Buying A Business in Scotland?

[Big Tav]

Hi guys,

I am new to the UK and it's time to get a job...or so I thought. A quick look on the web and I have seen some great small businesses for sale. I like the idea of a Coffe/sandwich shop or a newsagent or Post Office type of business. I want to be able to at least replace my income from working for BMW. It would need to pay me about £40,000 to be worth it I would say.

I am in Edinburgh so would consider something in Edinburgh or Fife area. I do have a fair bit of money up my sleeve but it was originally to buy a house and maybe an investment flat in the city.

I have thought it might be better option to buy a small business with my wife instead of the flat and do it that way. I have run my own building business in Australia and then sold cars for a few years. The only thing is that I am unfamiliar with UK tax laws, Leasehold Vs Freehold (I know what that means just unsure of what it's worth) and I am worried I won't spot the potential traps.

One question I have from the Ads for sale is about the Rateable Value. This is what a couple of ads say:

Leasehold. Current lease expires 2018. Rent is £14,000. Ratable value £7,450.
Leasehold. Rent 22,500 per annum. Current lease expires in 2019 with a break clause/rent review in 2016. Rateable value £17,400.

Some businesses even say it qualifies for 100% rate relief.


One other question is about Net Profit. If the owners are stating a £200,000 Gross Turnover with a Net profit of 25% one would presume that after all costs you are left with £50,000 correct? It his before or after you have paid yourself? I mean some coffee shops are run say a husband and wife team (or a Manager) with a couple of part time employees. Would that £50,000 be what is left to pay the owners or have their wages already been taken into account? In theory could you pay a Manager instead and have 50k or would their wages be from the 50k.

Sorry for all he questions but I want to go in with my eyes WIDE open. Any obvious traps or scams I need to watch out for? Cooking the books etc?

Cheers,

[stugster]

Business Rates (also known as "non-domestic rates") are calculated based on the Rateable Value of the property. Useful website here: http://www.scotland.gov.uk/Topics/Government/local-government/17999/11199/brief-guide

Coffee/Sandwich shop would be a lot of hard work, but if you do it right, you can make a killing on the coffee sides of things.

Make sure you do your due diligence when looking at the businesses. Some business owners might sugar-coat their turnover/profit margins to get a sale through.

The problem you have with "net profit", "gross turnover" is that those that are using the terms are just as likely to make a mistake in their understanding of them. The only way to know for sure what the numbers are is to look at the published accounts (if they don't have any, at least the abbreviated accounts submitted to CH).