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    7 Replies Latest reply on May 29, 2012 5:47 PM by Start-Business

    Buy out business or start from scratch???

    socalmicskills Wayfarer

      Ok, I'm going to make this as short as possible but feel free to scan for important points LOL.

       

      I am concidering starting an aquarium business.

       

      There are two major options for me: buy out a current (struggling) business, or start from scratch.

       

      Here's the issue: I live in Central Oregon, for those of you who are familiar with Central Oregon go ahead and skip to next paragraph.  There is one major city in Central Oregon (Bend, 80,000 population), the next smallest (20 miles away) is (Redmond, 25,000 population), and all of the outlying towns are small.  The nearest city out of Central Oregon is a 2 hour drive away.  So, the store that I am concidering buying is in Redmend (where I live). However, I believe the real money is probably in Bend where there is only a freshwater store, and a big box store (PetCo), that carries vary little.  So, is it smarter to buy the established store or start the new one.

       

      The established store in Redmond has a decent name but is struggling (I believe because of poor business skills).  I am not quite sure what it would take to buy them out but I have heard rumor of them on the verge of bankruptcy.  I am currently running a very limited version of a store out of my residence, so I know the clients, but think that I could do much better with the walk-ins and a real storefront.  Bend has no real saltwater store and that is my specialty.  However I would have to travel back and forth, and so would my family who would be helping me run the business.

       

      I have access to about $20,000 borrowing from my retirement, and have filed bankruptcy myself about 3 years ago by my credit rating is already back up to 675.  I don't know much about running a business but I know people and how to treat them, and I know fish and corals.  My wife is an excellent bookkeeper.  I am 34 years old, and somehow find a way to be decent at everything I do, but never really master anything.  I currently am employed by the United States Postal Service and make about $60,000/year, but would like to eventually leave the service and move on to bigger and better (and less stressful) things.  I would also like to continue to branch my business whether it be to become a "chain" or go into a complete pet store. 

       

      Also, should I take business classes at the local college, or send my wife to accounting school?

       

      I am sure that you will have plenty of questions, so feel free to fire them away.  I really want to get this right.

        • Re: Buy out business or start from scratch???
          Moderator Cath Guide

          While I can understand that buying a business sounds exciting to you at the moment, I would like to suggest that perhaps you should back off a bit and do some more research.  You say the business you are considering is struggling.  Can you identify why it is struggling?  If so, do you have the business skills (money and energy) to get it back on track?

           

          Since you are in the process of getting your credit rating back up, now is not the time to buy.  Perhaps you should continue working and saving your money and when your credit rating is better, then see if you are still motivated to buy this business (or start from scratch on your own).

           

          You say you don't know much about running a business - then maybe some classes at your local college would help with that.  Knowing your product is important but you need to know how to run your business, too.  You wife's bookkeeping skills are a plus and you can always use them.  Sending her to accounting school or signing her up for accounting classes would be good too.

           

          I hear your desire to get into this business but if I was your mentor, I would suggest that you take some time, gain some additional skills, work on your credit rating, save some money - with your goal of opening this business always in mind.

           

          Have you considered speaking to the struggling business and letting them know that you are possibly interested in their business in the future?  But in the meantime, ask if they would let you work in their storeon weekends.  You could learn a lot by osmosis, be a help to them, and decide if this is something you really want to do.

           

          I wish you the very best in whatever you decide to do.  Please keep in touch and let us know how you are doing on this journey.

           

          Cath

            • Re: Buy out business or start from scratch???
              socalmicskills Wayfarer

              Thank you so much for all of the insight, I welcome all of the pointers that I can get during this process.

               

              I believe that the reason that the business is struggling is due to several factors.  The owner of the business has very poor people skills, often very short with people and not willing to help them past the sale.  I have a lot of people coming to me regularly to buy things just because they do not like to deal with him.  I believe another factor is his inability to see the big picture, sometimes selling an aquarium at a lower price might help to bring more sales for all of the accessories and livestock down the road, for example.  He also does not try to get anything new in, same stuff every time that you go in there.  I have never run a business, but have worked in and managed customer service, and have been running my home as a business for the past 1.5 years.

               

              Is the credit really an issue?  I think with the ability to borrow against my retirement it should give me a good start, but I guess I really don't know how much it will cost.

               

              As I stated I have never run a business, I do read an awful lot, and am really good at finding answer on the Internet.  I am also considering some business classes, and I'm sure my wife would love to attend some classes as well.  My wife is currently a stay-at-home mom, and would be putting in as many (or more) hours into this as I would.

               

              As far as working in the store on weekends, the only way that could happen is if I were to work for free, it's too small of a store to add employees.  I guess the thing that I could learn most from him would be the connections.  I'm sure if you own a business there are business trying to sell you things all day long, but I don't have the wholesaler connections that he does.  I was considering getting the business license first to see exactly how much I could save through the wholesalers as opposed to what I am doing now.

               

              Once again Cath, thank you so much, and I look forward to hearing from you again.

               

              Pete

              Salt Life Marine Specialties

                • Re: Buy out business or start from scratch???
                  Moderator Cath Guide

                  Peter, it sounds as if you have the passion that is needed, but there are still a few missing parts: lack of hands-on in running a busines, funding, wholesaler contacts, an accountant, a lawyer.......correct?

                   

                  These parts are all essential for any business and you don't want to begin your business with any of the parts missing.  Again, I would suggest that you take some time and: continue to save money from your other job, look into a business school with your wife and see if they offer what you and she will need for your business, and perhaps find a mentor who can sit with you and answer your questions as you move towards your goal.  We can offer suggestions but a mentor can actually be with you.

                   

                  You mentioned that you would only be able to work in the store on the weekends and for free and that is one way to look at the issue.  Yes, you would not be taking home money but think of what you would be taking home: valuable contacts with customers, wholesaler contacts, the day-to-day running of the store, and possibly some good advice or suggestion from the present owner.

                   

                  Should you decide to move on and purchase the business all these will be a plus to you.  And who knows?  The owner might be willing to give you some concession on the price of the business because of your free weekend work.

                   

                  Again, these are merely my suggestions.  And I do see your passion.  Take some additional time and gather up the missing parts and you will be walking into this with your eyes open.

                   

                  Cath

              • Re: Buy out business or start from scratch???
                LUCKIEST Guide

                Welcome Peter, I have so much info on the subject

                 

                 

                Quick questions

                Do you know about SCORE??

                Do you have an accountant?? A lawyer??

                Have you seen financial's??

                 

                 

                LUCKIEST,

                  • Re: Buy out business or start from scratch???
                    socalmicskills Wayfarer

                    Hello, I do my best to answer your questions:

                     

                    Do you know about SCORE?  I have heard about SCORE and have been just been in contact to schedule a meeting with a mentor, I am very excited.

                     

                    Do you have an accountant? A lawyer?  I do not have an accountant, but I am hoping my wife could fill in there.  I am sure that I would hire one to start.  As far as a lawyer goes I have someone in mind whose focus is business law, but have not spoken with him yet.

                     

                    Have you seen financials?  I have not seen the financials yet, I guess that would help me to make the decision.  I am not 100 % sure that he is willing to sell yet, but I think he would for the right price.

                  • Re: Buy out business or start from scratch???
                    Start-Business Wayfarer

                    Peter Roina wrote:

                     

                    ...I don't know much about running a business but I know people and how to treat them, and I know fish and corals.  My wife is an excellent bookkeeper...

                     

                    Peter, you know fish and coral but you don't know much about running a business, you say, Do you know what makes people buy fish and coral? Do you know whether there is a sufficient desire in Redmond and its surrounding areas for fish and coral? Do you know for a fact that this store is going under because of mismanagement and not because they're not delivering value to anyone interested in fish and coral? Is fish and coral what sells? To whom? For what reason? Would they buy again? If so, why? If not, what would they buy instead? Would you be interested in selling that? Has the existing store tried selling that before? How did it go for them?

                     

                    In short, do you know your market and why you should be the top provider in it?