How can I tell if a cold storage business is profitable before I buy it?

A seller’s summary can show a healthy result for a cold store, but the number alone does not tell you what drives it. Refrigerated space earns in several ways and costs a lot to keep cold, so the useful questions are about the pattern behind the totals. Here is a sensible order for reading the records.

Separate storage from handling

Ask for revenue broken into storage fees, handling in and out, blast freezing and other charges such as labelling or special requests. A business that earns mostly from steady storage behaves differently from one that depends on busy handling. Ask which lines are covered by contract and which are billed job by job.

Occupancy through the year

Request pallet-position occupancy by month for several years. Seasonal food and produce customers can leave the building full in one season and half empty in the next. Ask what happens to the cost base in the quiet months, because the compressors and the staff do not shut off when space does.

Power, claims and customers

• Utility bills set against the volume the building moved, month by month
• Product-loss claims, credits and insurance payouts, with what caused each one
• Customer list showing how much income each account brings and when its contract ends
• Maintenance records for refrigeration plant and backup power

If one or two customers supply most of the income, find out how long they have stayed and whether their contracts can be assigned. Our page on what to check before buying a records storage business shows a similar storage review, without the refrigeration.

Match the books to the bank

Compare reported income with deposits and reported costs with payments. Ask your accountant to review the statements and note anything the owner pays personally that the business would bear after the sale. They can tell you how to adjust for it.