But there are a few guidelines he or she ought to be familiar with when evaluating yogurt business offerings.
Dublin, CA (Vocus) April 15, 2010
Spring is a particularly good time to buy a yogurt business and entrepreneurs considering such a purchase are offered useful guidelines in an article just posted on BizBen.com--the online marketplace for small and mid-sized business opportunities and for valuable resources.
“What’s good about being in a business that offers immediate gratification at a low price is that it usually can sustain sales during times when many other businesses are in a slump,” said Peter Siegel, MBA, Founder and CEO of BizBen.com.
“With the current high unemployment rate and uncertainty about the direction of the economy, many people are hesitant to book a costly vacation or buy a new car.
“But we still have that urge to splurge, and that can benefit companies like a yogurt business.”
Siegel said that entrepreneurs interested in taking advantage of this segment of consumer demand will find “a pretty reasonable learning curve” by entering the industry.
“But there are a few guidelines he or she ought to be familiar with when evaluating yogurt business offerings.”
Siegel said, for example, that the ratio of rent to gross sales is a critical factor so the buyer “isn’t paying too much for the privilege of being in a desirable location.
“Otherwise, the operator is working for the landlord rather than building up, and profiting form his or her business.”
Another important figure is the percentage of sales that should be allocated to product cost.
“That can vary,” said Siegel, “depending on the kind of yogurt business being evaluated.”
The BizBen.com CEO explained that some of the companies in this category have smaller margins “which translates to higher product cost in relation to total sales.
“On balance, they should see low payroll expenses because they can tolerate a high volume of business with entry level employees earning at or near minimum wage.
“That’s the kind of business where you see a narrow product selection--much of it extruded from a frozen yogurt machine.”
According to Siegel, that model “is different from the high-end yogurt business where several flavors are offered and the staff has to be more skilled at customer service.
“This kind of participant in the industry tends to get gourmet prices, which equates to lower product cost by percentage. But the payroll factor will be higher than the minimum wage model.”
The blog also notes the industry’s average amount of profit as a percentage of gross sales.
“When buyers are equipped with this information, it makes things easier for them to make smart choices. You don’t want to overpay for a company that isn’t meeting standard industry figures,” said Siegel.
“At the same time, we’ve learned that if you’re looking at a company that’s producing at or above average earnings to the owner, it’s useful to know that. The buyer is less likely to lose the chance at a profitable company if he or she understands what is important when values are calculated.”
Since 1996, the BizBen.com site has offered businesses for sale, featured buyers looking for those opportunities, and promoted the services offered by the business brokers and other professionals who serve this market. And during his career spanning more than 25 years, Siegel has consulted with entrepreneurs wanting to buy and to sell many kinds of enterprises, including those in the yogurt business. He is a SCORE counselor and author of books, blogs and articles about buying and selling small and mid-sized businesses.
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Contact Peter Siegel