Buying a shop - Anyone know whats involved - COMPLETE NOVICE

[kalo12]

Anyone ever bought a shop/business? I'm thinking of it but they seem quite cheap. Am I missing something? you buy the business but not the premises, right? so do you pay rent? what do you get for your money then?

no matter how simplistic your advice, it will be valuable. I know absolutely nothing.

bump

Hi

You are buying:

• the lease of the shop, you need to check the lease in particular the rent, any rent reviews, the term (is it a year - you might be on the streets next year?)

• the condition of the premises, you are responsible for the upkeep of the shop. If it is a full repairing covenant then you could be responsible for the structure. Not good if it is falling down around your ears.

• are there any staff ( employment contracts)

• how much stock there is

• assume that you are not buying a limited company just a trading name

You need some basic business advice check:
www.businesslink.gov.uk/bdotg/action/home?domain=www.businesslink.gov.uk&target=www.businessl ink.gov.uk/

I would advise getting a solicitor - there are some obvious pitfalls which you need to check that you are avoiding.

oh thanks kaz.

and what if there is accomodation involved?
for instance i saw i pub for sale with a three bedroomed flat with it for 12k. Could someone just buy it and live there and not run the business ?

Probably not - as the pub is probably tied to a brewery.

Also 12K is for the goodwill/business - rent for the pub and flat is on top.

You would need to check the books, get an accountant to check that it is a viable business. At 12K it is very cheap so probably not a good business model I would have thought.

Don't think there is much money in drink these days that's why all the pubs have turned into gastropubs.

kalo12 - my DW knows a lot about the pub industry. It is hard to know what you saw and what you would actually be buying but DW says the reason it looks cheap is because it probably comes with significant obligations:

1. a commitment to pay a certain amount of rent every year to the brewery / pub operating company

1. a commitment to buy a certain amount of drink each year from the brewery / pub operating company

1. a commitment to pay business rates

1. a commitment to invest a certain amount in refurbishment

1. a commitment to repair the outside of the building and insure the property

The total of all of the above is very significant. Much more than the cost of just renting a 3 bed flat. If you ran it as a pub the amount of money left over (depends on the pub) is typically not much above minmum wage and this is the reason so many pubs are closing.

Finally, remember, you would only be buying the lease and it may be very short before the rent is reviewed upward and the lease renewed.

My DW feels that running a pub is usually really not a very attractive proposition whenever she does the numbers.