Opportunity has knocked! Now What?

[maplecitycafe]

Well I have begun a quest in opening my own espresso business and have been doing research for a few months. As I get closer to putting my business plan together I have found a rather successful cafe has suddenly closed leaving many people upset. They have no place to get there coffee.Largely due to the fact this was a successful business. The owner a young women whos parents own many businesses in the town decided whe wanted to do something else and closed shop saying" Thanks for a wonderful three years but now I am off to pursue my dreams." There is sign on the window says fors ale or lease turn key business. Well before I saw the sign I emailed the cafe and got a repsonse saying yes we are for sale and would beable to meet you at a time that is convenient. Naturally tis was unexected but it seems like an opportunity that I should check out. I am not sure if I will have the finds availiable soon my plans were about a year out. But I dont want to miss an opportunity... What type of questions should I ask for taking over an exisisting business. What finiancial infomation should I be able to see.... ANy help would be appreaicted. They have a half satered web site with menu ect.... let me know your thoughts.. Will the fact his business has been around three years adn is successful help in the loan process?

www.rockymountaincafe.com


cheers
Charles


www.rockymountaincafe.com

 

[crema123]

Hello,

There is a lot of information in the forums here. I'm sure you've got a lot of research to do - but my suggestion is simply that if something "slips away" because you're not ready then it's always for the better... you will get in trouble by jumping too early. Well, that's my 2 cents... (also whatever reason they have for selling is probably a lie ...)

 

[NW JAVA]

Ask to see the real numbers. I kept dailey income reports, and I'm sure they did too, or at least some sort of weekly report. You have to see the REAL numbers not the tax forms.......

 

[ElPugDiablo]

How long has the place been closed?

 

[maplecitycafe]

time

Been closed for two weeks have an appointment on tuesday

 

[ElPugDiablo]

Since the place is just closed, there might be a case for buying it as an on going business. If that is the case, you need to look at tax returns and figure out the positive cash flow, you should think about some discount than the norm of buying private business (some multiple of earing before income tax and amortization EBITA) because the place is no longer in business. BUT, you should push for just buying the used equipment and what not. It's a lot cheap since most used equipment are worth about quarter on a dollar. Ultimately, you need to decide if can you make a go at the place while the prior owner just locked the door and left.

 

[crema123]

Agree with ElPugDiablo

If they are already shut down, their backs are up against the wall. You're going to have to get the business going again.

Maybe .25 to the dollar for their equipment at the most, and you're doing them a favor for taking over their lease!!

(oh ... yes, make sure the lease is OK, that you have extensions / re-negotiation ... always consult with a lawyer before moving ahead).

Let us know what happens ... good luck - looks like a nice shop.

 

[maplecitycafe]

update..

Thanks for the replies I appreicate the input. Based on community response I feel that there will not be much negative impact from the abrupt closing. A recent article in the paper suggested people are hoping someone buys it and takes over in hopes of being a long term owner. The down side of what the article suggests is it makes it a little more difficult to bargin. I have obtained last two years earnings from the buisness and they look good. I will have a laywer and a CPA review them over the Thanksgiving weekend. The owner has all the maintance logs for all equipment as well. This is a straight up purchase of shop and property and equipment there will be no lease. If I purchase this cafe I will own the whhole kit and kaboodle. I will keep you posted....

cheers
Charles

 

[HARVESTMOONROASTERS]

I have a friend who does property investing here in NJ. If I have learned anything from him, other then flipping a house a cheap as you can. Never, ever buy a business that does not include the property and the building. You will spend twice as much due to buying all the equipment, not counting what you want to or have to replace or upgrade. Then pay you monthly lease to the property owner. Not a win win from where I sit. If the shop was profitable before it closed, chances are it will be profitable for you as well.
Hope all works in your favor, let us know how it goes.