Do you want to open your tobacco bar or vape store? But rather than starting your own business, do you want to take over a business? The entrepreneurial adventure, in either case, will require determination, method, and skill.  Taking over a business is quite different from starting a new one , but they indeed have some aspects in common.

To help you in your process, find in this article our advice on each of the significant steps to take over a tobacco bar in good conditions.

#1. The study of the location, the first criterion of choice

The first element to consider in determining whether or not it is worth taking over a bar-Tabac: the location analysis. Indeed, the turnover of your kiosk business will depend directly on its attendance. It is therefore essential that it is located in a busy street and that it is visible.

First, ask yourself if the tobacco bar is located on a busy street. Is it the city center? From a shopping or residential street?

Pay particular attention to other shops on the street if there are any: is their attendance good or, on the contrary, are the shops empty?

To find out about the quality of the location, do not hesitate to talk to the street traders. Indeed, your potential neighbors will be able to help you realize the atmosphere and the vitality of the neighborhood.

Also, make sure that the tobacco bar is visible and accessible. Can you quickly stop nearby for a quick run? Is there a parking lot? Is the store well served by public transport? A metro station or a bus stop very close to your business are undeniable assets.

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tabacco bar counter

#2. The study of direct or indirect competition

Studying the competition should also be part of your site analysis. Determine how many direct competitors are nearby.

Take into account the businesses with which you will be competing for each of your activities, that is to say, both your tobacconist activity as well as your bar activity.

Evaluate how far they are from the premises you want to take over, and examine their commercial positioning to assess the degree of competition between establishments.

For example, a neighborhood bar-tobacco located 50 meters from a 5-star hotel with a bar will face little competition in its drinks business because the luxury hotel clientele is very different from that of a luxury hotel tobacco bar.

The location study must also lead you to wonder about the possible modifications known in your tobacco bar's immediate environment. Check with the town to find out if there are road works or town planning works planned.

You should note that the work causes when it takes place, nuisances which can cause a drop in traffic to your business. That said, this work can then enhance the neighborhood by making it more pleasant.

#3. Analysis of the premises used, equipment, and materials of the Tabacco bar

Take a close look at the premises. Do they match your expectations in terms of size?

It is indeed advisable to choose a room which is not too small. If you cannot put more than four tables or if the line for the purchase of cigarettes infringes too much on the counter space/consumption of drinks, it is necessary to find another local.

Conversely, be careful not to choose a room that is too large: rows of empty tables don't necessarily give a good impression, and you also don't want to have to pay for square meters that you ultimately don't use.

Also, please pay attention to the layout of the room and its level of obsolescence, and its compliance with safety and accessibility standards. In the event of work, it will probably be necessary to close your business for a few days, which will have a financial impact, and should therefore be considered when negotiating with the owner. Even if it is possible to do development work, estimating the amount before even signing the recovery is better.

It will also be necessary to evaluate the bar's equipment: is the equipment complete, worn, or, on the contrary, in good condition? It is always a good idea to make a list of the equipment still under warranty and note the age of the devices and any repairs already carried out.

The kitchen and bar facilities are relatively expensive. If they are in poor condition, you should know this and take this into account when negotiating the trade-in price of the bar-Tabac.

#4. Analysis of the tobacco bar's offer and clientele

Taking over a tobacco bar must also give rise to an in-depth study of the establishment's clientele.

First of all, we will have to question the regularity of customers: are they regular or occasional customers? In what proportions?

It will also be necessary to anticipate the possible impact of seasonality on the establishment. Is the bar located in town, in the country, or a tourist area? Consequently, should we expect that the number of customers will vary significantly from one period to another (summer/winter, school holidays, week/weekend)?

Also, look at the average basket and the distribution of income between different activities (bar, catering, tobacco, games) and identify opportunities to increase turnover.

For example, is it possible to increase revenue by improving the catering offer (upmarket or more choice) or developing the sale of accessory products (cigars, lighters, zippo, etc.)?

#5. Evaluate the team in place

Finally, study the team's composition if the business has one: how many people are there? Are they qualified personnel? Have the staff been there for a long time, or do they tend to be changed frequently?

Be careful; if the members of the family help to keep the bar and are not declared and counted for this work, you will probably have to provide a remuneration equivalent to that of a qualified employee.

It is also essential to get a feel for the atmosphere within the team. Is she good? What is the level of employee satisfaction?

It is better to detect problems of organization or understanding between team members well in advance than to have to deal with them when resuming activity.

If you are employed in a tobacco bar and want to take over, we have an article on employee takeover by employees to help you.

#6. Current suppliers of the Tabacco bar

To fully understand the recovery, it is also necessary to look at the current suppliers: who are they? What are the commercial terms negotiated with them? What are the supply frequencies?

If these terms don't suit you, plan to negotiate with them. You still need to have real leeway! In particular, find out if the bar is linked exclusively to a brewer (with the subscription of a brewer loan, for example).

#7. Analysis of historical financial performance

Analysis of historical financial performance is a critical element in the recovery of a business.

Study of the evolution of the turnover of the cigarette bar

First, study the evolution of turnover over the past few years. Is activity stable, increasing, or declining? Is this due to a change in the number of products sold or a change in prices?

In the case of a tobacco bar, it will be necessary to ask whether the successive increases in the price of tobacco have impacted both the sales of cigarettes and the frequentation of the bar. Does the person who quits smoking always come for their coffee at the counter in the morning? What development can we expect in the future?

Likewise, if you have a reasonably significant sales activity for games or lottery products, should you expect a change in regulations at this level? How will you be impacted?

Study of the profitability of a Tabacco bar

Secondly, take a look at the profitability of the tobacco bar:

  • Are the purchase prices of drinks, food, and merchandise stable?
  • What impact has the evolution of prices had on the gross margin of the activity?
  • Is the payroll under control?
  • Is the gross operating surplus (EBITDA) positive? In other words, is the business profitable?
  • Is the EBITDA margin calculated by dividing the EBITDA by the turnover (turnover) stable?

Examine the storage and supply policy put in place by the former manager. Is it relevant? Is it possible to reduce the stock or renegotiate longer payment terms to reduce the working capital requirement?

You will also need to look at the operational cash flow: is the business having positive cash flow? Is this sufficient to meet the financial commitments to be expected over the next few years (renewal of equipment, loan repayment, etc.)?

#8. Establish a business recovery plan

The realization of a business plan is a necessary step for any business takeover. The business plan for taking over a vape kiosk or vape bar serves, on the one hand, to assess the financial viability of your project and, on the other hand, to present it to potential financial partners.

In a simplified way, a vape store business plan consists of two parts:

  • A written part used to present the project and highlight its strengths
  • A quantified part, which is the financial forecast, used to highlight the need for financing and the profitability potential of your business

The business plan is, therefore, an essential element in the search for financing. Be careful, however: if it allows you to present your project to potential investors or banks, it will not allow you to win the moon! Remember that you will still have to have a sufficient personal contribution to convincing the financial partners of your involvement and your commitment to your project.

To achieve a complete, convincing, and well-presented business plan without spending an exaggeratedly long time on it, know that solutions exist.

#9. The search for recovery funding

Several solutions exist to finance the takeover of a tobacco bar. And this can be pretty expensive, more than a creation insofar as you buy the business from the previous owner.

Personal contribution is significant. It demonstrates your commitment to the takeover project and allows you to align your interests with your financial partners (you too have money to lose if the project fails).

To raise the sum necessary for the takeover, you can collect your contribution with a takeover loan, the terms of which will depend on the takeover scheme (buyback of company shares or buyback of business assets only).

Finally, do not forget the various state aid intended for the creation and takeover of a business. You may also be able to count on help from the municipality or the community of municipalities to help you take over a tobacco bar that, without your help, would disappear.

#10. Analysis of the seller's motivations and the clauses of the assignment contract

Finally, before signing the contract, which will materialize the takeover and give it its legal character, it is crucial to check several points.

First, ask yourself what the seller's motivations are. They can be private (moving, retirement, store fixtures, professional retraining, etc.), but they must not be linked to anticipation of deterioration in profitability. "You don't catch a falling knife," the saying goes. In the case of business takeovers, it is the same.

Finally, pay close attention to the terms of the assignment contract. For this highly codified document to be valid, it must contain several elements: price, elements of the commercial lease, circumstances of acquisition of the business by the previous owner (transfer, creation, succession, etc.). All these technical provisions, which are difficult to understand, should encourage you to seek the assistance of a specialized lawyer.

Our article is coming to an end. We hope that this has given you a better understanding of how to take over a bar-Tabac. If you have any questions, please let us know.