Are you interested in starting a bottled water company but you would rather buy an existing or liquidated bottling plant than starting a new one entirely from scratch? Then below are ten tips to help you get started.
Bottled water business has continued to grow over the years. A lot of companies make millions of dollars yearly just from selling packaged water in bottles because many people prefer to drink bottled water as it is considered to be safer and healthier for consumption and contains a lot of minerals and fewer bacteria.
A bottling plant is a place where water is processed and packaged for sales and distribution. Buying an existing water plant may help you save up on start-up costs for setting up your bottled water business but as a new comer into the bottled water business, there are chances that you may not know what to look out for when you want to buy your bottled water plant, so I have decided to list some of the important things you should look out for when buying a bottled water plant for sale.
Top 10 Tips for Buying Bottled Water Company For Sale
1. Do your due diligence-: Before buying a bottled water plant, it is important that you conduct a thorough investigation and obtain as much information on the business as possible. One of the things you ought to know is why the owner is selling and whether or not there are any existing legal problems.
2. Find out what the conditions of the assets and machines are like. It is important for you to find out the condition of the machines and equipment to determine what their current state is.
For instance, you have to know when the machines were bought, how they have been maintained and whether or not some of the equipment has become obsolete. You may need to hire a mechanical engineer or someone that is very experienced with such machines to help you perform the check.
3. Investigate the source of water-: Have you ever purchased as bottle of water that looked like it had some bad taste and odour? I bet it would be very difficult to convince you to try out another bottle of the same brand. Your bottled water business is just as good as the source of water you are using so if you are buying an existing water business, it is important that you investigate the source of water to determine if it’s a clean and healthy one.
4. Determine the value of the plant-: You also need to know how much the plant is worth and the fair price to pay for it. You can do this by getting a list of all the assets and equipment available and then finding out its market value.
Remember that you are purchasing used equipment, so you have to take into depreciation and wear and tear into consideration. You can ask for the company’s books of account to give you an idea of the net book value of each equipment and then sum it up to know how much to pay for what you are purchasing.
5. Determine production capacity-: Another thing to consider is the production capacity of the plant. If you plan to be producing 500 cartons of bottled water daily, it would not make sense for you to go for a bottling plant with a production capacity of 200 cartons daily. So, it is important to find out just how many cartons of water the plant is capable of producing daily.
6. Environmental $ Zoning Concerns-: Another smart step to take is to pay a visit to the environmental regulatory agency to find out if there are any regulatory or zoning laws which the business is violating. You need to mask questions to find out if you are permitted to have a bottled water plant in that area or not.
7. Outstanding indebtedness-: You also need to conduct extensive investigation to determine if the company is indebted or not. Since you will be purchasing a lot of equipment you need to be sure that the equipments were not bought on hire purchase with some outstanding debts still hanging somewhere.
You also need to be sure that none of the assets you are purchasing have been used as collateral for a loan. You also need to find out if all taxes and dues have been paid up to date.
8. Working environment-: Another smart step to take is to do a thorough check of the environment where the plant is sited to see if it’s a safe working environment and if there are any hazardous situations to be wary of. You should also ensure that all safety rules and regulations are being complied with strictly.
9. Seller Assistance-: To be on the safe side, you should consider asking the seller to stay around for sometime to offer you some assistance and help you learn the ropes. Although this might cost you some money in the form of consultancy fees, it would offer you some form of protection and after sales support.
10. Employees, Suppliers and competitors-: Lastly, you have to be able to have a chat with some of the employees of the previous owner. Talking to the employees would give you an idea of how the business is being run and would also give you an insight on potential danger signs to look out for. It would also do you a lot of good to study who your competitors would be.
If the seller is running out of the business due to stiff competition, you deserve to know so that you can be better prepared to deal with the competition when you start your business. You might also want to take a look at the previous financial statements of the business to determine if the business has been profitable otherwise.
It wouldn’t make sense for you to spend thousands of dollars on acquiring an existing water bottling plant only to find out that bottled water business is not profitable in that area because the people prefer to drink tap water. You should also talk to the existing suppliers and customers to see if they would be willing to patronize you once you take over the ownership of the business.