it.
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Mar 31, 2008
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canoek wrote:
Sep 30th, 2017 8:50 pm
Another huge reason they're run by immigrants is because of free labor. Imagine a store making $60k. You hire a guy, suddenly you're making $30k a year or less or whatever. Hire your son, wife, your whole family, it's free. Even your wife's cousin's daughter might work their for free in return for sleeping in your house or maybe just out of courtesy. That kind of a setup works in immigrant families since they work as a unit. That'd never work in a white family raised in Canada, you'd have to pay, maybe except your wife. Your kids would also live in their own place.

And oh, one more reason - they always have a steady supply of new relatives/friends/friends of friends coming over, willing to work for cash at well below minimum wage.
Oh yes, lol, that falls in line with trusted helper, but that comes at the expense of family time. I have close friends that never went on a family vacation, or family dinner, etc. since someone was always at the store. Alot of times, that can lead to a certain type of dysfunction (less family connection later on, more fighting, etc.). A couple of my buds, including my best bed growing started working at his store in Grd 8. All the way through high/university and even after starting his job. A few times it was fine, as I would go there and hang out with him while he's working. Alot of times, it was until closing at 11 pm. But he would seethe sometimes, and it definitely impacted his relationship with his parents (of course the dad would go golfing, and do some other social thing like running for the store association council). But all things in common was it was literally an order of "you're working". That definitely would not work under a more Western cultured family. And maybe it's different today, but they all started smoking in their early teens due to the ease of cigarette access.

A caveat though with the low-wage worker, handling the cash requires a really trusted member of the family or friend who's experienced. So it's not that easy finding that and unloading that part of the job. But, being a minority/immigrant, it definitely is easier to find it.

What I've seen and known happen a few times is an owner will say to a younger couple/family who knows how to run the store "you run it for x years, at the end of it, I'll sell it to you". Now I'm not sure what the exact arrangements is but obviously the owner gets some kind of benefit. And at the end, they don't end up selling to the couple, make up excuses, etc. My dad ran a small business, but said no to a convenience store due to the much worsened quality of life.
Newbie
Jul 19, 2010
15 posts
4 upvotes
If Couche-Tard-Circle K hasn't already offered to buy the convenience store you are considering, it's probably not a good idea.

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