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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

To want to buy a business even though we're skint and I know nothing...

29 replies

dreamingofaubergines · 20/11/2011 20:08

Don't want to go into huge detail because a couple of people I know IRL come on here and they would laff at me and my pipe dreams for trade reasons Wink

We're pretty skint, average mortgage, no savings, couple of credit cards with outstanding balances, but I've had a harebrained scheme to buy a business near me.
It's fairly ailing, think the person running it isn't much interested, and there's huge potential for improvements, the location is great and there's definitely a market for the products they sell.

I know very little about trade but I do have a passion for the products and a couple of possible leads for advice but I've not scouted these out properly yet. I have no idea of how much it costs to buy or set up a business, and short of turning up there and asking the owner if they're willing to sell I wouldn't know where to even start.

I currently work part-time in a pretty well-paid but deathly dull job, obviously I'd have to quit that and there's a chance they wouldn't take me back if it went pear-shaped, although I'd certainly be able to find work but not on as favourable terms. I'm bored senseless with the job though, and the idea of doing it full-time once the kids hit high school fills me with dread.

My nice, easy, leave-it-at-work-when-6pm-arrives would go out of the window to be replaced by a 6-7 day week, early starts and late finishes, I'd probably have to secure any loans on our house and it could be years before we're making any actual money out of it.

So, AIB bonkers U?

OP posts:
Pedallleur · 20/11/2011 21:14

Where is your start-up capital coming from? You have a mortgage and credit cards so should the business fail (and a lot do) would you lose your house, have a vast debt etc? If your business is a success it won't be an overnight one so how will you live/pay the bills? Good luck if you think you can do it but remember, there is no sick pay, paid holidays etc

ImperialBlether · 20/11/2011 21:17

Is there anything you can do whilst keeping on your part time job?

Do you know anyone (a mum eg) who would work for free at times?

ImperialBlether · 20/11/2011 21:17

Your mum, I mean!

Trills · 20/11/2011 21:19

Yes, YABU by the sounds of things.

wineoclocktimeyet · 20/11/2011 21:22

You probably need to sit down and write a devise a business plan (a Bank or local Council should be able to help with a Plan template).

If both your head and heart show its a goer - then go for it!

ninedragons · 20/11/2011 21:26

I think you would be insane to secure a business loan against your house.

If you can do it without that, great - do your research and pay someone to go through the accounts with a fine-tooth comb before you commit.

But don't borrow against your house.

ninedragons · 20/11/2011 21:31

It strikes me that a better plan might be to get the current owner to take you on as an employee, with a view to selling you the business eventually.

You could get to know the business properly, see how feasible your planned improvements actually are, and not have to take on any risk yourself (aside from leaving your current job).

iloveeverton · 20/11/2011 21:32

I did.

BUT you will need to make a business plan and make it as detailed as possible. Capital needed, staff costs, stock, insurance etc etc.

I also found help from an accountant, solicitor and the bank manager invaluable- but obviously you have to pay.

JaxTellerIsMyFriend · 20/11/2011 21:33

Rule 1 - never secure a business loan on your house, especially if you have no clue about business.

It isnt unreasonable to want your own business, but it is U to not have any savings to put into it. You will be starting off in a horrendous climate, already in debt.

iloveeverton · 20/11/2011 21:34

Just though the products you would sell is it something you could start selling from home on e bay or similar out of work hours?

It would give you a taste of how the product would sell, you could keep your job for now and build the business if this is successful?

BalloonTwister · 20/11/2011 21:35

It's not a pub is it? Definitely give it a wide berth if thats the case!

Original poster
dreamingofaubergines · 20/11/2011 21:43

Dh works full-time, at a push we could manage on his income alone for living costs (would send us from 'feeling skint' to 'actually skint' though.)

We have good credit ratings, I assume, never been turned down for anything and always repaid etc, so could possibly talk my way into business loans for startup capital.

My part-time job is a professional one (p/t only while kids are young, could easily go back to it f/t if the business went under, but I don't enjoy it enough to want to do it f/t now). I could still do the job while starting up but only on a very limited basis, a few hours a month.

No family help available, it'd be me, dh and a couple of close friends who might be up for helping out with a view to profit sharing in the future.

Business plan sounds the way forward, I suppose the soul-searching questions about whether it's the right thing for the family aren't as easily answered.

OP posts:
Original poster
dreamingofaubergines · 20/11/2011 21:49

Damn, X posted.

Not a pub, oh no!

Not possible to sell on ebay, and I don't think current owner would need more staff.
It'd be pretty much all or nothing, on the other hand I wouldn't be burning my bridges completely.

Point taken about not securing on the house though.

OP posts:
ninedragons · 21/11/2011 01:20

If the current owner really is uninterested, what about taking over from him or her in return for an equity stake? S/he could effectively become a silent partner and just take a share of the profits, and not have to deal with the bother of actually running the business. You, on the other hand, wouldn't have to go into debt.

ChippingInNeedsSleep · 21/11/2011 01:28

Would your company let you take a sabatical?

How much start up would you need?

What research can you do on your ideas to see how likely they are to work?

Andrewofgg · 21/11/2011 07:45

You can't secure the debt on the house without the consent of both and if I was your DH there'd be no way.

But even if you don't: if you end up bankrupt you would probably both (all? are their DCs?) lose your home.

Is this the time?

fuzzypeach1750 · 21/11/2011 07:48

In my experience if you've a passion for it, and have some money behind you, it can work. Just do your sums well before hand Grin

JennieMummy · 31/08/2012 07:37

Im about to do just this so some advice ive learned along the way.. Negotiate on price, if he's not interested and it's aling he may well reduce his price Considerably. Take out personal unsecured loans to raise the capital. Negotiate a favourable lease and/oror rent free period and try to work your job part time and in the new business until its turning over enough for you to stop or reconsider the situation.. If your gut tells you it's a sound idea.. Go for it!! Good luck :)

whois · 31/08/2012 07:42

YABU to consider doing this based on NO SAVINGS and securing debt against your house.

Dozer · 31/08/2012 07:44

YWBU to risk your house, and may also be unreasonable to take out unsecured debt. Do much more research, eg get info on the current business from Companies House, business plan etc.

RichManPoorManBeggarmanThief · 31/08/2012 07:51

In terms of what you'd have to pay, it would roughly be the value of the stock, equipment, fixtures and fittings, the premises (if owned rather than rented) and the value of any debtors (less creditors). There would also likely be a "goodwill" charge which is basically the value of the name/ brand/ customer base. This is always difficult to value. Ultimately, in total, the cost of the business should be no more than the lower of the present value of the future cash flows of the business and what it would cost to set your own version up (replacement cost).

If you do decide to do this, the best thing to do is set up a limited company and be a shareholder. This legally separates you and the business, so if the business goes bust, the creditors cant hold you personally liable for its debts. You may well still have to put the start up capital in by way of a shareholder's loan (so you'd be liable for that) but you'd be limiting your exposure to that amount (still dont secure it on the house though)

redexpat · 31/08/2012 08:08

Tread very carefully. Gordan Ramsey's Kitchen Nightmares is full of people who liked the idea of running a restaurant without an previous experience. But best of luck to you.

Callisto · 31/08/2012 08:34

It is hard to give advice without knowing what sort of thing the business sells - a product or a service, but if you like the product so much can you not start your own part time business selling the product without the need to buy an existing business? Starting small means there is less financial risk and getting a loan from the bank will be very, very difficult right now. The banks are not even lending money to established businesses with proven turnover.

You will need advice though. I have found the FSB invaluable for advice and information but you do need to join first. I wouldn't bother asking the bank for advice but there is some info here.

Also, I think it is as good a time as any to start a business. All of the small to medium businesses I know are doing really well right now. The government growth figures are not telling the true story for some reason.

Callisto · 31/08/2012 08:40

Jesus, I've just noticed this thread is a year old. Why on earth did you revive it JennieMummy?

squeakytoy · 31/08/2012 08:40

this is an old thread you know..