buying a business

[lynch]

I am considering buying a candle business, sort of. They have about 25 recipes for soy candles, along with a wax melter and other equipment. I would say all the equipment together is not more that $3,000 and they are asking $11,000 for the business. I have seen and used their candles and they are very very good. Minimal frosting with very smooth tops. I am very new to candle making and would like to buy an existing company and take it to the next level but I am not sure this is the one, any thoughts?? I assume it would be time consuming to come up with 25 recipes that work well, is this a correct assumption?? Any advice is appreciated.

[rjdaines]

Based on what I am having to do to come up with recipes I would say that the time, effort and supplies needed to reinvent that wheel is indeed worth something. Is it worth an additional $8000? I can't say but it seems to me that you are too low. Never thought about this approach tho, if I had the money.... but on the other hand, I'm learning a whole lot.

[chuck_35550]

I'm not sure what you mean by recipe. If you mean wick/wax/fo/color/jar formulations or fo combinations; just a little too sketchy to tell. The candle business is suffering in this economy just like all other businesses and I would think that in itself would require really extensive knowledge for success. I would want a look at current accounts and get step by step instruction and detail from the owners. People buy out the owner and then have to call them up to get information about how they did everything, because they can't duplicate and get the same results. I advise extreme caution. IMHO

Steve

[southerngrace]

What makes this business so good? How big is the customer base? Are they online? Are their current yearly sales over or under what your thinking of paying? What do you mean by recipes.. do they blend their own wax or is that the wick/wax/fo/color/jar formulations? Can you be more specific?

[ScentsofHeaven]

In my honest opinion, do a lot of research. For example customer base, are they online, have any solid accounts? Like southerngrace stated. I would be cautious. This economy is suffering and the candles are no exception. I am fairly new to the business but I can already tell it can be brutal. Just be careful. Good luck!!

[AlwaysWondering]

The real key is the existing customer base. How many are repeat customers? Is there a mailing list? Are there wholesale accounts with signed contracts that allow for a new owner or does that void the contract? Do they have a website? If they have google analytics, will they let you see the history of visits, etc? I'd very carefully research the price of the equipment and know the exact value of new products.

The main thing, like buying any business, is how long will it take to turn a profit and recoup your investment? Can you wait that long. I'd want to see a recent history of their sales, something reliable, like their paypal or merchants account for the last 12 months as well as their expenses. How much of the customer base is family and friends? chances are they will not stay with you at the same rate or at all once the business is purchased.

You know your risk tolerance and how long you can wait to make a profit.

Also, there may be some "off the books" sales such as cash transactions at farmer's market, etc. You need to find a way to ask this in a non-combative way.

[Stella1952]

I am considering buying a candle business

No offense, but you know so little about candle making, I think it'd be very unwise for you to purchase an existing business. If you were already familiar with candle making, it might be worth checking out but under the circumstances, I think you'd be better off spending your money on a business concerning something you know more about. It's NOT as simple as melting wax, adding scent, sticking in a wick and away we go.

[Noodle]

I agree that it would be unwise for you to purchase an existing business since you are so new to candles. As a new candle maker, you need to practice and practice first before buying any business. It is a lot of work. I think this should be a hobby first and then a business. JMO!

[earthfriendly]

Ditto, what Stella & Noodle said above. I was thinking the same thing when I saw how little you know about the candle business. Not trying to be mean or put you down, but it would be a waste of your money to invest in a business you know little of. There are a lot of candle and fragrance suppliers that have been around a long time that have gone out of business due to the economy.

It would probably be a good idea to take advantage of the slow economy to learn everything there is to making candles, not to mention the tremendous amount of money it will cost you while you are learning. It is a lot of fun, hard work, time consuming and expensive, but if after all this hard work you still want to open your own business then you will feel confident doing so and I wish you luck and success.

[Candybee]

Honestly if you were an experienced candlemaker you would already have a pretty good idea as to whether this was a viable business deal for you or not. My personal advice is if you want to be a candlemaker first learn how to make a good candle, learn about the various waxes, candle suppliers, and everything you can about making candles before you venture into a candle making business. The cold hard reality is its a hard business and an expensive one to make work.

If you decide to go ahead and buy the business anyway I wish you the best. Maybe you are a fast learner, have a saavy business sense, and are extremely lucky. But it seems to me its a lot of money to throw into a working business you know nothing about. Good luck!