Why Buy a Business?
Have you ever wondered why people buy a business? Why don’t they just launch their own?
“An existing business has a track record. The failure rate in small business is largely in the start-up phase. The existing business has demonstrated that there is a need for that product or service in a particular locale. Financial records are available along with other information on the business. Most sellers will stay and train a new owner and most will also supply financing. These last two are important considerations. Finding someone who will teach you the intricacies of running a business and who is also willing to finance the sale can make all the difference.” – Bob Dowdy, Founder of NRP
Buy a Business & Save on Time, Money, & Energy!
This was true 20 years ago–is it still true today? From NRP’s perspective, there’s nothing in the above excerpt that doesn’t still hold true. It seems that some people are more suited towards buying an ongoing business, and others towards leasing (aka starting from scratch).
If you are a first-time restaurant owner or worked in one extensively, then buying an ongoing business is the best bet. You’re walking into an opportunity that has everything in place.
Have you ever sat down at a restaurant and enjoyed some of the best chicken wings of your life? Maybe there was a secret sauce on your favorite sandwich at the local deli. When you buy a restaurant, you are also buying the recipes. That’s right, you now own the secret sauce. A flushed out menu with established fan-favorites can save time on creating one from seed.
Save on Build-out Costs
So you find the perfect property, then you realize there’s a wall that needs to be knocked down in order to put in a serving counter. There’s no hood, no grease trap, and countless other steps that need to happen before you can even think about opening your restaurant. When you buy a business, all of that is taken care of saving you an exponential amount in these overhead costs.
You can be the new restaurant in town without having the same stigma as the new kid in school. By taking over a business that’s been operating for years also offers years of loyal customers. Iconic city staples, well-loved local pizza shops, everyone’s favorite coffee shop, (etc.) have already built lasting relationships that a new owner can take on & continue to expand!
Vetted Sales History
Sometimes what we think is super cool doesn’t always land with the greater public. If you buy a restaurant that’s already in business you get to see how the sales have been throughout the business’s history. What a great advantage when jumping into a new adventure! Sales, cash flow, P&L’s (etc) are huge financial components to a business so having those numbers from the start is huge.
Maintained Vendor Relationships
Did you know that not all the things you see in a restaurant are owned? A restaurant business more than likely has vendor relationships already in play so that knocks another thing off of your to-do list. Some typical pieces of equipment that are vendor-owned include:
- Ice machine / soft-drink machine
- POS system and/or credit card processing machine
- Coffee & tea machine
Are you thinking about selling your restaurant?
Lease in Place
Lock in unbeatable rent for the first five (sometimes even 10-15!) years of business by buying a restaurant with a lease in place. In a fast-growing area like the Charlotte Metro, buying a business with a lease in place can land you in a prime location without worrying about inflated rent or extensive lease negotiations.
Start a Business & Lease a Property
If you’re an experienced operator, you have more options. You are able to lease or purchase property or buy an asset sale for a quick conversion. When you have a business running, you don’t require the concept in place, because you’re coming to the table with your own!