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Start by telling us more about your background.
Do you have an accountant??, A lawyer??, A business plan
The only sage advice I would give you is- don't jump into anything too quickly. Even though you may have great ideas for the restaurant- this is a really tough economy for restaurants.
Even in a strong economy, it is commonly accepted in the restaurant business that it is more likely that a restaurant will fail than succeed. Two studies of restaurant new business failure indicate failure rates in the 57% to 59% range in the first year alone. Those aren't great odds.
If you do decide to move forward, you and your favorite CPA will need to pour over the current owner's financials thoroughly. Use the data to find out the true reason why they failed.
Best of luck,
I sold my restaurant a little over a year ago to a couple that had additional monthly income, some money in the bank, decent credit scores, insurance to cover themselves and the business ... and it still took multiple banks over 90 days before one approved their loan. And the business showed a positive income.
Each scenario is different, but from speaking with other people in similar situations, it sounds like money is still very tight.
Here are two things I would recommend:
See if you can connect with a community member here that goes by the nickname Phanio. He is very knowledgeable about what you can do to give yourself the best odds for securing a loan.
On my blog, Small Biz Break, we recently interviewed Phanio (Joseph Lizio) about the state of lending today. It's a two part interview loaded with information. I think you will find it very helpful. The link to my blog is below.
I hope this helps.
Would the current lessee be willing to share with you profit and loss? If a successful business it might be helpful to have that information on hand. Location isn't everything so be mindful of that. What restaurant experience do you have? Investors and the banking industry will also look at that information. If you go in and say you've been a good cook (at home) and have no college or employment history to back it up, I'm quite sure they will be weary of your possible success.
All great advice here. My question to you is if the location is good, why is the current owner looking to move?
You can always let the current restaurant move out - let the property sit a bit - then go to the landlord and see if you can work a deal.
In the mean time, start researching used equipment and furnishing as well as sourcing your goods.
One idea is not to buy the business (paying for goodwill) or taking over a lease that may be to high (I think that is why the current owner is leaving). let the landlord sit for a bit - then work a better deal. If you miss out - that is OK as i ma sure there is more space in that location.
Business Money Today
Thank you all for the great advice. The current owner is not really a restaurateur...he has a reputation of starting businesses, getting successful, getting bored, and selling out. He wants to relocate to another state. The place is very small, beautiful, ready to roll...contains $27,000.00 worth of new kitchen equipment- he is selling everything for $55,000.00. Honestly, with all the shopping and work, I am thinking the little bit extra for having everything ready may be worth it. I am now cruising for investors. Does anyone have advice on a fair offer for an investor? Business plan is ready, menu is ready...I have been doing this for 23 years and am not afraid to work. Just ready to make the money for myself and not a huge company like I am doing at the moment. I have a great reputation in this small community of wealthy retirees, and I know I will kill the other places. I just find myself getting a little queasy asking others for an investment. Should I hold a dinner? With fare from my menu? What would be the best way to approach investors?
Invite not only those that would possibly invest but also some of the community. Send a formal invite to the Chamber of Commerce, mayor and anyone else that would give you some major backing. You are not only looking for investments, you are also looking for community support.
Put yourself together a PPT based off your Business Plan.
Sell yourself and your menu! The investments will come.
First things first - if you don't ask you will never receive. For the amount of money you are seeking - you won't get lucky with professional investors. Thus, you will have to get out in your community and network. Go to your chamber and ask for their list of networking events. Attend those events and talk to everyone - don't be shy. Even if the people you talk with don't invest - they may know others who will. Try to seek out CPAs, Lawyers, other business owners - even local doctors - all of these love to give back to their community and do so by investing locally.
Another option is to piece together your funding. Look into micro loans and peer-to-peer loans as well as personal contracts you could ask (friends and family) as well as personal collateral you could use - all of this to piece together the funding you need - $55K is really not that much is you attack it strategically.
Business Money Today
Agree with phanio. Expand your horizons. I highly recommend the your local Chamber. I've seen great things happen at ours.
Keep us posted on where you are at.
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I am thinking of buying a restaurant whose lease is up this summer. It has been successful, the owner is not willing to sign on again because he wants to move. If I can fund it, I know I can boost sales at LEAST 25%...I have been in the business over 20 years. I have little to no start-up money, I think family can help a some... Should I look for silent investors or is the SBA loan more appropriate? It just seems like a lot of people on here are saying that these loans are just not being granted at this point. And I will lose this place if it takes 3 months. This restaurant is in a very wealthy retirement area where people dine out every night. Any one have some sage and helpful advice?