Buying an existing business - steps to take?

[davek_964]

I expect to have to work full time in the shop if I bought one - I didn't mean that I just expected to sit back and rake in the profits, but that it's more of a lifestyle decision than 'it would be nice to work in a coffee shop'.

Franchise is possible but I can't help thinking I'd still be somebody's bh, albeit less so than fully employed.

[Trabi601]

davek_964 said:

I expect to have to work full time in the shop if I bought one - I didn't mean that I just expected to sit back and rake in the profits, but that it's more of a lifestyle decision than 'it would be nice to work in a coffee shop'.

Franchise is possible but I can't help thinking I'd still be somebody's bh, albeit less so than fully employed.

That's why I said that it can be soul destroying. Repetitive, boring, dealing with whinging customers, etc.

You need to go and do the job for a while before launching yourself into it - having started on the shop floor myself, before working through store management to regional management, I'm not sure I could ever go back to the shop floor full time. (Although, when I retire, I wouldn't mind a couple of days a week as a butcher / fishmonger to earn a bit of beer money).

I'm sure it can be enjoyable and rewarding, but I wouldn't want to throw a load of money at finding out I hated it.

[red_slr]

I come from the same background as you and 10 years ago gave it up for running my own business. I will drop you an email with some info.

[Steve H]

davek_964 said:

I expect to have to work full time in the shop if I bought one - I didn't mean that I just expected to sit back and rake in the profits, but that it's more of a lifestyle decision than 'it would be nice to work in a coffee shop'.

Lets be clear, the lifestyle change we are discussing for you is likely to be a notably lower income in exchange for substantially longer hours.

[davek_964]

Steve H said:

davek_964 said:

I expect to have to work full time in the shop if I bought one - I didn't mean that I just expected to sit back and rake in the profits, but that it's more of a lifestyle decision than 'it would be nice to work in a coffee shop'.

Lets be clear, the lifestyle change we are discussing for you is likely to be a notably lower income in exchange for substantially longer hours.

Yep, I'm fully aware of both of those.

[singlecoil]

Thing to do when buying a coffee shop is to choose one that you can sell again should the need or desire arise. If it's been there a good while and is still going strong then chances are it still will be in a couple of years time. You may well not get back what you paid for it so allow for that, but it will sell.

My point is that it isn't a huge risk. The greater worry might be getting back into your current line of work if you are away from it for a while.

[davek_964]

singlecoil said:

Thing to do when buying a coffee shop is to choose one that you can sell again should the need or desire arise. If it's been there a good while and is still going strong then chances are it still will be in a couple of years time. You may well not get back what you paid for it so allow for that, but it will sell.

My point is that it isn't a huge risk. The greater worry might be getting back into your current line of work if you are away from it for a while.

Thanks - that is basically my thought.

Even getting back into what I do shouldn't be massively difficult I don't think. I know somebody I worked with in the past who was made redundant about 5 years ago - he basically did nothing and burned through his redundancy. Finally started looking for a job at the end of last year, found a 3 month contract and now has a full time role somewhere else. Also somebody I worked with until a couple of years ago, has been self employed doing something different for the last 2 years but has now got an offer to get back into the same kind of role - but actually with higher pay than he was on before.
So it seems like returning to what I do now is possible.

[dfen5]

Why buy an existing one? Loads of empty shops, just make sure it's got the right use available. Maybe a small industrial unit to take on the local burger van?

Best cafe where I used to live had plastic outdoor tables/chairs and everything was done on a cooker that looked like it was out of the 70s. Price was good, food was good, always busy.

Other than that, seasonal cafe - winter off.

[singlecoil]

dfen5 said:

Why buy an existing one? Loads of empty shops, just make sure it's got the right use available. Maybe a small industrial unit to take on the local burger van?

OP is in Surrey, so there might not be so many empty shops around his way. But if he can find one it's perfectly viable to start a coffee shop but won't save a lot once he's bought all the equipment and complied with the regulations. Plus the good thing with an existing business is he will be making money from day one.

Normal retail shops will have A1 planning permission which is adequate for sandwich/coffee shops. He'll need A3 to run an actual cafe. I think the tipping point is whether he's running deep fat fryers etc which will need commercial ventilation systems.

I've made a close study of this subject as I had a mind to do the same thing myself.

[davek_964]

singlecoil said:

OP is in Surrey, so there might not be so many empty shops around his way. But if he can find one it's perfectly viable to start a coffee shop but won't save a lot once he's bought all the equipment and complied with the regulations. Plus the good thing with an existing business is he will be making money from day one.

Normal retail shops will have A1 planning permission which is adequate for sandwich/coffee shops. He'll need A3 to run an actual cafe. I think the tipping point is whether he's running deep fat fryers etc which will need commercial ventilation systems.

I've made a close study of this subject as I had a mind to do the same thing myself.

Yep, that's pretty much it. Plus, buying an existing business would give a clue how it's performing against existing competition. Starting from scratch seems a whole lot riskier even if it might be cheaper initially.

I know somebody who was in a similar position to me a few years ago, and bought a franchise. Caught up with him and he told me that it's going well now and making money, but for about 18 months he was having to fund it every month with a fair chunk of cash. So certainly when starting from scratch, initial cash flow is very important.

[superlightr]

I would imagine one of the hardest 'jobs' or businesses to run. Sure its a change from your current job but so becoming a deck hand on a fishin boat being pretty much the hardest job out there.

Mid life crisis - fed up with current job want a change. Nothing wrong with that but sandwich/coffee/breakfasts relentless and soul destroying I would imagine with competition aplenty. its volume work at best and if you want a holiday its a problem.

Is there not something you would like that may involve re-training? A plumber or electrician? We can't get enough reliable electricions or plumbers and we are swamping the ones we use with work (letting agents)

If i were retraining then it would be as an electrian. Be fun to retrain over say a year, enjoy the break from work and then when qualifed out you go - get the work be your own boss.

[davek_964]

Plumber or electrician wouldn't appeal. In fact, my mate took the electrician route a couple of years ago (he was already qualified and doing that kind of stuff in addition to his day job) and after a couple of years has decided he's too old for it and fancies an office job again I think!

Off the top of my head, if I did retrain my first choice would probably be as a chef - which of course keeps you in a catering industry!

However, coffee shops is one possibility I'll look into but certainly not the only one. An ex colleague who did something similar a few years back (but not coffee shops) mailed me last night and said he considered several options before he found a business that suited. He went franchise and says he's never been happier - but did have to fund heavily at first.

There is another idea currently brewing, which I believe I could start while keeping my day job to see how it goes. It would mean some initial outlay but less than the cost of a coffee shop and it would be something that interests me. Need to give it a bit more thought and do some research.

Edited by davek_964 on Wednesday 22 February 18:27

[singlecoil]

superlightr said:

I would imagine one of the hardest 'jobs' or businesses to run...

Any particular reason why you would imagine that? It's hardly physically demanding apart from having to stand most of the time. Ordering and paperwork not much a problem either, it's mostly repetition.

[superlightr]

singlecoil said:

superlightr said:

I would imagine one of the hardest 'jobs' or businesses to run...

Any particular reason why you would imagine that? It's hardly physically demanding apart from having to stand most of the time. Ordering and paperwork not much a problem either, it's mostly repetition.

as in low value high volume work and the added complications of hygiene, staff, its all very much front of shop, customer care all the time/on show and I would think profits are very marginal. I may be completely wrong. A number of the small sandwich/coffee shops near to me are changing hands/closing all the time.

Edited by superlightr on Wednesday 22 February 18:35

Edited by superlightr on Wednesday 22 February 18:35

[singlecoil]

superlightr said:

singlecoil said:

superlightr said:

I would imagine one of the hardest 'jobs' or businesses to run...

Any particular reason why you would imagine that? It's hardly physically demanding apart from having to stand most of the time. Ordering and paperwork not much a problem either, it's mostly repetition.

as in low value high volume work and the added complications of hygiene, staff, its all very much front of shop, customer care all the time/on show and I would think profits are very marginal. I may be completely wrong. A number of the small sandwich/coffee shops near to me are changing hands/closing all the time.

Nothing wrong with low value high volume IMO if you can achieve a reasonable speed. The hygiene isn't complicated or problematic as long as the really quite simple procedures are followed. Gross profits is usually around 60 to 65% varying according to how high a price can be commanded. There's no doubt that it's not good pay but it's not bad either, and there are many who say that being your own boss is a lot less stressful than middle management etc.

[21TonyK]

OP, coffee shop? What sort do you mean? Modern coffee means knowing the difference between a wet or dry macchiato and being able to make an espresso properly, not just coffee. It's not rocket science but if you are going into that arena you need to get it right from day one or you will be snubbed by 50% of your potential customers from the onset.

[Frimley111R]

I think that the biggest challenge is moving from one working environment to another. Its a huge change after all that time and I am not sure more hours/less pay is a positive step. I'd try working in one at weekends to get a feel for it otherwise its a big step only to find that after a few weeks/months you decide its not for you.

[davek_964]

I think this has got a tad bogged down in the specifics of a coffee shop. I don't really need to work in a coffee shop weekends, to know that my dream job does not involve me serving people coffee and cake for minimum wage. The ex-colleague I mentioned before bought into a parcel shipping franchise - I'm pretty sure that's not because his dream job was putting things in boxes, but he is very happy with how it's working out.

A coffee shop was one possibility and I haven't ruled it out - but I am / will consider other ventures too. One of which would mean starting from scratch if it turns out the be feasible.

My reason for starting the thread was more to get advice about the important mechanics of buying a business were - i.e. like some of the initial answers such as : get an accountant, try and get the existing owners to stay on for a handover period etc.
It wasn't really about whether I could run a coffee shop without knowing the difference between a Latte and an Americano!

[superlightr]

singlecoil said:

superlightr said:

singlecoil said:

superlightr said:

I would imagine one of the hardest 'jobs' or businesses to run...

Any particular reason why you would imagine that? It's hardly physically demanding apart from having to stand most of the time. Ordering and paperwork not much a problem either, it's mostly repetition.

as in low value high volume work and the added complications of hygiene, staff, its all very much front of shop, customer care all the time/on show and I would think profits are very marginal. I may be completely wrong. A number of the small sandwich/coffee shops near to me are changing hands/closing all the time.

Nothing wrong with low value high volume IMO if you can achieve a reasonable speed. The hygiene isn't complicated or problematic as long as the really quite simple procedures are followed. Gross profits is usually around 60 to 65% varying according to how high a price can be commanded. There's no doubt that it's not good pay but it's not bad either, and there are many who say that being your own boss is a lot less stressful than middle management etc.

Ok -yesterday I bought a £2.50 sandwich ham/mustard and tomato. = about £1.50 gross profit per sandwich for the shop. £20k salary/expected say for the owner who makes the sandwiches and mans the shop 365 days a year £3k business rates £3k light/heat/water/compliance/insurance So min of £26k a year to run a sandwich shop Say its open 340 days a year = £76 a day to earn the above so about 50x sandwiches a day

If running a coffee shop and sandwiches then I'm sure you would need 2x people, higher business rates so say £21k more to run a coffee/sandwich shop giving a total of £47k

whats the gross profit on a cup of tea/coffee and cake? say 100% £3 coffee and cake Yum sounds nice so £1.50 gross profit so half is from sandwiches and half from coffee/cake 340 days open = £138 a day to earn the above. So 50x sandwiches and 30x coffee and cakes


is that about right would you think?

clearly if you can then sell a full English breakfast at £6 or a higher value item you are likely to be making more of a gross profit but its still a lot of sandwiches and coffee and cakes a day to sell 340 days a year.

Run my own business in Lettings so please excuse me if Ive transposed some in-transposable numbers I have tried to be generous in my back of envelope calcluations and would be grateful if anyone can give a more accurate anticipation of profits and costs

Edited by superlightr on Thursday 23 February 10:34

[jas xjr]

when doing your calculations as to the viability of the business. do not not rely on increasing turnover. this should happen but i always used to work on whether the business was viable if turnover did not increase.
another thing we used to do was buy buildings which we could develop. using income from a flat or whatever.