This is a Premium feature
Cafe business help(8 Posts)
Hoping for some wise help. Looking at investing in a cafe business. And I will be going getting full financial advice from the bank etc. But...
So I don't sound unprofessional can anyone guide me through the issues of what exactly i will need.
I already have the business idea and business plan as such though no idea on what to include for initial set up costs and then daily running costs.
So far I've thought of:
Lease cost to buy the lease of the premises.
Rent per month.
Stock and any extra equipment.
But what type of insurance would I need? Buildings? Public liability? Anything food specific? I already have my food hygiene and hospitality experience and catering.
What else should I address in cost factors? And do I become self employed? Or would it be a limited company if I pay any staff?
Other issues are payroll software and hr legalities.
So help and advice welcome. Ps it would only be a small cafe business with maybe myself and 1 or 2 staff.
For a start you won't get any "business advice" from a bank. All they're interested in is selling you products to make them profit, i.e. loans, credit card terminals, life insurance, etc.
You need to go to consult an accountant and a solicitor. The former for financial aspects, such as whether the asking price is realistic, how to finance it, what taxes you'll be liable for, whether to be a sole trader, partnership or limited company, payroll if you're employing people, maybe VAT if it's big enough, etc. A solicitor to go over the legal things, such as what exactly the sale agreement gives you, proper advice re your obligations of the lease, protections from the seller opening a new business close by, checking legalities, i.e. planning permission, etc etc.
Small cafes are notoriously over priced as most are money pits and don't even give the proprietors a living wage, lots of people get badly stung by getting stuck in costly leases they can't escape from. Start with an accountant (you need the accounts for last 3 years as a minimum from the seller). No point wasting time with a solicitor if the finances don't stack up.
As for costs, there's also water rates, waste disposal, maybe business rates, credit card terminal fees, bank charges, alarm system, cleaning/laundry, replacement utensils/cutlery/crockery, telephone/internet, property maintenance, equipment maintenance contracts, advertising/marketing, etc etc. Get the accounts from the seller and they'll show these costs to give you an idea.
And do I become self employed? Or would it be a limited company if I pay any staff?
I’d suggest you’re nowhere near ready to start a business based on this question. This is very important to understand.
And yes to a PP, cafes are notoriously difficult businesses to run. If you want to work 20 hours a day to barely make living wage it’s definitely the way to go.
Thank you for all your honest input. I will look more into advice from an accountant rather than the bank. Good input @Badbadbunny
And yes I didn't expect the idea of running any business to be easy or short hours while I sit back and relax while the money rolls in.... I was just after a good comprehensive list of things I may not have already thought of over the past year of research.
And maybe I worded the question of self employment/limited wrong as I do have a basic grasp of these concepts due to my degree but as it was a while ago I was asking someone to confirm my thoughts in a specific business concept.
I do know I am not ready YET to consider a cafe as an investment but research has to start somewhere. And the pp list will help a great deal. Thank you
You can be self employed and pay people. You can be a sole trader and pay people.
Ltd v unlimited company is about whether the business is a legal entity in its own right or whether you are personally responsible.
Thank you. I think that's was I was trying to get the answer of. As I had heard self employed people can pay people but I was unsure if this is an ideal situation due to the risks of being responsible. And deciding on what would work best for a very small cafe.
Your answer does help thank you.
Having even a very simple ltd company comes with a cost though. We pay an accountant about £1300a year.
What’s your expected turnover per year?