When you’re on the cusp of buying a restaurant, it can be an exciting time. And you’d hardly qualify as a would-be restaurateur if your head wasn’t full of food trends, recipes, presentation, cool interiors and more. But there’s a range of less-motivating tasks you’ll also need to nail down if you want to realize your dream purchase anytime soon.
It’s a list of items whose importance to your future business prospects can easily be underestimated when your head is spinning and you’re full-on anticipating that moment when you can celebrate your achievement.
So, take a moment to check out this list of mistakes to avoid. If you can stop from making them, it could be all the difference to how things turn out.
1. Neglecting to have a detailed business plan
You know what you want to do, so why bother with the detail? There are lots of reasons. You will need a detailed plan to make sure you don’t overlook something of crucial importance. It’s also a document which can explain your concept to other people you will have to consult along the way. It can make it easier to decide practical things like how many staff you may need to hire.
With the help of an efficient business broker, a business plan can also force you to sit down and think through things like your marketing strategy. And perhaps most important of all, it will help you to quantify how much the whole project will cost, and give you a much clearer idea of whether you can afford the plans you have in mind.
Remember, too, that a great business plan is often one of the first steps towards getting other people to treat you like a professional and take your ideas as seriously as you do.
2. Not performing thorough due diligence
You adore the café setting, you like the people who are selling up, there’s even space to expand when you’re ready, so in your mind you’ve bought your dream business already and you can’t wait to get started.
Your gut feeling may be absolutely inspired, but due diligence is there to remind you that you ignore practical considerations at your peril. What about the footfall you can expect for a property so far out of the city? Have you read about the surge in the crime rate for that neighborhood? And have you asked (or even wondered) why that nice couple want to sell such a great looking business at a knockdown price?
It’s natural that you need to feel an emotional commitment to any potential new business. But it’s not at all smart to let your enthusiasm blind you to potential obstacles which may eventually undermine your own business plans.
That’s why an experienced business broker can give you independent professional guidance, especially if you’re going to need a lawyer and/or maybe some help with understanding the financials.
3. Failing to secure funding
If you need funding, it can be tough when you’re starting out in the food business. But at least you’re looking at taking on an established restaurant, which is far easier to finance than any start-up. However, as your broker is sure to inform you, things like a thorough due diligence and a detailed business plan could make all the difference to whether or not you satisfy the stringent lending criteria and are able to raise the finance you need.
Be aware that your broker’s experience will not only help you present your application in optimal fashion, it will also ensure that you go for the best loan terms you can get – something you will really appreciate further down the line.
4. Not negotiating the price
How many times in your life will you negotiate a restaurant purchase? This may be your only chance to experience this situation, and it’s not really the time to be learning on the job. So once again, provided you choose a business broker who has a good experience of your chosen sector, there’s no one better suited to the task of representing your interests and sealing a deal you can be happy with.
And what’s more, you can trust a broker to also negotiate the deal peripherals to your very best advantage so you never get the feeling that you’ve walked away leaving some important things on the table.
By Bruce Hakutizwi, Director of North America for BusinessesForSale.com, the world’s largest online marketplace for buying and selling small and medium size businesses.