If you get a 50,000 loan for 5 years at 9% - your monthly payment would be $1037.92.
The seller says she brings in $4000 - $5000 per month. Is this Revenue or Gross Profit? If it`s revenue then it will be reduced by the Cost of Goods Sold.
Even if this represents a gross profit amount, with the rent, overhead and loan payments, there isn`t much left to pay you and any one else involved (like your partner).
I`d suggest developing a plan that includes the basic $ projections as well as a plan for "rapidly" increasing the revenue.
You are correct that Revenue is "all" the money the business takes in.
However, gross profit is the difference between the revenue and the cost of what produced the revenue. (called Cost of Goods Sold or COGS).
Gross profit is what is used to pay all the expenses such as rent, salaries, advertising, etc.
I just redid the loan calculation and came up with the same number.
And finally, it`s great that your "partner" will be working with out pay - but in the beginning, it looks like you will be receiving a very small compensation too. Are you prepared for that?
I can tell that you are anxious to "do this".
Did the seller give you any indication as to how she arrived at the price?
Does the purchase price include any inventory?
Well, I asked her how she came up with the price she was asking for the business. Her response was that she never got a loan or help & that all the money was out of her pocket. She also said she had never really paid herself, as far as drawing a pay check.
Yes, the store comes with inventory. I haven`t seen it yet, but she claims she has enough inventory to re-stock the store twice over. She even has some spring & summer stuff.