Business for Sale, Would I Buy It? | National Rug Service

In this version of today’s “Would I Buy This Business” is a luxury imported rug retailer and National Rug Service. I’m not sure what a National Rug Service is. Does that mean they sell online and you can buy it from anywhere even though it looks like they’re located in maybe the Seattle area? I don’t know. Let’s look at the number. So the asking price is 799k. Gross revenue [1,274,425]. And cash flow [312,933]. So they’re asking a little over 2x, 2.33x, a little more than that maybe on the price. So the price isn’t crazy for what is included or what the cash flow is. It doesn’t say what the inventory value is. I would imagine a warehouse full of rugs could be another couple hundred thousand dollars in inventory. So you gotta factor that into how much cash you have available. It says SBA pre-qualified. This generally means that the tax returns are also gonna show something hopefully close to what the financial show. It says it’s kept in 8,000 square foot building which is a really big base for a rug store. so maybe they are doing online sales. It says foundation is robust, with a showroom curated with rare and unique hand-selected pieces from around the globe. Features hand-knotted rugs. Among the finest collections worldwide. Alright well if that’s true then the sales actually look kind of low to me. 1.2 million for some of you know one-of-a-kind super-rare super-premium rugs sounds low. Owner is willing to mentor the buyer on sourcing these pieces. Okay so to me that would be one of the biggest concerns with this business is you’ve got to be able to get the inventory. And do you have to go to places like Iran and Afghanistan and India to find the people making these rugs and get them back over here? Are there tariff issues or import issues? Can you buy stuff now and import it from Afghanistan? Do you wanna go to Afghanistan to find these things? That to me would be the single biggest hiccup in a business like this, is being able to have a reliable source of products that you can continue to sell profitably. that may explain the lower-than-average asking price. Just in the difficulty of running this business. I would probably be concerned about that and the size of the operation and the cost of the inventory. So I’d be okay with everything about this business except difficulty in sourcing the products. If I can’t reliably source the products I don’t have much of a business and for that reason, I would pass on this one. Cause it just seems like that is gonna be a significant challenge in this business.

More about this series, CapForge’s owner and founder gives us a little behind-the-scenes on what a good or bad business would be. CapForge helps tons of clients either buy or sell business and Matt was a business broker before starting CapForge. Let’s look at some of these businesses up for sale and see if Matt would be interested in buying them.