Help needed as to what to do?

steve1980

Someone has definately got the net profit wrong. Your turnover will be the £52,000, your net profit will be alot less than that.

You need to speak to your accountant and get the correct figure as you are just wasting your time.

Do you not have copies of your own accounts?

jexygirl

Hi there,
firstly, if you are thinking about renting it out, I would check the terms of your lease VERY carefully, as this would be sub letting. Also bear in mind, if you are allowed to sublet, that if the people that let from you run the buisness into the ground/dont pay rent or bills etc - you could be left with a big mess, and no going concern to sell.

You effectively are selling a 2 year lease. You have the option to extend, which doesn't nesscessarily follow that an ingoing tennant would have the same rights. I would check with your landlord and see if they are willing to grant you a new 10 year lease now, which would be much more appealing to a buyer.

As has been said, your turnover amounts to around 52k give or take, this is not your net profit.
On the (terribad imho )advert, it states rent is 6k, you say you pay 10k a year. Even with VAT the rent would be around 7200 on 6k, so I am assuming that you pay some sort of insurance or something else is inc. in the 10k (you said 2.5k a quarter, thats where I am working from).
When selling, you should also get your accountant to do an ANP - adjusted net profit - ie. adjusted with your personal outgoings taken out as potential buyers can then see an actual potential profit.

I think you should talk to the agent, Daltons weekly is the last place I would look to buy from, for a start, iirc, you have to pay to membership to the online site to look through full listings - this may have changed over the last few years. However, I did also find it on http://uk.businessesforsale.com/uk/Sandwich-Bar-Coffee-Shop-With-Accommodation-In-Hailsham-For-Sale.aspx.

I would say that currently things aren't moving much for anyone, and 2 months is relatively short time period, so you need to decide whether to find some renewed interest in it, ( I have to say if you can't pretty much quote or at least know your figures off the top of your head - particularly in the food trade, what costs what, what your GP is on each item etc. then it is likely this isnt for you)
or what about chatting to your member of staff? They may be interested in a deal with you - something profit related perhaps? They run it, staff it, (depending whether you currently take a wage / it can support staff) effectively its their buisness, they don't pay you rent, but they take it over and take any profits after bills/ rent / outgoings are paid? That is the incentive to build it and make it work, they still get a wage, but get to run it their way, and you still have a buisness that, when things improve, you may get more interest in, or the staff member may decide to buy - if they have been running it, they have more chance of financing it with a lender as it would be their goodwill.

A new person with renewed enthusiasm could definitely open longer hours, introduce sandwich rounds, expand on the offering and even turn it into a BYO alcohol bistro in the evening.

Just my thoughts / waffle as usual
Jex

paulwf

99% of the time when someone loses interest in a business when it is only 3 years old it is for one reason...it isn't making enough money.

OP I think you need to sit down with your accountant and go through a proper profit and loss breakdown, a business isn't going to be profitable unless you know exactly how your P&L sheet works.

We've got a turnover of £50K, call it £55K with the rent. At a GP of 70% we get £35K from the business, add £5K for the rent and we have a gross profit of £40K. Now deduct £10K for what you pay in rent and £15K for a member of staff and we're left with £15K.

I suspect nearly all that £15K is taken up with other expenses (waste collection, electricity, water, business rates, music licenses, r&r). There certainly isn't anywhere near enough left for 2 people to draw a living wage from it!

Please excuse my rough and ready figures (I'm in a rush today) but I'd say the business is running at a massive loss if you were to consider two full time wages. Therefore it appears to be worth nothing. OP could you please list some P&L details so we can see what the true situation is?

Horace

I have followed this thread with interest (not been able to log onto MSE until today).

I agree with what paulwf has said that you have lost interest because you are not making money. It is tough out there I know and the first three years or so of self employment is particularly challenging. I also think that in these tough times you will struggle to find a buyer for the business as it stands so it is far better to improve what you have than quit.

You need to get people using your sandwich bar/coffee shop so start offering sandwich buffets to local businesses where they order from you, you deliver. Businesses very often order food in for meetings and what better than a local sandwich bar that sells delicious homemade food?

What have you done so far to promote the business? I think that one of you needs to attend a few business networking meetings so that you can promote your business because I am thinking that at the moment people don't really know that you exist. Another thing you could do is maybe offering your venue as a location for business breakfast networking meetings - it may mean opening a little earlier and you could do bacon baps if you don't cook plated meals such as full english breakfasts you could charge the networking organiser say £7 a head and they may charge out at £10 a head so they make a bit of money too. You will get some repeat business that way and once people have tasted your food then they are more likely to come back and maybe book buffets for their offices etc.

I was wondering if it is worth extending your opening hours? At the moment you are open from 8.30 until 2.30 and you are missing out on afternoon trade because people will want afternoon tea and cake so maybe you should try and stay open until 5pm? Same goes for Saturday stay open until 4pm or even 5pm. I know that when I am shopping or I am out and about I like to stop for a decent cup of tea and a slice of homemade cake in the afternoon - there is nothing more disheartening than finding what looks to be a suitable place to eat and then discovering they are closed. There's another idea - you could offer afternoon teas where people buy a pot of tea, some sandwiches and some homemade cakes which you serve on cake stands (same with the sandwiches) so it looks posh (sell afternoon tea for say £12.95) - this is very on trend at the moment. Get yourself in with the local tourist board too, offer them afternoon tea parties for coach trips - make visiting your olde worlde teashop an experience not to be missed.

Get friendly with your local newspaper too - maybe they will do a piece on you about extending opening hours and the fact that you will be offering different services such as buffets for business meetings and having space for holding business networking events etc.

One networking group that is doing the rounds at the moment is Business Biscotti what is great about them is that you can register your business offering your venue as a place to meet - you would become an Ambassador (it is what they call the folks that run the meetings) and people will meet typically once a month from around 9.30 until about 12, it is more of a drop in but people buy their own drinks...again this is a captive audience who may well stay for lunch especially if they are embroiled in a conversation with someone.

It is possible to turn a business around and become more inspired, I know this for a fact. I have a friend who is a voiceover artist - his business was just ticking along and I guess he was feeling a little disheartened because his business wasn't growing as he would have liked, I made some suggestions at to how he could improve his takings and make money whilst he sleeps. As a result, he now has an online shop selling generic on-hold messages that people can buy for £10 and silly ring tones that he sells for 50p - he can upsell more bespoke packages. It is hard when you are in a business because you concentrate on what could be going wrong and why you are not making money - it takes someone from outside to re-inspire you.

I was in a client's office 3 weeks ago (I am doing admin work to make ends meet) and he suggested that we have a brainstorming session, that evening a new domain name was bought, a new business plan was written on the Saturday and a Limited Company registered on the Monday. All it took was a brainstorming session with a friend and client because it is hard to brainstorm on your own. Now I am more fired up than I have ever been and my business is starting to fly - soon I won't have time to do admin work for my client:D

I am hoping that you are a little more inspired now and that you will re-consider selling.

bris

If I read this correctly your takings are only, on average £925 PW? I am sorry to say but your business is worthless, there is no way in the world that three people can be making a wage from this business, the only good part of it is the accomodation you rent out.
Your overheads will take up most of the takings, rent alone being just over £200 so I am wondering how you managed to survive for three years.
If you do manage to find a buyer then please don't sub let, (insist the LL issue a new lease to the new owners) as this will come back to bite you. Unles the new owners can work a little magic and treble the takings, they will go bust leaving the LL to chase you for the arrears they run up.
If your profit is £925 after all overheads, please ignore this post.

mizzbiz

Paulwf is spot on - there's something not right about those figures and I think his estimations are pretty good as to where breakdowns are.
How much are you and your husband drawing from the business? What loans are outstanding?

I think really you need to have a better grip on the figures involved. There is profit there if there were no staff, costs were shaved and opening times/offerings increased. However, as it is currently operating and with that turnover, the business will have 0 net profit. You are definitely unlikely to get nigh on 60k as it is - you're probably more likely to get the value of the fittings second hand and a couple of thousand for goodwill. I've seen a similar business local to me up for £10k - their turnover was slightly more than yours.

To get more value from this business than that you will have to continue operating it to make it more profitable. Your rent is static so by opening more/selling more stuff, only your cost of sale and a few overheads (power) will increase - the rest will be increased profit. You can then get a higher value from the business if you wish to sell it on.

PS take a look at this one in central newcastle http://www.daltonsbusiness.com/cafes-for-sale/city-centre-cafe-and-restaurant-tyne-and-wear-uk/246373

£20k less than yours, turnover 3-4 times greater. No idea about the breakdowns but I'll wager it's making some profit at that t/o

And the same business but through a much better agent http://www.business4sale.co.uk/Listings/25526/City-Centre-Cafe-And-Restaurant

motorguy

Isnt it disturbing how many people in business cant distinguish turnover from net profit?

:eek:

steve1980

pgilc1 wrote: »

Isnt it disturbing how many people in business cant distinguish turnover from net profit?

:eek:

It's slightly more concerning that business owners don't even know what their net profit is!

mizzbiz

steve1980 wrote: »

It's slightly more concerning that business owners don't even know what their net profit is!

And it's even more concerning than that if you do not even know that your net profit is likely to be <0

motorguy

Its also interesting that when a thread starts to not go the O/Ps way, they generally stop posting on it, rather that admit their business is a pup