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American Business Brokers & Advisors Founder & President MERGERS & ACQUISITIONS BUSINESS VALUATIONS
DECEMBER 2024
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The ABCs of Convenience Stores
Every day, we are tasked with making priorities and determining what items need to be done first. From the time we get out of bed until it is time to go to bed, we are prioritizing what we do and whom we talk to. But nothing is more taxing than having to prioritize things for your business, especially if you are in the convenience store business, because of all the moving parts: employees, vendors, suppliers, regulations, cashflow, and life in general. If you are in business and operate more than five convenience stores, you would be considered a multi-unit operator. And if you have five, then there is a good chance you will end up with nine or more stores. I say this to make the math easy to figure, because generally over time, after working with over 1,000 stores, I have discovered the 1/3, 1/3, 1/3 rule, which says that, most of the time, if you have nine stores, 1/3 of them are “A” stores, 1/3 of them are “B” stores, and 1/3 of them are “C” rated stores. This rating is based on the profitability of the stores. The “A” stores are generally the newer stores, the cash cows, and you wished all your stores were like them. The “B” rated stores probably used to be “A” stores, but over time, the stores and areas they are located in got dated, and likely, some competition moved in, which affected the performance of the store(s). Then there are the “C” stores, which probably break even financially and don’t really contribute anything to the profitability of your company. The “C” stores are the issue. When I am in doubt as to whether I should keep a financial asset in my portfolio, I give the asset the “Upside test,” meaning I ask myself: What is the upside, if any, in keeping this asset? If there is no upside in the convenience store with a “C” rating, then why I am keeping it? Once I answer the “Upside” question, I get rid of the asset, and in the case of the convenience store, I would take the money and invest it in what I do best and build or buy a store that would be an “A” rated store for me. The simplicity of this concept is obvious, and anyone in the convenience store business should practice it. Who would not want to take assets that are not making money and convert them into an asset that will make them money? Well, more people than you can imagine. Take Bob, who has 27 stores. He follows the 1/3, 1/3, 1/3 rule to a T. He has nine stores that are highly profitable, nine stores that are profitable, and nine stores that need to be converted to dealers or sold
off to the local State Farm guy for an insurance office. But Bob can’t get out of his way of letting go of some of his stores because he thinks he will be a failure for not making the “C” rated stores profitable, so he continues to operate a declining asset, which is nothing more than an accident waiting to happen. Because where do most of the employee issues and customer issues come from? The nine stores not making money, not from the “A” rated stores. My comment about Bob is rampant in the convenience industry, except with the operators who are well-financed and growing. The operators who understand this 1/3, 1/3, 1/3 rule of thumb are constantly culling their stores and eliminating the ones that do not contribute to the profitability of the company, which is good common sense. The moral of the story is don’t be a Bob and let your ego over the number of stores you have get in the way of why you went into business, which was to make a profit and capitalize on the assets you have. –Terry Monroe
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Happily Ever After and Financially Fit MERGING MONEY AFTER 50
Are you tying the knot after 50? (Congratulations!) For older couples getting ready to walk down the aisle, there are unique financial considerations to take into account. Merging finances at this exciting stage involves retirement plans, adult children from previous relationships, and different priorities for the future. Get ready for the honeymoon phase as we explore how to merge marital finances in your 50s and beyond.
UNDERSTANDING YOUR SIGNIFICANT OTHER’S SPENDING At this point in your life, your financial habits and values are well established compared to 20-somethings still finding their financial footing. Being transparent about your income, savings, and spending with your partner is essential. You may even want to review each other’s credit reports. Discuss your hopes for retirement and what it will take to get there. You may be more set in your money mannerisms, so it will take planning to reach your shared lifetime goals. COMBINING ACCOUNTS Newlyweds who are 50-plus must decide if they will merge their accounts fully or maintain separate ones. At this age, you likely have more assets to consider. Maybe you’ll keep individual bank accounts and create a joint account for shared expenses like bills. Reviewing your estate plans together is essential to ensure your wishes for wealth distribution to heirs are clear. Embarking on this new chapter means more than just sharing a life — it’s about blending finances in a way that makes sense for both of you. Communicating about your finances and shared goals ensures your golden years together are filled with financial harmony and peace of mind.
WHAT WOULD BE THE PERFECT CONVENIENCE STORE LOCATION?
One of the first rules of real estate is that real estate is all about location, location, location. If this is the No. 1 rule in the real estate business, then the No. 2 rule is competition, which is just as important, if not more. Before we discuss what the perfect location for a convenience store would be, let’s first begin with YOU. What is it you want to accomplish? Are you an owner-operator who has a couple of stores and are looking to grow your base of business? Or are you someone who already owns multiple stores and you are planning on growing into the 10–20-plus store range or beyond? Is your plan to build or buy wherever you can and resell the store, or is your plan to grow the family business? It makes a difference. The criteria for finding the perfect location are the same, but the outcome is different because of the cost involved.
where they are looking 25–50 years in the future. They can do this because they have the infrastructure and financial capability to keep the business going for a long time, and they are not dependent on family members to continue the growth, which enables them to develop stores across the country where the people are migrating. If you are a regional player with 10 or more stores, then you generally won’t have the infrastructure to jump 1,000 miles across the country and acquire some stores or build a group of stores without jeopardizing your entire operation. Therefore, you are restricted to finding a location that is considered an “A” location with minimal competition, which may mean buying an older store and razing and rebuilding it within your region. An owner-operator with only a few stores is limited in their growth opportunities and would be best suited to acquire a competitor who has a good location but is not a good operator.
I have seen hundreds of convenience store operators who think they are good at operating their stores, but in reality, they are mediocre operators who have an excellent real estate location with the real estate location carrying the business, not their ability as an operator. So, the perfect location can be different things for different people, but the basics of the perfect location are, first, going to where the people are. You can do a quick demographic search of the area you intend to operate in or with the assistance of a commercial real estate company with access to demographic information. Of course, the location you select must have easy access, and a right-hand turn into the location is always preferable, especially coming off a major highway or expressway. Competition is the next factor that will make you or break you. Is there already a competitor close by? If so, then how much new business do you expect to acquire from
Most of the larger chains of convenience store operators have a long-term vision
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SUDOKU (SOLUTION ON PG. 4) Take a Break!
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TERRY’S QUOTES OF THE DAY “I would rather be a failure at something I love than a success at something I don’t love.” –George Burns “When dealing with people, let us remember we are not dealing with creatures of logic. We are dealing with creatures of emotion.” –Dale Carnegie
WORD SEARCH
the marketplace? There are companies that, for a fee, will do the research for you to help determine how much business the location will generate.
Are your intentions to keep the store and operate it, or are your intentions to sell it in the near future? If you plan on keeping it, then be sure to survey the territory to see if there is a possibility of a new competitor down the road, and incorporate this into your financial proforma. Ultimately, the perfect location for a convenience store is one on a parcel of property large enough to facilitate the store with enough real estate for future growth, easy ingress and egress for vehicles to enter and leave the location, and strong demographics of available customers and minimal competition. –Terry Monroe
CARDINAL COCOA FROSTY GARLAND
GENEROSITY MENORAH MITTENS PEPPERMINT
PINECONES SNUGGLE UNITY YULE
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INSIDE 7824 Estero Blvd., 3rd Floor Fort Myers Beach, FL 33931 1 2 The ABCs of Convenience Stores Combining Finances When Tying the Knot Later in Life
Sudoku Solution
What Would Be the Perfect Convenience Store Location?
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Terry’s New Book Is Here!
The Best Way to Update Your Will Without Confusion
How to Ensure Your Will Reflects Your Current Wishes A SIMPLE GUIDE FOR PEACE OF MIND
Whether getting divorced or welcoming a new child, you may need to change or revoke your will to reflect any life changes. Why? Because significant changes can affect how your assets are handled. Common reasons for adjusting a will include marriage, divorce, new family members, financial changes, buying or selling property, or appointing a new guardian for a minor. So, how do you change a will? In the past, people added a codicil, an amendment to the original document. However, codicils can create confusion and legal disputes. They require signatures and witnesses, just like a will, which can make them more of a hassle than they’re worth. A simpler approach is to create a new will entirely. This new document should clearly state that it revokes all previous versions, including any codicils, ensuring your latest wishes are honored without question. Creating a new will is generally no more complex or costly than adding a codicil and provides a clearer legal foundation.
Sometimes, you may need to revoke your will but are not ready to make a new one, but simply destroying the current will might not be enough. If other copies of the will exist, a probate court might still consider those copies valid. Revoking a will is essentially canceling it. Once a will is properly revoked, it no longer exists legally. If you’re considering revoking your will, it’s essential to do so through legal means to ensure your intentions are clear. Only the person who created the will, known as the testator, can revoke it. Once the testator dies, the will becomes legally binding and cannot be changed or revoked. Whether you need to account for new family dynamics, financial shifts, or relocations, ensuring your will accurately reflects your wishes is crucial to avoid future confusion and legal complications. If you are unsure how to proceed or have concerns, consulting with an experienced estate planning attorney can provide peace of mind and help safeguard your legacy.
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