Need advice on expansion

[MatcoMN]

I currently run a small route retail operation in Minnesota, and I have the opportunity to purchase another route adjacent to mine as a long term veteran is retiring. I am struggling with the decision as it would put me 250k into debt again.

Here are some of the stats.

-employee would have limited supervision during the day.
-must sell 6k a week to cover expenses and pay the employee.
-employee would get base salary with bonus for anything over the 6k in sales for the week.
-I have been averaging 11k the last 3 years a week.

I dont have any employees right now besides myself (s corp). So I avoid State Unemployment, Dissability, and Workers Comp insurance (was quoted $250 a month).

The expansion would be fully paid for in 7 years which would save me $1200 a week in expenses.

My current business will be fully paid for in 5 years.

I am looking for some advice as to if it is a wise ROI to generate $500-1k a week in net profit off the 2nd route.


Thoughts?

[BNB]

It it's profitable and worth the income to you, then the answer is yes.

This is more of a risk v. reward question. You talk about it being paid off in 7 years. Are you confident the income will keep coming for 7 years or that there is a high probability of it? To me, 7 years is a long time to pay off the debt on a business, but I don't know what is considered "normal" in your field. I would also do all the numbers and look at risk v. reward and make the decision accordingly. That is not a simple answer and requires a heck of a lot more information than we have from your post.

[Bobjob]

From what you posted it seems okay. Was the retiring person averaging well over 6K a week?
I would say your ROI isn't just the extra weekly revenue, but also a larger business.

How much are you concerned about employee theft?

[Fulcrum]

7 years is a long time. Personally, I wouldn't want to have it financed for longer than 5 years (fully amortizing) and attempt to have it paid off as early as possible.

I'd want to know how the 250K+ asking price was determined.