I am buying a store. Should I hire a professional inventory service to verify the inventory value?

I’m selling or buying a store.

RMI has counted hundreds, if not thousands of inventories that involve a change of ownership, where the buyer needs to know what to pay, and the seller needs to know how much to get paid for their inventory at wholesale value. Usually what happens is, we still count the inventory at retail, by pre-defined departments, and the buyer and seller agree in advance on an average margin to back off of each department to bring it back down to an estimated wholesale amount. The only way to get a true cost as opposed to an average cost is an Item-Level Scan, assuming the cost per unit is still accurate in the POS System as these change frequently.

It is unfortunate that we have counted many stores for buyers after the transaction has occurred, only to find out the inventory is tens of thousands less than what they anticipated, after having purchased the inventory going off the seller’s books or perpetual inventory and not having a professional service count it before the transaction occurred. Sometimes the seller hasn’t performed an actual physical inventory for years, and feels the number is correct, but doesn’t really have a hold on the actual shrink that is occurring at the store, adding up to large sums over the years. This mostly occurs at smaller independents, in which I am sure is mostly innocent naivety. Sometimes a seller may show a potential buyer a filed tax return with inventory values as proof. However, we have found many smaller stores will give their CPA values right out of their POS, with no recent physical count.

 Many times owners believe they have little shrink because it is mostly family that works there. Unfortunately, this is a time where a lot of “what feels innocent” shrink occurs, ie; giving product to friends, vendors, etc.

Conclusion, it really provides value to pay a small fee in retrospect to an inventory service, to at least, or at the very least, compare to what the seller shows on their books for comparison. It could save you thousands and also save you disappointment in your first year of business when you do decide to hire a service, only to discover you suffered a substantial loss your first year.

Please feel free to reach out to me. We love to show customers what we can do to get the most accurate inventory count possible, where everyone wins and everyone feels good about the transaction.

On a side note, perhaps we can get you on a Monthly, Quarterly or annual schedule? As the saying goes, “You really don’t know what your profit is, until first discovering what your losses are.”

Brian Hungerford

President and CEO

Rocky Mountain Inventory, Inc.

720-280-2706