Buying an existing business - steps to take?
Discussion
superlightr said:
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
Anyone who is interested can have a look at the coffee shops for sale on 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 costsEdited by superlightr on Thursday 23 February 10:34
http://www.businessesforsale.com/
The details are usually quite brief but will usually give an indication of gross, sometimes net profit and turnover. Often the address isn't given but aa bit of detective work will often reveal the location. Once you have a number and postcode you can find the r.v. and the rates paayable here
https://www.gov.uk/correct-your-business-rates
Many small coffee shops etc will be paying no rates at all in the future, and many more will be eligible for rates relief.
The estate agents dealing with the business seem to behave in quite different ways.
Most of the ones I enquired about were being sold via Nationwide, and they seem helpful. I mailed them and said that there was one I was interested in, and may visit at the weekend as a customer to see if I wanted to make further enquiries - and was given the address, with the gentle reminder that anything to do with actually buying the business / finding out the commercial details etc. should be done through them.
One estate agent sent me the info I asked for, and has then left messages on my home phone 3 days in a row - the last one getting quite insistent that I called them back (this is the reason I didn't give out my mobile number). I mailed them yesterday and politely pointed out that I had made a number of enquiries over the weekend, and if I wished to take this one further I would most certainly contact them - but unless I made that decision, they should assume I was not interested and hence we had very little to discuss in person at this point.
One sent the details I asked for and the email - literally - said that if I made any attempt to visit the premises or talk to the sellers without involving them, then they wouldn't send me anymore info ever ever ever.
Perhaps the main thing to be aware of when buying a business is having to deal with knobhead estate agents.....
(And incidentally, the above post is correct - a lot of these coffee shops state zero rates after small business relief).
Most of the ones I enquired about were being sold via Nationwide, and they seem helpful. I mailed them and said that there was one I was interested in, and may visit at the weekend as a customer to see if I wanted to make further enquiries - and was given the address, with the gentle reminder that anything to do with actually buying the business / finding out the commercial details etc. should be done through them.
One estate agent sent me the info I asked for, and has then left messages on my home phone 3 days in a row - the last one getting quite insistent that I called them back (this is the reason I didn't give out my mobile number). I mailed them yesterday and politely pointed out that I had made a number of enquiries over the weekend, and if I wished to take this one further I would most certainly contact them - but unless I made that decision, they should assume I was not interested and hence we had very little to discuss in person at this point.
One sent the details I asked for and the email - literally - said that if I made any attempt to visit the premises or talk to the sellers without involving them, then they wouldn't send me anymore info ever ever ever.
Perhaps the main thing to be aware of when buying a business is having to deal with knobhead estate agents.....
(And incidentally, the above post is correct - a lot of these coffee shops state zero rates after small business relief).
davek_964 said:
(And incidentally, the above post is correct - a lot of these coffee shops state zero rates after small business relief).
No guarantee of that going forward though is there? I know a lot of small business, mainly retail that have seent ehir rates bill plummet or reduce to zero this year, it may save a few of them TBH, what will next year & the year after bring though?LordHaveMurci said:
davek_964 said:
(And incidentally, the above post is correct - a lot of these coffee shops state zero rates after small business relief).
No guarantee of that going forward though is there? I know a lot of small business, mainly retail that have seen their rates bill plummet or reduce to zero this year, it may save a few of them TBH, what will next year & the year after bring though?IF you can, have a clause added whereby you hold back some of the agreed sale price for 12 months and only have to pay it should the business perform as promised by the existing owner. I appreciate it may not always be possible, but it can be a big help and even a saviour.
IMO - get a good accountant, and a solicitor. Do plenty of due diligence, and take bits of advice from folk who have done it, or understand it. Everyone will have an opinion, some will think it's a good deal and others will always say it's too much... go with what you know and what you believe in.
Or, just ignore all of the above and go for it
IMO - get a good accountant, and a solicitor. Do plenty of due diligence, and take bits of advice from folk who have done it, or understand it. Everyone will have an opinion, some will think it's a good deal and others will always say it's too much... go with what you know and what you believe in.
Or, just ignore all of the above and go for it
singlecoil said:
LordHaveMurci said:
davek_964 said:
(And incidentally, the above post is correct - a lot of these coffee shops state zero rates after small business relief).
No guarantee of that going forward though is there? I know a lot of small business, mainly retail that have seen their rates bill plummet or reduce to zero this year, it may save a few of them TBH, what will next year & the year after bring though?An important consideration if you're buying a business I would think?
LordHaveMurci said:
Yep, we will. My point is that if the rates come back in again will that £6k or whatever it may be make the business unviable.
An important consideration if you're buying a business I would think?
Any business that is going to become unviable as the result of business rates is on the ropes anyway. It's not going to be more than half the rent (unless that's artificially low) and the rent will be a small proportion of the other costs such as stock and labour.An important consideration if you're buying a business I would think?
singlecoil said:
Any business that is going to become unviable as the result of business rates is on the ropes anyway. It's not going to be more than half the rent (unless that's artificially low) and the rent will be a small proportion of the other costs such as stock and labour.
Agree - staff and rent can be the highest costs but some shops don't have stock - ie service providers. It may not make a business unviable but it perhaps makes it less attractive to open a new premises or makes it tighter to take on more staff or to take a business risk and invest.We have taken the view not to open a new high street office because of the risk and cost of compliance set by the government and issue of staff and cost of doing so. There are so many more expenses that we have to take into account now then say 15 years ago. each on its own is "not very much" but when all added together it does cost a lot.
Business rates are a rip off. We get nothing for them. Not even our rubbish collected. Businesses provide jobs and help create foot fall for the high street. So yes for a number of businesses I would imagine is death by a thousand cuts of which higher business rates will and is one of them.
superlightr said:
Business rates are a rip off. We get nothing for them. Not even our rubbish collected. Businesses provide jobs and help create foot fall for the high street. So yes for a number of businesses I would imagine is death by a thousand cuts of which higher business rates will and is one of them.
They are no more of a ripoff than any other tax, such as income tax. You get the same services back from business rates as you do from income tax, VAT etc. In some ways it's a good tax because businesses can't avoid them by basing themselves going offshore. singlecoil said:
They are no more of a ripoff than any other tax, such as income tax. You get the same services back from business rates as you do from income tax, VAT etc. In some ways it's a good tax because businesses can't avoid them by basing themselves going offshore.
a tax is a tax sure. 1001 threads on how much the govt waste of our money. But this hits the high street. High streets that are diverse make a place more interesting to shop in and attract more people and is more successful.
superlightr said:
singlecoil said:
They are no more of a ripoff than any other tax, such as income tax. You get the same services back from business rates as you do from income tax, VAT etc. In some ways it's a good tax because businesses can't avoid them by basing themselves going offshore.
a tax is a tax sure. 1001 threads on how much the govt waste of our money. But this hits the high street. High streets that are diverse make a place more interesting to shop in and attract more people and is more successful.
Having come late to the party, here's my tuppence worth.
Be very careful, in the real world people sometimes lie.
Someone planning to sell such a business will often inflate takings and profits by putting their own money in, making the business seem more attractive.
A small cash taking business is valued on a multiple of established profits.
Definition of a cynic: an optimist with experience.
Good Luck
Be very careful, in the real world people sometimes lie.
Someone planning to sell such a business will often inflate takings and profits by putting their own money in, making the business seem more attractive.
A small cash taking business is valued on a multiple of established profits.
Definition of a cynic: an optimist with experience.
Good Luck
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