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  • #977908
    Bigegg
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    Hi,
    I am also looking at purchasing a small business and was wondering what guidelines were available to gauge how much cash is actually required.
    My wife and myself are experienced hoteliers with other experience in food service and office administration. We are looking at purchasing a cafe but are unsure if we have enough cash. After purchasing the cafe, for what we believe is a good price, we will have $30k available to cover all our living expenses for the first 6 months plus an $20k in the business account.
    Do we have enough cash?
    Brad:confused:

    #1103057
    Anonymous
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    Hi there Brad,

    I’ve moved your post to a spot where it’s more likely to be seen by those who can offer you some advice.

    I hope you get the answers you need, and in the meantime, just want to congratulate you on taking this huge step, and wish you all the best with it.

    Welcome to Flying Solo, too. :)

    Jayne

    #1103126
    Anonymous
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    Hi there Brad,

    I’ve moved your post to a spot where it’s more likely to be seen by those who can offer you some advice.

    I hope you get the answers you need, and in the meantime, just want to congratulate you on taking this huge step, and wish you all the best with it.

    Welcome to Flying Solo, too. :)

    Jayne

    #1103058
    inxpress111
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    You didn’t say if you are buying an established business or not – but if you are you would be able to see from the books what costs are associated with it – as you would also be able to gauge how much the business takes. Buying an established business would mean that you would be taking money from day one and you would only have to budget for your personal living costs out of your savings. Setting up a new business is a totally different matter and sorry but I haven’t had any experience in that.

    Good luck to both of you – hope if goes well.

    #1103127
    inxpress111
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    You didn’t say if you are buying an established business or not – but if you are you would be able to see from the books what costs are associated with it – as you would also be able to gauge how much the business takes. Buying an established business would mean that you would be taking money from day one and you would only have to budget for your personal living costs out of your savings. Setting up a new business is a totally different matter and sorry but I haven’t had any experience in that.

    Good luck to both of you – hope if goes well.

    #1103059
    Bigegg
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    Thanks for your feedback Anne.
    The business has been closed for about 2 months. The previous owners had some financial difficulties due to unrelated family troubles that prevented them from continuing. As a result we are purchasing the equipment directly from the landlord and have no access to their books to gauge sales and expenses. As a result forecasting these figures involves a fair degree of uncertainty.
    Cheers,
    Brad

    #1103130
    Bigegg
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    Thanks for your feedback Anne.
    The business has been closed for about 2 months. The previous owners had some financial difficulties due to unrelated family troubles that prevented them from continuing. As a result we are purchasing the equipment directly from the landlord and have no access to their books to gauge sales and expenses. As a result forecasting these figures involves a fair degree of uncertainty.
    Cheers,
    Brad

    #1103061
    Past-Member
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    Try adding your rent, insurances, wages, taxes, licences, business registration fees, superannuation, work insurances, electricity, supplies etc and estimating a minimum weekly amount. That is your minimum amount but you need to make a profit and put some funds away for unknown costs, taxes etc. Then work out how much you expect to earn in a week. That should let you know if it’s worth it because your savings will go very quickly. $30K over 26 weeks is approx $1150. I would not think that would be enough if you had no earnings or customers. Can your accountant find out what their average running expenses were?

    All the best.

    #1103132
    Past-Member
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    Try adding your rent, insurances, wages, taxes, licences, business registration fees, superannuation, work insurances, electricity, supplies etc and estimating a minimum weekly amount. That is your minimum amount but you need to make a profit and put some funds away for unknown costs, taxes etc. Then work out how much you expect to earn in a week. That should let you know if it’s worth it because your savings will go very quickly. $30K over 26 weeks is approx $1150. I would not think that would be enough if you had no earnings or customers. Can your accountant find out what their average running expenses were?

    All the best.

    #1103063
    MatthewKeath
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    KarenC, post: 114609 wrote:
    That is your minimum amount but you need to make a profit and put some funds away for unknown costs, taxes etc.I think this is important. What happens if the coffee machine dies, or some other vital piece of equipment. You need to have some money in the kitty for unexpected expenses.

    Good luck with it all.

    #1103134
    MatthewKeath
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    KarenC, post: 114609 wrote:
    That is your minimum amount but you need to make a profit and put some funds away for unknown costs, taxes etc.I think this is important. What happens if the coffee machine dies, or some other vital piece of equipment. You need to have some money in the kitty for unexpected expenses.

    Good luck with it all.

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