Where to start with buying existing business?

[newnamenellie]

Hello,

For as long as I can remember, I've wanted to run a cafe. I live in a small tourist city in the North of England and just recently two established cafe businesses have come up for sale.

My background is in teaching and I have literally zero knowledge of running a cafe, however, I would like to look into this nonetheless...

My question is, where do I start? I would need a mortgage or loan to buy a business and I have no clue about how any of this works - well, we have a mortgage on our house, but not sure if that's the same thing.

As you can see, I am very much in pipe dream territory at the moment, but was just inspired when I saw the businesses for sale!

I would be first visiting these cafes and trying to find out why they are up for sale and how busy they are.
If you think you have a viable business opportunity you need to find out what you are actually buying and get writing down numbers of outgoings and potential incomings as part of a business plan.
You would be taking a huge risk borrowing on your mortgage. You would not need a commercial mortgage unless you are buying the premises. You will probably find the premises are on a lease which you will be committing to paying for x number of years or selling up yourself.
In all honesty, if you have not run any business previously or worked in that industry, I would at least start by getting some work experience. It isn't for the faint hearted, it's damned hard work, and you will also need to learn how to manage staff as you will not be able to do it by yourself.

The rules on selling food have changed quite a bit over last couple of years and are requiring much more knowledge & paperwork than previously , the cafe staff on the site that my DP is the manager of have had quite a bit of extra training because of this
I don't think it's as straight forwards as it was previously
I may be wrong

@DelilahBucket thank you for your reply. I have been to both cafes, one of them a few times and it was always very busy and popular- it is a sort of afternoon tea type of a place with a vintage theme.

I agree that I need to get some hands on experience and I can totally imagine it being very hard work!

@blitzkoff thank you for replying. Yes, the legislation side of things could be a headache, I’m sure.

The second cafe which I have only visited once has only been open about a year 😳. It is an offshoot of a city centre independent, and is situated in a more residential area - not sure if it’s just not viable, hence the sake…

I read somewhere that food businesses are being hit by rising fuel costs (of course) and this may well mean that once viable businesses are no longer that.

I'd see if you can get a weekend job in a cafe to find out more: what makes it work/not work

Hello - sorry to be late to this but as a cafe owner I thought I might be able to help slightly, especially as mine is up for sale.

Please be aware that the turnover and the profit are NOT the same thing at all. We have a high turnover but due to rising costs (mostly staffing) there is very little profit.

Reputation is key. Staff are key. And good hospitality staff are difficult to find. We treat our staff well and had our initial staff members for >5yrs, which is almost unheard of, because we paid them a decent rate and offered them training.

I'd check their trip advisor and other reviews - watch their social media too. Take time to see how busy they are - try to work out if it's repeat local customer (due to the existing owners) or passing trade / foot fall.

We rent out premises but if we wanted to buy it we would have needed a 50% deposit for a commercial property - which wasn't viable at the time.

Our business was going great until a health issue popped up for me (hence the sale) and covid. Is hospitality businesses have survived through lockdown then that's great but they'll still be in recovery.

I hope this has helped even slightly and good luck with your endeavours.