Buying a business

BunnieJ

Hi,

I don't know where to start!

I've always wanted to own/run my own business (I love food, baking, all things American 50's diner), but never had the money or knowledge to get started.

Things are not great at work and I don't get paid a huge amount, so trying to save is difficult. And as for business plans and loans I wouldn't have a clue! :huh:

I was just browsing the net earlier and I noticed a sandwich/deli shop for sale in my local area (all fixtures & fittings included) for £3,000! Out of pure curiousity I sent the seller a message and he responded straight away. He has a potential buyer already lined up, but they are yet to secure all the funds, so he asked if I would be interested if the first buyer falls through. I know myself or my partner could find £3,000 as it's a very low loan amount.

I'm going to view the shop this weekend and try and find out as much information as I can. The seller says he just doesn't have the time to run the business as he's opened a bar and wants a quick sale.

I'm really wondering if this is all to good to be true? He has one member of staff atm, but advised that the business really only needs one person to run it and it could be done by myself.

This could all come to nothing as the other buyer might find the cash, but I can't help thinking there might be something in this...

Having looked at other similar businesses for sale, they are HUGE compared to what he is offering, and I could never afford them.

Anyone out there got any advice? Are you a business owner? Any help much appriciated!

TL;DR

Should I buy a sandwich shop business for £3,000, or is it too good to be true?

kazwookie

What is his turnover, ask to see his accounts?
What is the rent
For £3K what are you actually buying? (ie stock, good will, shop fittings etc)
Do you have the relevant food hygeinne certificates
What is the public liability insurance
How much is gas / electric/ water per month
Where would you buy your food from
What mark up would you have
How much are the business rates?

somethingcorporate

You need to do a business case to see if you can make it pay.

I'd be interested to know what you get for the £3k that you couldn't do yourself for cheaper.

Pennywise

How long is the lease - you could end up being liable to pay the rent for years - even if you give up the premises.

How much holiday/redundancy pay is due to the employee - you take over the liability if you buy the business.

As said above, you NEED to see the last three years' of accounts as prepared by their accountant - walk away if not forthcoming. Ignore them saying that some sales aren't put through the books. You need proof it is profitable enough to cover your existing pay and also the extra costs you'll incur.

Are you buying the equipment or is it leased, therefore leaving you with monthly rents to pay?

A business can be worth a negative amount, i.e. you can take on more liabilities than assets.

You say you only need £3k, but what about all the upfront costs that you take on, i.e. insurance, deposits, stock, bank charges, floats, etc.

Get the accounts and then go to see an accountant.

BunnieJ

Thanks

The £3k is to purchase the business (which includes all the fittings, equipment etc currently in the shop - recently refurbished). He is also asking that we change the shop's name.

I had a food hyginene certificate which expired, but I would be happy to retake the course. I did some reasearch and amzingly it's not a legal requirement to have a food hygiene certificate to open a sandwich shop.

I (probably naivey) assumed I could continue to buy food from the wholesaler they currently use, but maybe have to set up a new account?

I wouldn't have to pay any staff (except myself) as I would be the sole owner/runner of the shop. As for the rest of the rates we have not yet discussed them. He personally has been keeping the shop open Mon-Saturday as they get very little trade on a Sunday.

There are several sandwich shops/cafes etc in my local area/where I work, so I planned to go over during my lunch break and do some research on their products and how much they're charging.

When I view the place I will be asking all of the above questions. I realise it may be slightly more than £3k with the other costs included, but hopefully not too much more.

BunnieJ

Update:

I think he is interested in my offer as he wants to meet up and discuss things tomorrow.

Does anyone know the average turnover/profit of a sandwich shop? I need to be making enough that I can pay myself a salary I can support myself on.

What do I do?

Suarez

BunnieJ wrote: »

Update:

Does anyone know the average turnover/profit of a sandwich shop?

How long is a piece of string?

Depends on location/size/products etc.

Is it Ltd company?

I would also be looking at net profit as a shop turning over £200,000 could still be losing money and a shop turning over £100,000 could be profitable.

Turnover is vanity, profit is sanity

zygurat789

BunnieJ wrote: »

Update:

I think he is interested in my offer as he wants to meet up and discuss things tomorrow.

Does anyone know the average turnover/profit of a sandwich shop? I need to be making enough that I can pay myself a salary I can support myself on.

What do I do?

It has been said before "you NEED to see the last three years accounts"

This will answer most of your questions, when you have them come back here. Your vendor will be expecting this request and should have copies available.

Mistral001

BunnieJ wrote: »

Hi,


He has one member of staff atm, but advised that the business really only needs one person to run it and it could be done by myself.

I have not run this type of business, but having only one person running the shop is being very optimistic I should have thought. What he probably means is that it needs two, but will not support two.


Continuity of business is essential. Having to close on random occasions even for a few minutes when you have a meeting with the bank manager or are sick will drive potential regular customers to your competition.

BunnieJ

Thanks for all the help :-)

The seller has a buyer lined up, but has offered to sell to me if it falls through (they're still finding funds). My partner and I are going to view the shop this weekend (the seller is on holiday over the weekend), and hopefully arrange a meeting next week if the business is still available.

I don't know if it's a Ltd company, but I would like to set it up as one if I buy it.

AbbieCadabra

won't TUPE apply for the current employee? don't think it's as easy as just getting rid of them & you running it, all depends how long they've been employed for i think.

length of current lease & break clause(s) is a biggie. get professional advice regarding this.