Sandwich shop!
Discussion
Hello,
A couple of my more ambitious friends have recently discovered that a nearby sandwich and lunch business is up for sale for £65k.
About the business:
price includes F&F
lease £7.5k
rates £3350
EXCELLENT loacation
Net Profit around the £40k mark
About them:
Taxi drivers earning about £12k each
NO starting capital
No experience in this industry
Live with parents
They intend to raise £75k, £25 k financed by a local lottery grant and £50k financed by the bank
They intend to work there themselves as the current owners do
Does anyone have any experience or advice with running this sort of business? They are offering me the opportunity to purchase a third of it. I earn £20k and am training to be a CTA (Chartered Tax Advisor).
Buying a £40k a year business seems enticing but the fact it would be 100% geared and we have no prior experience is setting alarm bells ringing.
Apologies if this is a silly question or not enough detail but I am but a 23 year old with no self employment experience so any thoughts would be most appreciated!
Thanks in advance
A couple of my more ambitious friends have recently discovered that a nearby sandwich and lunch business is up for sale for £65k.
About the business:
price includes F&F
lease £7.5k
rates £3350
EXCELLENT loacation
Net Profit around the £40k mark
About them:
Taxi drivers earning about £12k each
NO starting capital
No experience in this industry
Live with parents
They intend to raise £75k, £25 k financed by a local lottery grant and £50k financed by the bank
They intend to work there themselves as the current owners do
Does anyone have any experience or advice with running this sort of business? They are offering me the opportunity to purchase a third of it. I earn £20k and am training to be a CTA (Chartered Tax Advisor).
Buying a £40k a year business seems enticing but the fact it would be 100% geared and we have no prior experience is setting alarm bells ringing.
Apologies if this is a silly question or not enough detail but I am but a 23 year old with no self employment experience so any thoughts would be most appreciated!
Thanks in advance
Buy a copy of this book:
http://www.amazon.co.uk/Starting-Running-Sandwich-...
or there are several others on the same topic.
I'd say naive idealists are the ones who fail in catering. Otherwise it looks like a potentially high profit, reliable business, if very hard work and long hours. But then I'd say that's every small business...
If you ask others what they think about starting any small business, most of them will say you're crazy, bound to fail etc. Best thing to do is not ask. They might be right, but if they are it will probably be pure chance. There aren't many certs in business, I reckon.
eta would I buy into their business? Probably not, for the reasons others have described. Also, they sound too close to the 'naive idealist' camp for me. It takes a lot to earn a quid.
http://www.amazon.co.uk/Starting-Running-Sandwich-...
or there are several others on the same topic.
I'd say naive idealists are the ones who fail in catering. Otherwise it looks like a potentially high profit, reliable business, if very hard work and long hours. But then I'd say that's every small business...
If you ask others what they think about starting any small business, most of them will say you're crazy, bound to fail etc. Best thing to do is not ask. They might be right, but if they are it will probably be pure chance. There aren't many certs in business, I reckon.
eta would I buy into their business? Probably not, for the reasons others have described. Also, they sound too close to the 'naive idealist' camp for me. It takes a lot to earn a quid.
Edited by N Dentressangle on Wednesday 24th March 21:42
Synbios said:
Cheers guys.
There is another angle. A slightly bizarre one. My mother is also interested in buying the business, she has £55k stashed away and is a very hard worker. She is a homeowner. What are thoughts on this kind of business in more capable hands?
FFS. There is another angle. A slightly bizarre one. My mother is also interested in buying the business, she has £55k stashed away and is a very hard worker. She is a homeowner. What are thoughts on this kind of business in more capable hands?
1. Leave the losers driving their cabs.
2. A hard worker doesn't necessarily make a good businessperson
3. There's a reason the business is for sale.
V8mate said:
Synbios said:
Cheers guys.
There is another angle. A slightly bizarre one. My mother is also interested in buying the business, she has £55k stashed away and is a very hard worker. She is a homeowner. What are thoughts on this kind of business in more capable hands?
FFS. There is another angle. A slightly bizarre one. My mother is also interested in buying the business, she has £55k stashed away and is a very hard worker. She is a homeowner. What are thoughts on this kind of business in more capable hands?
1. Leave the losers driving their cabs.
2. A hard worker doesn't necessarily make a good businessperson
3. There's a reason the business is for sale.
All your points are valid, though. Def agree with point 1!
I'd get her to read one of the 'sandwich business' books like I suggested - could be 10 quid that saves her a lot of money - and then see how she feels.
There's probably room for some very hard bargaining on the 65k asking price, if she's still interested. Some good fortunes have been made in lower end catering, and I'd say it's still a good way for someone w/o special knowledge or skills to make a buck. Hard work, common sense and a willingness to sell what people want look the key things to me.
I take it they've seen the figures, due diligence and all that.
£65k sounds like a lot for something that's only going to earn you £40k for working very hard.
There are a lot easier ways to earn that sort of living, with a lot less risk.
Well done for looking and thinking about going it alone, but move on very quickly from this one.
£65k sounds like a lot for something that's only going to earn you £40k for working very hard.
There are a lot easier ways to earn that sort of living, with a lot less risk.
Well done for looking and thinking about going it alone, but move on very quickly from this one.
I would be having a very close look at that 'net profit' figure. Just what does it mean? Is it in fact the owner's wages? If it was really net profit I would take that to mean that the owner doesn't need to make any sandwiches, but that he gets that figure simply for owning/running the business.
I expect what it really means is that the current owners work in the business and claim to be able to pay themselves £40K. So how many owners are there? If there are for instance 2, and they are working full time, then that would suggest £20K each, which would suggest that if the taxi drivers took it over, they would be paying out £65K in order to be able to earn an extra £8K each.
I expect what it really means is that the current owners work in the business and claim to be able to pay themselves £40K. So how many owners are there? If there are for instance 2, and they are working full time, then that would suggest £20K each, which would suggest that if the taxi drivers took it over, they would be paying out £65K in order to be able to earn an extra £8K each.
whythem said:
Think how many sarnies you have to make per day for £40K after costs.. Assuming .75p profit each sarnie you have to sell 53,000 sarnies = 146, 365 days a year. I dont see it happening somehow, unless your anuties got really special baps
Cans of pop, crisps, cakes, snacks, fruit, etc, etc?smartie said:
whythem said:
Think how many sarnies you have to make per day for £40K after costs.. Assuming .75p profit each sarnie you have to sell 53,000 sarnies = 146, 365 days a year. I dont see it happening somehow, unless your anuties got really special baps
Cans of pop, crisps, cakes, snacks, fruit, etc, etc?There can be a great mark up on coke...
why not just start up afresh without buying the business?
Plently of high st shops available at present. How much loyalty/goodwill is there for customers and a sandwich shop? Not much I would suggest. Thus what are you actully buying?
Keep the costs down, start new, test it before investing so much money.
Plently of high st shops available at present. How much loyalty/goodwill is there for customers and a sandwich shop? Not much I would suggest. Thus what are you actully buying?
Keep the costs down, start new, test it before investing so much money.
singlecoil said:
I would be having a very close look at that 'net profit' figure. Just what does it mean? Is it in fact the owner's wages? If it was really net profit I would take that to mean that the owner doesn't need to make any sandwiches, but that he gets that figure simply for owning/running the business.
I expect what it really means is that the current owners work in the business and claim to be able to pay themselves £40K. So how many owners are there? If there are for instance 2, and they are working full time, then that would suggest £20K each, which would suggest that if the taxi drivers took it over, they would be paying out £65K in order to be able to earn an extra £8K each.
Exactly right. Couldn't have put it better myself. I expect what it really means is that the current owners work in the business and claim to be able to pay themselves £40K. So how many owners are there? If there are for instance 2, and they are working full time, then that would suggest £20K each, which would suggest that if the taxi drivers took it over, they would be paying out £65K in order to be able to earn an extra £8K each.
They are "buying" themselves an expensive and highly labourious job. The only upside is, if they develop the business and sell it on after a few years and get a good price for it, (or in the very least, their money back). Find an empty unit, kit it out for say £20,000 and build up the trade from day 1. If you're lucky, in 2/3 years time, you can try to sell it and ask some other mug to stump up £65,000 for it!
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