Bait and Tackle Store for sale.

Educate me Martin.  How slow is slow turn with most of the inventory?  And how does that eat into the profits?  And what do you mean by "shrink"?  I really have no idea of retail issues.  But I do think even 35-40% GM is likely high.

-Allen

I'm not the expert but based on price and revenue I assume that income should be about 20-30% from revenue (o yes, do not forgot taxes).
I think this business would have more revenue if boat/engine repair shop was running.

I think 20% is pushing it on this place?

Educate me Martin.  How slow is slow turn with most of the inventory?  And how does that eat into the profits?  And what do you mean by "shrink"?  I really have no idea of retail issues.  But I do think even 35-40% GM is likely high.

-Allen

I'm not the expert but based on price and revenue I assume that income should be about 20-30% from revenue (o yes, do not forgot taxes).
I think this business would have more revenue if boat/engine repair shop was running.

If you don't mind, can you please walk me through your calculations based on price and revenue.  My first order calculations from GM's and assumptions on expenses get to an income of about 20% of revenue if I'm being very generous.  At $348K in revenue, that's ~$70K.  But I could actually believe it is much lower based on sales price and inventory included with the price.  Price minus inventory is $95K.  I don't think 1X revenue is a good deal for the seller.  2X seems more likely, while still being fair with a buyer.  That implies ~$47K in net income.  That's income of <14%, which I could believe too.

I'm always curious about financials in markets I know nothing about.  Now, ask me about the financials of a fabless semiconductor company and I'll talk your ears off.

-Allen

My mistake on the revenue Allen.  I think the biggest problem is the slow turn with most of the inventory.  I doubt that the "true gross margins" are much more than 35 - 40% at best and I'm sure there's a lot of shrink associated with live bait.  By the time the expenses are paid, I don't see much opportunity for income commensurate with the amount of time one would have to spend running the place.  Even with the low cost of money these days, a slow moving inventory can quickly eat into the profits.  It's too bad this type of business has such a difficult time with success considering the lack of retail outlets available for us to buy our fishing needs.  The competition from the Walmarts of the world and online retailers make this a very tough proposition.  I spent 34 years with the dominant retail drug chain in Northern California and in the end, we just couldn't compete effectively against the larger national chains and ended up being purchased by CVS.  The bigger retailers continue to grow and the smaller independents are rapidly vanishing in all segments of retail.

  I miss Long's!

Shrink is any kind of loss such as theft, breakage,paperwork errors

Shrink is any kind of loss such as theft, breakage,paperwork errors

Ah, so in the context of live bait, this would mean the bait dies and gets thrown out, right?  Got it!

-Allen

Allen,
Next time we fish together, this will make a great topic for what could be a very lengthy conversation.  I'm not a finance guy but I held the positions of Senior Vice President of Operations, Marketing and Supply Chain during my years with Longs and have a pretty extensive knowledge of retail.  That being said, I know little about the bait and tackle business but in many cases retail is retail and the same concepts and principles apply.  The issue of inventory turn is simply the tying up of money that could be used productively somewhere else, either in or outside of the business. In an over simplified way, it's kind of like the philosophy of saving your money in the mattress vs investing it for a gain. Cost of inventory and efficient use of capital is a huge issue in all retail operations. In the drug store business, our net profit was always a low single digit number.  Gross margins were generally in the 25% - 28% range.  I think the gross margins would be much greater in the B & T business but the lack of total revenue looks like a real issue considering the likely expenses, many of which would be relatively fixed and not impacted by additional sales volume.  I think the whole thing really comes down to the ability to operate a small business in a world of competitors made up of very large and efficient chain store operators.

It's too bad this type of business has such a difficult time with success considering the lack of retail outlets available for us to buy our fishing needs.  The competition from the Walmarts of the world and online retailers make this a very tough proposition. 

The only way shops like this can succeed in the current environment is to maintain a heavy online presence. The overhead costs associated with online merchandising pale in comparison to brick & mortar retail. So it's like another way to generate a stream of income for cheap. Of course, to offer competitive prices online, you have to sacrifice margins a little bit. But it's not an issue if you already have inventory and a place to warehouse it all.
So yeah, just friggen buy it already Allen!  I know you're thinking about it.
I can't wait to open a tackle shop in the Monterey area! That's been my dream since I was like 6. But now it's also going to be a kayak shop & a freedive shop too... LOL!

Or does the owner know somehting we don't? Think about it, We have a BPS in Manteca, soon to have another in San Jose,  Outdoor shop in Petaluma area, Hi's down in the bay area, Fishermans wharehouse ina  few places, and  i am sure I am missing a bunch.  Is he already getting squeezed?  Motor shop, unl;ess you lease that service out, that can be a lot of overhead involved.  A couple of mechaincs, somehting to lift those motors.  Not to mention more Cal EPA folks checking your business to see to it that no oil is ending up in the bay.  Proper disposal of things like batteries and other waste.  I am willing to bet there is some CAL EPA reg on bilge water run off or some damn thing.  And the n the little thing called warranty work or "come backs."  The better mechaincs either have their own place or work for a dealer where they may be better pay.  SO you end up with people with less expierence or just can't hack it.  You can end up buying engines from some one's screw up.  Is it really worth it? 

The owners just wanna let it go because its a hassle , they never have time to fish or take vacations...

I would expand it into a kayak rental spot and kayak fishing tours , prime striper n sturgeon fishing. There's a bunch of sloughs that can be safely paddled even by newbies.

Last  I heard the folks at benicia bait were looking to buy it or the 2 guys who own the cafe.