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Buying an existing business

Discussion in 'General Business Chat' started by Travis92, 25th Jul, 2017.

  1. Travis92

    Travis92 New Member

    Joined:
    25th Jul, 2017
    Posts:
    2
    Location:
    Sydney
    Hi all,

    A collegue and I are currently looking into buying an existing business (preferably a cafe) by the end of 2017. We are not too sure at this point as to what structure would most suit us. The idea is to take over an existing cafe and if (or should I say when) all goes well we may consider a copy/ paste approach.
    We both currently earn a salary of around $90k and by the end of year will have around $200k together (100k each) in savings.
    I have been told that the bank will pretty much laugh at us because we have no experience in running a business?
    Surely you have to start somewhere!

    We currently have plans to meet a recommended small business specialist accountant who we are hoping to get contacts for a solicitor and bank manager or broker who can join our 'professional team'.
    We are planning to creating a 'specialist professional team' to leverage off their experiences and kick start our busniess idea.

    Some of the questions to consider for this scenario would be:

    - How can we increase our chances of obtaining finance? (I believe its acceptable to use the existing businesses books to put together a business plan? Obviously with the help of proffessionals.)

    - What sort of finance options are there for this particular scenario?

    - How do you utilise the bank as a guarantor instead of coming up with around 3 months bond?

    - Are there any other proffessionals we should see?

    - Will we be taken seriously despite no experience in running a business?

    - Is there anyone on here that can assist in recommended contacts?

    Look forward to hearing everyones feedback!

    Travis
     
  2. KYu

    KYu Member

    Joined:
    15th Feb, 2017
    Posts:
    6
    Location:
    Sydney
    When financing for business purchases, in most cases, you can work off 50% of business purchase price.

    What sort of experience do you have and why are you interested in purchasing a cafe? Do you have experience in similar industry, experience managing people/team, running a different type of business?

    What is your motivation in purchasing a business? Are you looking for something you can grow or something to directly replace your full time job?
     
  3. RPI

    RPI Well-Known Member

    Joined:
    31st Aug, 2016
    Posts:
    74
    Location:
    Brisbane
    Hi Travis

    First thing is look at the LEASE
    Second thing is look at the LEASE
    Third thing is look at the LEASE

    So many buyers of cafe's we see are going in to a location where the lease is too expensive and the landlord is the only one making money.

    The clients of ours that are doing best are in tiny little locations in high traffic areas at peak times.

    Others have gone into locations that have failed multiple times and then negotiated a turnover only rent or a low rent.

    Hospitality is hard and often with unsociable hours. If your rent burden or debt burden is too high then it doesn't matter how good you are at business.
     
  4. Travis92

    Travis92 New Member

    Joined:
    25th Jul, 2017
    Posts:
    2
    Location:
    Sydney
    Hi Kyu,
    We are hopeful to borrow as much as we can, the issue is we both currently do not have any experience in running a business or have worked in a similar field to be honest. We do have three investment properties between us though? Would this increase our chances?
    Our motivation is simple one, we want increase our cash flow so we can start to actively invest more and to hopefully grow the existing business. We are both in the military and look at this as an opportunity to discharge and allow us to stay at home more often regardless on the endless hours we are expecting to arise!


    Hi RPI
    We will most definitely take that information on board!
     
  5. KYu

    KYu Member

    Joined:
    15th Feb, 2017
    Posts:
    6
    Location:
    Sydney
    Speak to a mortgage broker that can go through your personal financial circumstances. If you do have equity in your IP, it might be easier to do something now while you are employed.

    I am assuming you are still in the early stage of exploration here. You can start looking at existing businesses for sales and ask for more information. Don't limit yourself to just cafe, there are lots of other businesses out, there that might be one that suit you which you aren't even aware of its existence yet.

    And Yes, hospitality is though. If you don't have experience and you are looking to purchase one to grow, just be prepared and know that a lot of people exit their business in the first year because they were not ready to cope with all the stress that comes with owning a small business.
     
  6. Simon Hampel

    Simon Hampel Founder Staff Member

    Joined:
    24th Aug, 2016
    Posts:
    158
    Location:
    Sydney
    You should look at whether you can do some after hours work for a few months at a local Cafe to learn how it all works and get a feel for the industry before you quit your current jobs.

    No point taking on huge levels of debt when you don't know what you are doing or don't know if you will be able to cope with the work.
     
    adam duckworth likes this.