How do I tell what a vape shop owner actually takes home?

A seller may say the shop “pays the owner well”, and the number may be true. It may also include long hours at the counter that nobody was paid for. A small shop often lives on one person’s presence. To see what you would take home, rebuild the owner’s earnings from the records and ask what changes the day you take over.

Put a wage on the owner’s hours

Ask how many hours the owner works at the counter, on ordering and on the books. Then ask what it would cost to cover those hours with staff you hire. If the owner draws a profit but works every open hour, part of that profit is really a wage. If you plan to hire a manager, ask your accountant how that changes the remainder, and say so if you plan to work the counter.

Draws and personal expenses

Owners often run a vehicle, a phone, meals or family wages through the shop. Some of these are fair adjustments and some are not. Ask for a list of each item the seller wants added back, and for the paper behind it. Your accountant can say which adjustments hold up. A BDC explanation of financial statements helps you read the starting point.

Point-of-sale reports and cash

Ask for the point-of-sale reports for the same periods as the statements, split by category. They should agree. When they do not, ask why. Also ask how much of the sales came in as cash and how it was recorded. Sales that were never recorded cannot be relied on, and a buyer’s lender will look at what the records show. Due diligence covers the wider checks.