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  • #992790
    cafe_guy
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    Yes, another cafe thread by a new member! I’ve read lots of existing threads on this topic, and I notice most of the people fade away with 2-3 posts.. not a good sign perhaps. I’m hoping not to do that.

    Anyway I’m not asking people to repeat all the same info, which I’ve been reading over and taking in. So I’ll try and keep to my situation.

    Firstly me.. I’m pushing 50, fit and healthy, married (wife works, low earner) with late teenage kids. Have never worked in food/hospitality or anything similar (last 20 years as a professional). The mortgage is nearly gone so have decent equity (although going backwards until I sort this out!). I’m not overly outgoing so networking is not my greatest skill, but am not an introvert either (my partner is more the extrovert).

    What I want (ideal world) is a small-ish street cafe in a suburb near my home (for familiarity and travel time), pretty traditional, nothing trendy or pretentious, focus on coffee. I don’t intend to change the cafe world. I love coffee, have had a decent machine at home for years and recently completed that barista course I’d always been wanting to do. I’d like to take over an existing cafe that’s been trading for 3+ years with good business and hopefully not mess it up. Ideally a 5-day business that could grow to 6 or 7. No big plans initially, but as I gain confidence I’d like to tweak things here and there.I’m not sure which role I see myself in just yet. I’m thinking under $200k purchase price. Rose tinted glasses now off!

    I’m currently reading/research (aka procrastinating).I have Craig Reid’s book “The complete guide to buying a cafe” (I’ve seen him posting on here in the past) and I do think this has some sound practical advice (like get the accountant and solicitor organised first; do due diligence; questions to ask the owner, etc.). I’ve spoken to my regular accountant and he says he can help check out any financials. He didn’t laugh when I mentioned it, so that’s good, and he even gave some advice. He’s just my regular tax accountant, not sure if I should get someone more specific to this kind of thing.

    Some good advice I’ve heard is to get experience in a cafe. Sounds great, but I’m not sure that would be viable for someone my age and lack of experience. I’d be happy to work for free for a week washing dishes just to get the vibe of a cafe (not sure if that’s actually legal but anyway).

    I also have no business/accounting knowledge, but I’m good with figures and don’t mind taking a course to learn up. I’m technologically savvy.

    I’ve looked at ads on Domain business, Cafes-for-sale, etc. I even enquired about 2 from Domain and got no response! Don’t they want to sell, or is the agent just lazy (my bet)? I didn’t call, I emailed. If I was the vendor I wouldn’t be happy. Some ads say “just listed” and they’re a month or more old. They also don’t seem to change much.

    So questions.. am I being overly optimistic in finding such a cafe? Should my next step be to organise a solicitor or maybe get some business advice/mentoring? Maybe do more groundwork before then, getting some actual financials? As long as I do due diligence and get the financials checked out, am I reducing my risk considerably?

    Thanks for making it this far and looking forward to any input :)
    TJ

    #1188162
    GuestMember
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    Welcome TJ. I love it when people talk coffee. Although I never drink tea and coffee, I absolutely love the smell. That was a nice introduction and I wish you every success.

    I think general business advice is good. Getting an advisor or mentor in your industry might be even better as they’ll know it specifically, especially if you can find one aligned with your desires and values.

    I think you will need a solicitor to look over the contract. If you’re certain you’re doing it, and it is just a matter of time, you might start digging that well before you need water, and meeting some to find one to work with. They all have different areas of expertise, so you’ll need one in this field.

    As for agents, I don’t know enough about that to be useful. What I do know is that since moving to Australia, I’ve been gobsmacked at how many of my emails have been ignored. A startling number of businesses here just don’t seen to want custom.

    Here on the Sunshine Coast I’ve had that with tradies, upholstery retailers, even a second hand van company that I was about to spend $26k with. I just don’t get it. In the UK, nearly every business would respond same day or within 48 hours max. They’re throwing money down the drain.

    #1188163
    cafe_guy
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    Thanks for the quick response Paul. Coffee is one of those things isn’t it.. almost universal appeal. Notes taken.. I’ll get onto a solicitor and consider a mentor. I reckon I could make do myself, but I’d kind of like to get things moving.. Christmas is coming all too soon.. and perhaps a business advisor/mentor could get me going quicker.

    And agreed about finding tradies who actually want your custom! We contacted multiple fencing contractors recently before we got one to bother even coming out and give a quote.. must be making far too much money to be so picky :)

    #1188164
    GuestMember
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    You’re welcome. Most people find mentors really useful. Richard Branson sought advice from Freddie Laker – and valued his advice even though Freddie’s airline business failed, because of the lessons learned. You could consider joining coffee shop groups on LinkedIn and Facebook as well.

    #1188165
    bb1
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    Paul Peace, post: 220578, member: 54653 wrote:
    In the UK, nearly every business would respond same day or within 48 hours max. They’re throwing money down the drain.
    Interesting, In the last month I have sent 12 emails to business’s in the UK, to date 2 answers. I don’t think it is just an Oz thing.
    #1188166
    GuestMember
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    Obviously not just an Oz thing but in my experience it is worse here. It may be different in different industries but I can’t see any finer grain pattern to it. I think they’re all down at the beach here on the Sunshine Coast.

    #1188167
    jamin
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    cafe_guy, post: 220572, member: 70754 wrote:
    So questions.. am I being overly optimistic in finding such a cafe?

    It’s realistic, cafes sell all the time. it’s a matter of whether it’s worth buying. you can either look for a growing & profitable business and try to maintain it or find an underperforming business (assuming it has a good location) and turn it around. Or start from scratch, which can often be the cheapest option (it certainly can be done for less than $200k)

    cafe_guy, post: 220572, member: 70754 wrote:
    Should my next step be to organise a solicitor or maybe get some business advice/mentoring?

    I recommend getting advice on the lease from a lawyer that specialises in retail leases – getting the lease wrong can have a big impact on profitability and resale value.

    Hands-on experience is important. I don’t know of many cafe owners that wouldn’t accept some free labour… just let them know what you’re planning and make sure it’s in a different part of town

    cafe_guy, post: 220572, member: 70754 wrote:
    As long as I do due diligence and get the financials checked out, am I reducing my risk considerably?

    There’s obviously a lot to look out for. Try to find out how much the existing owners are actually working in the business. You may not want to work 70 hours a week to break even.

    #1188168
    cafe_guy
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    jamin, post: 220646, member: 69488 wrote:
    It’s realistic, cafes sell all the time. it’s a matter of whether it’s worth buying. you can either look for a growing & profitable business and try to maintain it or find an underperforming business (assuming it has a good location) and turn it around. Or start from scratch, which can often be the cheapest option (it certainly can be done for less than $200k)

    I recommend getting advice on the lease from a lawyer that specialises in retail leases – getting the lease wrong can have a big impact on profitability and resale value.

    Hands-on experience is important. I don’t know of many cafe owners that wouldn’t accept some free labour… just let them know what you’re planning and make sure it’s in a different part of town

    There’s obviously a lot to look out for. Try to find out how much the existing owners are actually working in the business. You may not want to work 70 hours a week to break even.

    Thanks for the tips. Among other things, you’ve got me thinking that starting from scratch might at least be an option. And yes I’d like to keep a sane amount of hours per week if possible. (I’m sure a lot of cafe owners are shaking their heads at this point..)

    So I’d like to find a mentor/coach, perhaps I’ll check out the directory on here. It’s not exactly entrepreneurial or cutting edge stuff but I’d love to get some help and cut to the chase.

    #1188169
    Andy_K
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    cafe_guy, post: 220647, member: 70754 wrote:
    Thanks for the tips. Among other things, you’ve got me thinking that starting from scratch might at least be an option. And yes I’d like to keep a sane amount of hours per week if possible. (I’m sure a lot of cafe owners are shaking their heads at this point..)

    So I’d like to find a mentor/coach, perhaps I’ll check out the directory on here. It’s not exactly entrepreneurial or cutting edge stuff but I’d love to get some help and cut to the chase.

    You could also look at buying a cafe under management so you can work the hours you want, get experience at the same time and not lose customers in the process. Will cost a little more but may de risk the investment.

    #1188170
    cafe_guy
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    Andy_K, post: 220694, member: 70643 wrote:
    You could also look at buying a cafe under management so you can work the hours you want, get experience at the same time and not lose customers in the process. Will cost a little more but may de risk the investment.

    Thank you, sorry for the delay. Good suggestion, I have seen ads for cafes advertised as under management. I guess with less risk comes more cost in wages? I’d like to know more about this is you have any more insight or personal experience. Is this a topic to discuss with an accountant or mentor/coach?

    PS: any mentor/coaches (and/or accountants with cafe experience) on the site who are interested in taking me on, please contact me to discuss.

    #1188171
    Andy_K
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    cafe_guy, post: 220807, member: 70754 wrote:
    Thank you, sorry for the delay. Good suggestion, I have seen ads for cafes advertised as under management. I guess with less risk comes more cost in wages? I’d like to know more about this is you have any more insight or personal experience. Is this a topic to discuss with an accountant or mentor/coach?

    PS: any mentor/coaches (and/or accountants with cafe experience) on the site who are interested in taking me on, please contact me to discuss.

    Hi cafe_guy,

    The only personal experience I have is that I am looking at buying one atm. I am only looking at under management because it is too late in my life (looks same personal circumstances as you, to a T) to get all the experience required in a short time. If you are the owner you can work, train, observe, earn and plan all at the same time. Build your skills over time without wrecking the business and you can tweak as you see fit. A business running under management and turning a reasonable profit is doing something right so you don’t need to change too much too soon. Gain the confidence of your staff, help them and they will help you. Eventually you can increase your hours and decrease staff wages if that is what you want. Or keep the workers and you work on the business rather than in it.

    Not suggesting this is the best way to go, just what appealed to me and my thought processes.

    Understanding of Balance sheets/P&L/Cashflow/ratios is critical though imo.

    Good luck

    #1188172
    jamin
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    Agents say a lot of things… it is rare to find a genuinely profitable ‘under-management’ cafe

    not saying you have to work crazy hours, but it would be sensible to add a healthy contingency to the numbers you’re being given.

    #1188173
    cafe_guy
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    Thanks Andy_K, appreciate the input. I’d like to keep comparing notes :) It does appeal to me also, of course if the figures work.

    jamin, thanks. I have a heavy natural scepticism so I will look at ‘under management’ cafes with extra care. Appreciate the comment!

    #1188174
    3ntr3pr3n3ur
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    Hey TJ,

    Have you considered a partnership?

    I like the concept of approaching an already successful cafe owner/entrepreneur and suggesting a partnership in your new venture.

    Even if you were to offer a free equity stake (say 25%) in your new venture just to get him on board, it would pay dividends almost immediately.

    Imagine starting from scratch with a $100,000 outlay, but with all the hands-on input of a successful cafe operator (whom has a vested interest in seeing your joint venture succeed). Within 12 months you could argue the value of the cafe could equate to, or exceed, $200,000….

    I’ve certainly considered this approach in other industries and am convinced it’s the way I will enter some random venture in the future.

    Wishing you well TJ…!

    #1188175
    cafe_guy
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    3ntr3pr3n3ur, post: 220842, member: 57743 wrote:
    Hey TJ,

    Have you considered a partnership?

    I like the concept of approaching an already successful cafe owner/entrepreneur and suggesting a partnership in your new venture.

    Even if you were to offer a free equity stake (say 25%) in your new venture just to get him on board, it would pay dividends almost immediately.

    Imagine starting from scratch with a $100,000 outlay, but with all the hands-on input of a successful cafe operator (whom has a vested interest in seeing your joint venture succeed). Within 12 months you could argue the value of the cafe could equate to, or exceed, $200,000….

    I’ve certainly considered this approach in other industries and am convinced it’s the way I will enter some random venture in the future.

    Wishing you well TJ…!

    Thanks, no did not consider it. My business acumen is fairly low, but I’m a quick learner. I’m willing to consider any viable option, perhaps I’ll put it to my accountant. Although, my aim is a less entrepreneurial, more low-risk approach and perhaps would not be all that interesting for a partnership (but I guess the bottom line is if the numbers made sense..).

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