Buying a business is no small undertaking… which means you’ll need to ensure that all the t’s are crossed and i’s dotted well before you seal the deal.
From licenses and loans through to liabilities, leases, and all the legalities, CoGoGo is here to make sure you’ve covered all bases with our essential checklist for buying a convenience store.
The money stuff
Do your financial planning
You’ll need to play detective with the numbers, combing through the last three years’ financial statements to understand revenue streams, expenses, and net profits.
Calculate the amount of upfront investment that you’ll need and your predicted ROI.
Life is also unpredictable, so you’ll need to think about how any overhead cost increases may impact your cashflow. These might include utility bill hikes, payroll increases (all the more likely given the successive minimum wage hikes of recent times), and increasing insurance premiums and business rates.
Get your loans and finance in order
Get your business funding lined up as early as possible. This will usually be in the form of your cash deposit and some kind of traditional bank loan.
You may also want to look at other finance options, i.e. for expanding and developing the store or for shoring up working capital, in the form of asset finance or merchant cash advances.
Remember that you’ll need capital to cover solicitor fees (for conveyancing and checking lease agreements and contracts), surveyor fees, and accountancy fees.
Work out if there’ll be any hidden costs
Check if there’s any hidden costs lurking beneath the surface – maybe the store hasn’t been keeping up to date with paying its VAT bills, or there could be outstanding debts to suppliers that were not immediately obvious.
You may also need to spend money on redecorating or refurbishing the store to modernise it, attract more customers, or rebrand. Costs could include signage, new refrigeration, a new POS system, a tech and CCTV overhaul, or new shelving.
Indeed, ACS’ Local Shop Report 2024 found that UK convenience stores collectively invested a whopping £1 billion in their businesses over the past year, with 56% of those investing upgrading their refrigeration, 36% replacing their shelving, and 32% revamping their technology.
The operational stuff
Find out where you stand with your suppliers
The previous owner most likely has open accounts with various suppliers and newspaper/magazine distributors, so you’ll need to find out where you stand with them as the new owner.
You’ll also want to check for any exclusivity clauses or restrictions in supplier agreements that could limit your ability to switch to cheaper or better suppliers.
And if you’re planning to team up with a Symbol group or join a franchise like Spar, Londis, or Costcutter, they can help streamline the supplier process and might even have some insider deals. Just be ready to build those relationships—and maybe set aside some cash for upfront fees and ongoing membership!
Understand any existing employees’ contracts
When you take over a business, you’re not just inheriting the store—you’re also inheriting the staff, and you’re legally required to keep them on the same terms they had before.
If you decide not to, you’ll be on the hook for paying them redundancy, thanks to the TUPE Act.
Evaluate the existing assets and tech
The store’s assets—equipment, inventory, fixtures—are a big part of what you’re paying for. A thorough evaluation ensures you’re not overpaying for outdated or non-functional items.
Check the state of essential equipment like refrigerators, freezers, and coffee machines, and look at fixtures like shelving, display units, and lighting. Are they well-maintained, or will they need replacing soon?
Take a good look at the store’s tech setup as well – from POS systems and inventory management software through to security systems such as CCTV and alarm systems. Is everything in good working order? Will anything need to be replaced?
The boring lease and bill stuff
Get your lease terms nailed down
If you’re buying a leasehold property, keep in mind the lease doesn’t automatically transfer to you. The landlord needs to approve a new lease or a sublease. While the current lease might have an assignment clause (letting the leaseholder pass it to you), chances are the landlord’s permission is still required.
Worst-case scenario, you could buy the business and later find out you can’t get the lease—yikes!
Once you’ve agreed on lease length, costs and renewal clauses, you’ll want to determine how and when rent increases will occur—whether it’s tied to inflation, a fixed percentage, or market rates.
You’ll also want to clarify who’s responsible for what—whether it’s repairs, upgrades, or general upkeep. You don’t want to be blindsided by costly repairs down the line.
Business rates
Don’t forget to check those pesky business rates! You might end up paying more than you bargained for if the property gets revalued or rates for your type of business go up.
But here’s the good news—there are potential reliefs out there, like small business rate relief, that could help soften the blow. Those eligible for the retail, hospitality and leisure relief, for example, could see 75% knocked off their business rates bills.
So, do your homework and see what you’re entitled to!
Energy bills
Given the current eye-watering energy prices, it’s smart to see if you can save some cash by switching providers for your convenience store.
Firstly, check when the existing contract ends and how much notice you’ll need to give if you want out. Look at what you’re paying per unit of gas and electricity (measured in kWh, or kilowatt hours), and how much energy you’re using annually.
Now, look around and see if there are any more affordable tariffs out there. You could use a price comparison website or an energy broker to find you the best deal.
The legal stuff (yawn)
Alcohol premises and personal licence
If you’re planning to run a convenience store that sells alcohol or other regulated items, you’ll need both a personal licence and a premises licence. The personal licence allows you, or a designated individual, to legally sell alcohol, while the premises licence grants permission for the store itself to engage in such sales.
It’s important to apply for these licenses well in advance to avoid any delays in opening your business.
National lottery ticket licences
When a convenience store changes ownership, the licence to sell lottery tickets and the lottery terminal don’t automatically transfer to the new owner.
The existing licence expires, and the new owner has to apply to the National Lottery for a fresh one. Here’s the tricky part: National Lottery treats this as a brand-new application, so if there are other nearby applicants who’ve been waiting, they might get priority over you based on factors like location or opening hours.
Losing the ability to sell lottery tickets can be a big hit, as those ticket buyers often end up purchasing other items while they’re in the store.
Post office approval
If the convenience store you’re buying has a post office attached, there’s a key step you’ll need to keep in mind: the Post Office will have to approve you as the new owner to run the post office. There’s no guarantee they will, so it’s something to be aware of going in.
Some post offices are labelled “community branches,” meaning they’re super important to their local (often rural) communities. These branches aren’t part of any conversion plans and get a small, fixed payment from the Post Office.
Insurance
Start by chatting with an insurer or broker and give them the full rundown of how your business will operate. They’ll walk you through the insurance you absolutely need by law, and then suggest extra coverage that’s worth considering.
This could include things like covering your premises, stock, and goods in transit (like those trips back from the cash and carry), freezer breakdowns, or even cash and Lottery scratchcards.
You’ll also want to think about business interruption insurance, employers’ liability, and public/products liability. Got delivery vehicles? You’ll need motor insurance too. If you’re a member of the British Independent Retailers Association (BIRA), you can even access retail-specific insurance packages.
Understand your responsibilities
There are all sorts of legislation that you’ll need to be aware of as a responsible and compliant c-store owner – from selling fireworks through to vape recycling. You’ll need to understand your legal obligations before you sign on the dotted line.
For example, if you sell vapes, by law you must provide an option for consumers to dispose of them on a one-for-one basis under the WEEE (Waste Electrical and Electronic Equipment) regulations.
And if you’re catering to the festivities of Bonfire Night or Diwali, then you’ll need to adhere to the laws regarding the safe storage and sale of fireworks that are contained in the Pyrotechnic Articles (Safety) Regulations 2015, The Fireworks Regulations 2004 and the Explosives Regulations of 2014.
