Historic operating accounts showing net income above a minimal living for the family, or a documented capacity plan reaching that point within about five years. Occupancy history, the rent roll, payroll and any expansion approvals support both versions of the answer.
Either the accounts answer it or a dated plan does
Marginality can be addressed with evidence of the enterprise's present income or its future capacity to generate more than a minimal living or make a significant economic contribution. Historic accounts, occupancy records, the rent roll and tax returns may establish present capacity. If present income is insufficient, a dated expansion plan can be supported by quotations, approvals, contracts, financing and a hiring schedule.
Employment is relevant but is not the only permissible form of economic contribution, and no single pair of evidentiary approaches is exclusive. Projections should be tied to objective records rather than unsupported increases. Hypothetical example: a Hope pet-grooming operator plans to acquire a U.S.
salon that has one groomer and unused treatment rooms. The first review produces a choice between proving current earnings and proving credible expansion. Tax returns, appointment data, and payroll settle current performance; a signed lease amendment, equipment quotations, and employment offers support growth.
A projection cannot carry both claims if it ignores the shop’s actual capacity. The decision is whether to buy only after new service space and staffing are documented, or to price the acquisition as a small business that may not satisfy the non-marginality analysis.