As we all have to eat and drink to survive, the would-be entrepreneur has long been attracted to a business within the food and beverage industry.
While this may be a fundamental need for us, remember that you need to consider a number of complex and interrelated issues when you are thinking about buying a business around an existing restaurant.
Did you know that only one in 10 purchases usually succeeds? As such, you will need to value correctly and be very diligent if you are to survive against these odds.
One of the main skills you need to possess when you are ready to buy a restaurant business is your ability to decipher information and communicate well.
You will need numerous meetings with the seller and don't be surprised if the early ones don't reveal some fundamental facts and figures.
It is natural for the seller to be a little protective and to want to gauge your enthusiasm and see whether you are really serious and qualified before divulging delicate data.
There are some basic facts and figures to absorb before you are able to project your own figures for the future.
What style of food does the business favor and how many tables are there in the restaurant? How many covers, or meals are set per week and by day and if the menu is very specialized how strong are the supplier contracts and the subsequent supply chain? Labor is a major cost in any business and particularly here.
Find out how the costs breakdown and whether the strength of the entire business is based on the skills and strong personalities of key figures, notably the master chef.
You may not expect to get a lot of the finer detail during the early process, as a seller often wants to keep any news of a potential sale away from the employees until the appropriate moment.
Write up a checklist of questions to ask the owner, you should have hundreds and not be afraid to be very specific, nor to insist on detailed answers.
Before you do this, though, remember that this type of business involves working long hours and can be a seven days per week activity.
You will be required to deal with many "fires," be great at managing people and your time and may not expect to see a specific net profit for quite a while.
Some of the challenges you may well face as a new owner include the ability to consummate new relationships with your suppliers.
Some suppliers see a change of ownership as an opportunity to significantly "amend" their contracts, and prices.
You have to be able to deal with upset people, who may be concerned as their table is not ready, even though they booked in advance but got there late.
You have to be able to stimulate your employees to work well, to handle all situations promptly, resulting in termination or praise according to the circumstances.
When you're sure that you are cut out to buy business interests in the restaurant industry, have tabled the right questions and received the comprehensive answers, are happy with your interpretation of the financials and contracts, then you are ready to discuss the value.
Always consult with established experts in their fields, who have restaurant industry experience and can use what they know to back up your own feelings.
Find out what the bottom line is, how much the owner makes in terms of salary, net profits and benefits and then adjust this figure downward based on any capital expenditure you feel you may have to make.
With a restaurant for sale, expect your three major costs - food, labor and rent to be no more than two thirds of your total expenses and make sure that you have a first-class marketing plan so that you can tell the world about your new baby.
While this may be a fundamental need for us, remember that you need to consider a number of complex and interrelated issues when you are thinking about buying a business around an existing restaurant.
Did you know that only one in 10 purchases usually succeeds? As such, you will need to value correctly and be very diligent if you are to survive against these odds.
One of the main skills you need to possess when you are ready to buy a restaurant business is your ability to decipher information and communicate well.
You will need numerous meetings with the seller and don't be surprised if the early ones don't reveal some fundamental facts and figures.
It is natural for the seller to be a little protective and to want to gauge your enthusiasm and see whether you are really serious and qualified before divulging delicate data.
There are some basic facts and figures to absorb before you are able to project your own figures for the future.
What style of food does the business favor and how many tables are there in the restaurant? How many covers, or meals are set per week and by day and if the menu is very specialized how strong are the supplier contracts and the subsequent supply chain? Labor is a major cost in any business and particularly here.
Find out how the costs breakdown and whether the strength of the entire business is based on the skills and strong personalities of key figures, notably the master chef.
You may not expect to get a lot of the finer detail during the early process, as a seller often wants to keep any news of a potential sale away from the employees until the appropriate moment.
Write up a checklist of questions to ask the owner, you should have hundreds and not be afraid to be very specific, nor to insist on detailed answers.
Before you do this, though, remember that this type of business involves working long hours and can be a seven days per week activity.
You will be required to deal with many "fires," be great at managing people and your time and may not expect to see a specific net profit for quite a while.
Some of the challenges you may well face as a new owner include the ability to consummate new relationships with your suppliers.
Some suppliers see a change of ownership as an opportunity to significantly "amend" their contracts, and prices.
You have to be able to deal with upset people, who may be concerned as their table is not ready, even though they booked in advance but got there late.
You have to be able to stimulate your employees to work well, to handle all situations promptly, resulting in termination or praise according to the circumstances.
When you're sure that you are cut out to buy business interests in the restaurant industry, have tabled the right questions and received the comprehensive answers, are happy with your interpretation of the financials and contracts, then you are ready to discuss the value.
Always consult with established experts in their fields, who have restaurant industry experience and can use what they know to back up your own feelings.
Find out what the bottom line is, how much the owner makes in terms of salary, net profits and benefits and then adjust this figure downward based on any capital expenditure you feel you may have to make.
With a restaurant for sale, expect your three major costs - food, labor and rent to be no more than two thirds of your total expenses and make sure that you have a first-class marketing plan so that you can tell the world about your new baby.
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