If you want to become a business owner, then you might be thinking about investing in an existing restaurant. This is a great option for becoming a restaurant owner without having to start from the ground up. Still, it is a big investment that you should take very seriously.
Here are a few must-know tips that you should keep in mind when making this type of major purchase:
1. Check Out the Market
You should first take the time to research about the market in your area. A good business broker can help you get a better understanding of what the local restaurant market is like. This can help you determine what type of restaurant you should invest in, how you should run that restaurant and what type of success you can expect.
An experienced business broker will have depth of understanding about any potential restaurants you plan to buy, guiding you through the process and saving you time, money and stress in the long run.
2. Figure Out Your Finances
You also need to line up your finances for purchasing any business. Determine how much you can afford to spend, leaving room in your budget for making repairs and handling operating costs when you first take over the business. Make arrangements so that you’re in a position to make the purchase when the right restaurant becomes available. After all, it can take a while to get approved for a big business loan, so it’s best to get started as soon as you can.
3. Don’t Buy the First Restaurant You Find
If you are anxious and excited about becoming a business owner for the first time, you might be ready to purchase the first restaurant that you come across. However, this typically is not a good idea, unless you have consulted with a business broker first. At a minimum, you will want to answer these questions first.
Take the time to look at a few different restaurants so that you can choose the one that is right for you. Restaurants are not one-size-fits-all and you need to be sure the one you select fits within your business goals and objectives. The restaurant may require you to be physically present during the first few weeks, months, or even years of taking it over. If that’s the case, one that serves only breakfast and lunch will have completely different hours than one who stays open with a late night bar.
4. Find Out What is Included
You’ll want to know exactly what is and is not included in your purchase. For example, with many of these purchases kitchen equipment and furniture are included. If the business has a liquor license, this may or may not be included. A professional business valuation will help you identify if the asking price is justified by what’s included in the sale. Do due diligence here so that you can negotiate properly and avoid any surprises at closing.
5. Work With Professionals
Check in with professionals who have experience in transactions related to buying and selling businesses. An attorney, a CPA and a business broker are all extremely valuable for evaluating all aspects of the process. This can help you ensure that both you and the seller are protected during the business transaction.
Buying an existing restaurant is a fantastic opportunity for those who want to become small business owners, without the risk associated with start-up. Restaurants are notorious for failing so buying one with a successful history greatly reduces your chances of a bad investment.
At Alliant Capital, our team will show you how the business evaluation was performed, how to understand the financials, how to prepare an offer, assist you with due diligence and the closing. This is just part of the many benefits of choosing Alliant Capital Advisors as your business partner.