6 years in biz, should I expand?

[raspcapp]

I have to say this is the first time I have ever posted since following this forum in the last year +. I am a wife of a bull-headed husband who not only loves the coffee business, but has a new idea about expanding daily. Recently, my husband, we will call him Pete, was given a unique opportunity to "co-brand" his coffee business with a major national food chain. (Co-brand-kinda like what Long John Silvers and A&W Rootbeer did). My problem is this, although I think it is a great idea, the amount of money needed is aggressive and astronomical-they want to open 10 within the next year. Do we seek investors?? WE do not make the greatest amount of money at our 1 coffee shop right now, I just think this would be really risky......Don't get me wrong, I love coffee and I love our little coffee shop/cafe, but to invest that much TIME and MONEY into something that we aren't sure will be profitable is something that keeps me "telling him to quit expanding and just concentrate on the 1 coffee shop we have now." My husband knows the business, knows what is takes to run a successful coffee shop, but I am too scared of losing it all, Any advice?

 

[cafemakers]

This could be an excellent opportunity to expand your company; however, your fear of the potential risk is entirely valid - if not handled correctly, you could end up exhausting yourselves and your capital with little return.

I recommend that you should carefully evaluate the potential of this opportunity and its true costs before committing yourselves to proceed with this or any new venture. Remain open to all options - despite the appearance of a great opportunity, not every business is best suited to expand in this way (or perhaps at this time). If you are not comfortable with your estimates of return for what costs are required; propose changes to the framework such that you are comfortable, or do not pursue the arrangement.

Everyone has their own personal tolerance for risk, understand the deal before proceeding and decide if the risks that you will assume for what may come in return are acceptable to you.

Be certain that you work closely with your advisors to provide you with information to structure your deal; I've written a page about that in our online guide, here: Good Business Advisors

Best of success!

Andrew

 

[Java Rocks Tony]

obviously u must be doing something right for a national major food chain to take an interest in u and ur shop. i say, runn all the numbers, get a perspective on what they are willing to pay for, and see where it goes. however if u do not have negotiating experience, hire a good business attorney, one that does nothing but this type of work. i'd start with merger and acquisitions attorneys. seriously, i would get an attorney to do the negotiating.

this could prove very lucative for u. it's how carabba'a italian resturant started, if u r familir with them. they were a family run italian restaurant in Houston, TX with 2 stores b4 the folks that own outback formed a partnership with them and now, less than 10 yrs later they are nationwide and multi millionaires.

i'd at least see what they want and what u stand to make off of it. good luck to u!

 

[Muddycup]

I have been where you are, and had to decide on expanding, everyone is right, you need to decide how much risk you you want to take on. make sure you get good advice on the opportunity that has been presented to you. ( true partnerships almost never work in the long run, never give up control of your business.