Location: Houston, TX
This is a compilation of a gun shop for sale called Gun Emporium located in the North Houston, Texas area. Along with the gun shop is a plot of land used for a shooting range. Revenue would be earned through the selling of firearms, with a smaller portion being earned by the sale of passes to the shooting range. Logically, one of the major expenses to be incurred in this business would be the cost of goods sold. With regard to these assumptions, we created an analysis that includes a forecasted income statement along with a forecasted balance sheet based on industry data compiled over the past 5 years. Also included is a bankruptcy analysis showing the results of bankruptcy and how our investors, both equity and debt, would fare if bankruptcy was to occur. The current set up of the model allows for various inputs to be altered including the mortgage, extra bank loan, and the other major inputs into the report.
All of the assumptions were made upon close examination of the industry and the trends that occur with this specific artillery industry. Upon examination of an industry competitor, it was determined that the industry would allow for an approximate 6.7 weighted average cost of capital and internal rate of return. These numbers were achieved by the assumption of a $3,189,696.48 mortgage loan along with an initial extra bank loan of $461,376. Profitability was shown within the first year and retained earnings compounded at an approximate rate of more than 100% on a yearly basis.
Throughout these analyses, Gun Emporium appears to be a solid small business investment for not only a perspective buyer, but also for those involved in financing the gun shop through loans. For both the mortgage and the extra bank loan offered, a minimum of a 5% internal rate of return was calculated, proving that despite losing some investment if the gun shop did fail, both lenders would ultimately make money coming out of the deal.
All in all, with this forecast of earnings we believe that this business could become very successful and should be seen as a great investment if one is looking to make money and also pursue his/her passions.