The Grande General Store, Est.1948
The Grande General Store, EST. 1948
The purpose of this paper is to discuss Case #6 in the student text regarding The Grand General Store. The Grande General Store is a family owned business that has been in the family for several generations. The current owner-operators have grown children; however, the children are not interested in following in the family footsteps. Rocky and Anita Grande are getting up in age and are getting tired of running the store. With no one in line to run the store, they have decided to sell the business.
The Grande General store is located on the outer edges of Denver, Colorado. The store is well know and well respected amongst the local community. The current employees are also dedicated to the store and
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“There are many favorable aspects to buying an existing business such as drastic reduction in startup costs. You may be able to jump start your cash flow immediately because of existing inventory and receivables.” (U.S. Small Business Adminstration, 2012, p. 1) On the other hand, a potential buyer must be sure that the cost of the existing business doesn’t outweigh the cost of starting a new business. “There are also some downsides to buying an existing business. Purchasing cost may be much higher than the cost of starting a new business because of the initial business concept, customer base, brand and other fundamental work that has already been done.” (U.S. Small Business Adminstration, 2012, p. 1). In this case, the community recognition, customer base and loyalty of the employee staff would be worth additional investment in the long run. According to the income statement, the business has had increased Sales and Net Income over the five year period. Within the five year period reported, the net income has increased substantially. Reviewing the net cash flow numbers shows the cash in has also increased, but so has the cash out. Overall, the net cash flow from operations has increase over the five year period. The balance sheet shows a slight decrease in cash in 2002 which could mean a slight decrease in financial strength. (Katz & Richard, 2011, p. 405) Additionally, the net worth of the business has continuously