Buying an existing business - steps to take?
Discussion
I am seriously considering making a fairly drastic life change - specifically buying an existing business. I know that the ideal is to choose a business that suits your own experience - however, after a career of telecoms software the reality is that it's going to have to be something completely different.
There are a million reasons I shouldn't do this - I have zero experience of running a business, I don't have a clue what it involves and if I do it, it's probably going to be in an area I know nothing about. So I fully expect people to tell me I'm mad.
On the other hand, I am looking at stuff with a purchase cost that I can afford to fund myself, particularly if I sold one of my cars. I have no mortgage, no dependents and hence I feel I can afford the risk if I'm willing to take the chance.
I find myself particularly drawn to the small catering type things - coffee / cake shops, sandwich shops, small cafes etc. I realise that you run the risk of being crushed by Costa etc. but my preference would be to buy somewhere which already has competition from the established chains, but is still profitable.
I have done some browsing, and mailed a few businesses for sale over the weekend for more info - and have a number of replies to go through this evening.
I know the key thing to check is whether they actually make any money, what's included in the sale, costs like wages / rent etc.
But what steps are actually needed if I get serious about this?
There are a million reasons I shouldn't do this - I have zero experience of running a business, I don't have a clue what it involves and if I do it, it's probably going to be in an area I know nothing about. So I fully expect people to tell me I'm mad.
On the other hand, I am looking at stuff with a purchase cost that I can afford to fund myself, particularly if I sold one of my cars. I have no mortgage, no dependents and hence I feel I can afford the risk if I'm willing to take the chance.
I find myself particularly drawn to the small catering type things - coffee / cake shops, sandwich shops, small cafes etc. I realise that you run the risk of being crushed by Costa etc. but my preference would be to buy somewhere which already has competition from the established chains, but is still profitable.
I have done some browsing, and mailed a few businesses for sale over the weekend for more info - and have a number of replies to go through this evening.
I know the key thing to check is whether they actually make any money, what's included in the sale, costs like wages / rent etc.
But what steps are actually needed if I get serious about this?
AyBee said:
I'm not convinced I can help here, but I'd think getting an accountant to look at the books would be my first step and trying to establish why the existing owner wants out. I'd be interested to know where you're browsing if you don't mind please?
Yep, I'd assumed an accountant would be needed.The common reasons for sale - at least stated in the ads - seem to be :
Retirement
To concentrate on their other business(es)
This is where I was looking at the weekend :
http://uk.businessesforsale.com/
Thanks, some useful points so far.
A lot of the businesses I made enquiries about over the weekend I can reject immediately now I have more details of their location.
A couple look interesting. One of those appears overpriced to me, but might be worth a look. One of them looks promising on the surface, and I may very well visit as a customer at the weekend and see what I think.
A lot of the businesses I made enquiries about over the weekend I can reject immediately now I have more details of their location.
A couple look interesting. One of those appears overpriced to me, but might be worth a look. One of them looks promising on the surface, and I may very well visit as a customer at the weekend and see what I think.
DSLiverpool said:
Rates going up, food costs going up, uncertainty ahead - Jesus how hard do I have to try to talk you out of it for at least a year.
Are you employed ? If so what's your appetite for 12 hour days, working weekends, taking holidays when the staff allow it ?
You'll be a slave to trip advisor fretting over some knob head slating your tiffin consistency.
If you STILL want to do it at least wait till you they go bust to buy the assets
Costs pretty much always go up - that's inflation.Are you employed ? If so what's your appetite for 12 hour days, working weekends, taking holidays when the staff allow it ?
You'll be a slave to trip advisor fretting over some knob head slating your tiffin consistency.
If you STILL want to do it at least wait till you they go bust to buy the assets
Yes, I am employed. However, as I said to somebody today - it's hardly a one way ticket. I've been doing the same kind of crap for almost 30 years, so if I did try a big change and it all went horribly wrong, it's not like I'd suddenly be unemployable.
My main concern is whether these places do / can actually generate enough income to provide a reasonable standard of living.
Trabi601 said:
What are you actually looking for?
If you think you're buying into something as a bit of a step back, almost a hobby business, then I think you're likely to be disappointed and struggle to make enough money to live on.
If you actually like the idea of working full time in a coffee shop, then get a job doing this before spending money - because it's nowhere near as easy as it sounds. Full time customer service roles like that can be soul destroying.
We've seen a number of cafe / coffee shops come and go in the village over the years. Nobody seems to make enough money out of it to actually stick at it for more than a year or two.
I am looking for an opportunity to be my own boss, primarily because I've had enough of working for people who frankly don't have a clue what they are doing, and working for businesses who's only concern is keeping the shareholders happy.If you think you're buying into something as a bit of a step back, almost a hobby business, then I think you're likely to be disappointed and struggle to make enough money to live on.
If you actually like the idea of working full time in a coffee shop, then get a job doing this before spending money - because it's nowhere near as easy as it sounds. Full time customer service roles like that can be soul destroying.
We've seen a number of cafe / coffee shops come and go in the village over the years. Nobody seems to make enough money out of it to actually stick at it for more than a year or two.
Whilst I know I am good at what I do, that doesn't transfer very well to anything useful, therefore I would need to find something that does not require specific skills. I could not suddenly be a mechanic / chips away contractor / hair dresser etc.
I am by no means a chef, but enjoy cooking etc hence something with a slight catering twist appeals. 'Working in a coffee shop' is not a target for my career at all - I'm late 40s, have a professional technical job and whilst I am by no means rich I earn enough that I have no mortgage, own 3 cars - two of which are very nice and am generally comfortable.
I do not expect to be able to maintain my current quality of life, and I do not expect to be able to keep my current cars. I think the running costs would be excessive for the income I'm likely to get. But, I am seriously considering whether a change in lifestyle would be suitable compensation, and I do think that I'll never know unless I try. Whether I actually will or not, remains to be seen.
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 b
h, albeit less so than fully employed.
Franchise is possible but I can't help thinking I'd still be somebody's b
h, albeit less so than fully employed.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. 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.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.
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.
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.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.
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.
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.
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
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!
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!
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).
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