SB: Small Business Start Up Discussion

ben_and_elly

Hi. I hope this is the right place to post - apologies if not - please send me to where I should go!

My hubbie is a mechanic and has the opportunity to buy a small garage (ongoing business)run by an elderly gentleman wishing to retire. The lease has recently run out but the owners agreed to extend to 5 years, with a year's get out clause.

We have never run our own business and don;t really know where to start, so have the following (hopefully don't sound too stupid questions)

1/ How do we know if the price of business is good
2/ What sort of information can we get from current owner (ie accounts etc.) to go to bank to see if they would lend us any money. The garage is quite old and will need a bit of work. Can we rightfully ask owner for books etc. What other info should we look at?
3/ Anything we should watch out for?

I apologise if these seem like silly questions to the more experienced of you out there, but this seems like such a good opportunity to walk away from, but having kids etc. don't want to jump straight in "all guns blazing" and not make it work.

Thank you .

Palitra

It is hard to start an offline business during the econimical crisis today. I would not take a risk

gibbyni

ben_and_elly wrote: »

Hi. I hope this is the right place to post - apologies if not - please send me to where I should go!

My hubbie is a mechanic and has the opportunity to buy a small garage (ongoing business)run by an elderly gentleman wishing to retire. The lease has recently run out but the owners agreed to extend to 5 years, with a year's get out clause.

We have never run our own business and don;t really know where to start, so have the following (hopefully don't sound too stupid questions)

1/ How do we know if the price of business is good
2/ What sort of information can we get from current owner (ie accounts etc.) to go to bank to see if they would lend us any money. The garage is quite old and will need a bit of work. Can we rightfully ask owner for books etc. What other info should we look at?
3/ Anything we should watch out for?

I apologise if these seem like silly questions to the more experienced of you out there, but this seems like such a good opportunity to walk away from, but having kids etc. don't want to jump straight in "all guns blazing" and not make it work.

Thank you .

I have never bought or sold a business, we started ours from scratch, however I would say on your questions

1. Ask yourself if your happy with the price, uts hard to value a business as its only worth whatever someone will pay for it.

2 I would assume that you would get full access to the accounts, if you dont i would be wanting to know what they are keeping hidden.

As for weather or not to do it only you would know the answer, it easy to get caught up in the moment and get excited about having your own business however its very hard and can be an emotional roller coaster. you will have slow months and think to yourself should i just pack it in then just as quickly it can turn and the next month can be your best month ever.

As said it would be hard mow in the recession however it will only last a few years and if you can survive it you could be in a good position, ie bought the business cheep.

Another option is to start it from scratch yourself, landlords at the min have lots of units sitting empty so you should be able to get good deals on rent, same with equipment.

Have you savings? or will it be purchased with a loan. If its a loan it mite be very hard to get the money and they will most likely want it secured on your house etc.

hope this hlps a bit

jimbob_3

Hi,

i have recently invested in a new business and would like some helpful suggestions as to what kind of thing to include in a contract before we go to the solicitor and finally get it formalised.

About a year ago, a friend was looking for an investor for his new restaurant - i had just received some compensation so i invested 10K. Initially this was in return for 30% of the business.

As the year has gone on, i have invested a further 2K in cash, and a further 23K on my credit cards - so grand total of current personal liability approx 35K.

in return, i now own 49% of the business.

I play an active part and take a small amount of drawings / expenses each month.

Although the business is managing to repay me about £600 pm, the overdraft is only going down very slowly - so not really making lots of money

so we would like to draw up a contract that does the following:

a) secures my loan repayment on a regular (monthly basis) - with the option of changing it if there is a need to spend more on the cards, or the amount owing goes down

b) allows me to be able to take monthly drawings / expenses from the business which will increase as we make more money\ pay off the loans

c) secures my 49% stake in the business

d) prevents my partner from simply walking away and leaving me with all the debts.

So far, our solicitor has not been able to write something which we are both happy with - so i thought i might be able to see if anybody here can make some helpful suggestions

many thanks

Jim

techmax76

Planning to start a small business? Ask yourself million times if the business you're going to start fits to your interests. It is very important to give your 100% heart and dedication its not just gaining but its about loving your business or craft. Also don't forget to acknowledge the people who helped you. Always keep your feet on the ground. No matter how successful you become in the future always look back on the days how you started and be thankful.

Dexter794

Im planning to set up in a small business in September (sole trader) and i already have a current account (joint with my wife) that i dont use. Can just use that or do i need to get my wifes name off the account.

NatalieBuh

Dexter794 wrote: »

Im planning to set up in a small business in September (sole trader) and i already have a current account (joint with my wife) that i dont use. Can just use that or do i need to get my wifes name off the account.

Hi Dexter,

I run a home business and have found that when it comes to submitting your accounts for the year to your accountant, it is much simpler and cleaner to have one account used for business purposes. It doesnt necessarily have to be a business account - a current account will do. Any good accountant will not just ask for receipts but also your bank statements so they can look for any business related transations you have made that you may have missed. If your wife's transactions are on there too, it can look a tad messy.

Hope this helps.

Natalie

lisa76

Si, Looks a nice website - only checked out the free resource bit and seems Ok.
Just one thing - not sure if you'll be allowed to advertise it on here?!

a11waysindebt

jimbob wrote: »

Hi,

i have recently invested in a new business and would like some helpful suggestions as to what kind of thing to include in a contract before we go to the solicitor and finally get it formalised.

About a year ago, a friend was looking for an investor for his new restaurant - i had just received some compensation so i invested 10K. Initially this was in return for 30% of the business.

As the year has gone on, i have invested a further 2K in cash, and a further 23K on my credit cards - so grand total of current personal liability approx 35K.

in return, i now own 49% of the business.

I play an active part and take a small amount of drawings / expenses each month.

Although the business is managing to repay me about £600 pm, the overdraft is only going down very slowly - so not really making lots of money

so we would like to draw up a contract that does the following:

a) secures my loan repayment on a regular (monthly basis) - with the option of changing it if there is a need to spend more on the cards, or the amount owing goes down

b) allows me to be able to take monthly drawings / expenses from the business which will increase as we make more money\ pay off the loans

c) secures my 49% stake in the business

d) prevents my partner from simply walking away and leaving me with all the debts.

So far, our solicitor has not been able to write something which we are both happy with - so i thought i might be able to see if anybody here can make some helpful suggestions

many thanks

Jim

If it was me I would have looked in to this before investing any money. As with any business clawing back the money will take time. The turnover might be there but is there any money if you know what I mean.

If its taken that money of you in a year be prepared to invest some more.

Did you see any books before parting with any money.

Savvy_Sue

lisa76 wrote: »

Si, Looks a nice website - only checked out the free resource bit and seems Ok.
Just one thing - not sure if you'll be allowed to advertise it on here?!

He's not, it's gone, I've sent a PM ...