Business start up advice needed

[Jenjen23]

Hello,
Myself and my husband have seen an opportunity to purchase the leasehold of a successful bakery in my town, however I have no idea how to go about the purchase/funding etc.

I will try to give you some helpful info:
Well established and reputable concern.
Turnover approx. £127,000 per annum with net profit approx. £43,000 per annum.
£39,950 leasehold
£14,000 rent per annum
We understand that the premises are offered with the benefit of a new lease, the length of which is negotiable.

We have about £5,000 to our name, do not own any property etc and as you can probably tell have never run our own business either! All advice and suggestions welcome.
Thank you.

 

[Scalloway]

Do you have any experience of working in a bakery?

 

[Jenjen23]

my husband is a chef and so knows the basics.

 

[James1974]

It's always interesting to see people wanting to start new ventures. You could apply for a bank loan but often that would require a loan to be secured against assets such as property so you may struggle unless you can demonstrate to the bank that you have a strong business plan. If you have salaried jobs at this present time then it may be possible to get a loan for the amount required before putting your attention into running the business.

To be honest though if you have no experience of running a business or more importantly in running a Bakery which isn't an easy operation to run I would stay clear of that purchase. In terms of numbers you may be better off finding an easier route with less initial investment. Start small and grow organically. £43k pa profit sounds a nice start but that doesn't take into consideration that you will split that between two people and of course some of your early mistakes could significantly hit your margin. Just my thoughts but everyone has to take a leap sometimes too.

 

[Clinton]

What is the purchase price?

And how was the profit calculated i.e. do the owners underpay themselves for their own labour in order to show a higher profit figure (as is common with small businesses)?

 

[Jenjen23]

It's £39,950. It's a father and son running it although the father is now semi retired and they have 1 full time member of staff and a couple part time with a wage bill amounting to £30,000 per annum although if a husband and wife/family team were to take over this could be reduced considerably.

 

[Scalloway]

If you buy the business you will have to take over the existing staff.

http://www.acas.org.uk/index.aspx?articleid=1655

 

[Clinton]

£30K doesn't cover the cost of one full time member, a couple of part timers AND a full time owner.You need to re-calculate how much profit this really is making.

I.... although if a husband and wife/family team were to take over this could be reduced considerably.

No, it doesn't. Don't make the mistake of thinking your time is worth nothing.