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  • #16
    Purchasing an already running cafe

    Me neither. There are plenty of good tips up here though. The more the better - just reading and contributing to this post increases the overall body of information. Good reading and info in here - including yours.

    I will continue reading this post with interest.
    Rgds, Mariner.

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    • #17
      Depending on the structure of the business, it can be quite normal for the owner of a small business to pay themselves a salary.

      if they're a sole trader, then it's irrelevant, all profits are directly theirs, assuming the business is small enough to avoid payroll tax.
      If it's run through a trust then they can pay themselves a wage but they'll have to pay super on it, which isn't a problem if they want to contribute to super in the first place, but why restrict yourself in this way.
      Similarly if run through a company, but legal minimum wage can be a consideration.

      Generally speaking, it's far more effective for an owner of a business that's run through a trust or company to pay themselves out of net profits, which gives them more options in terms of tax, especially if they can distribute the profits to family members via dividends or trust distributions. However one of the downsides of this is the way it looks if you need to apply for a mortgage, loan, etc.

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      • #18
        I know of café owners who siphoned off some of the takings without putting it through the books. When they went to the bank for a load, the bank refused them as the books told them they would be unable to repay a loan.

        Barry

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        • #19
          I spoke to an economics professor who suggested the black economy was about 30% of GDP I would imagine that a coffee shop would have potential for this.

          Eventually one way or another people (even business owners) want to be rewarded for their efforts.

          What is the best way to do this may be beyond the scope of this forum but warm fuzzy feelings wont pay the bills or even keep your partner happy.

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          • #20
            Purchasing an already running cafe

            That means a business is not viable or not run properly then. Everyone is required to pay their fair share so that we can all have services and a standard of living that we take for granted.

            Getting back on topic, I would not buy a business that was not capable of turning an honest profit......I would not risk my money on such a venture.

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            • #21
              Purchasing an already running cafe

              Originally posted by Mariner View Post
              Getting back on topic, I would not buy a business that was not capable of turning an honest profit......I would not risk my money on such a venture.
              A business that isn't turning a profit, honestly or otherwise, may still be ripe for a turnaround. A seller of a badly-run cafe that's in a great location might just present a great opportunity to turn it around.

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              • #22
                Purchasing an already running cafe

                Too true about the business Johnathon, It may be a juicy piece of low hanging fruit, ripe for the picking, i really don't know. Speaking for myself, I would want to be very sure of what I was doing (as well as experienced at it) before I undertook to invest a lot of hard earned and/or high interest owing money on such a venture. Depends on how good you are and what level of risk you are comfortable with of course...I still believe that people don't sell gold mines that are still full of gold all that often.

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                • #23
                  Hard to break the bad news but someone else got in before me. Apparently they'be bought a roaster and will be roasting their own house blend, hopefully they know what they're doing.
                  Thanks for all the comments though.

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                  • #24
                    Bummer... but at least you now have some good ideas about how to approach things next time. Maybe make a checklist or similar so you can walk in and get due diligence done quickly?

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                    • #25
                      Re: Purchasing an already running cafe

                      I don't work in the cafe business but do own a supermarket with my brother.

                      The one key mistake a lot of first business owners make is being prepared to work. My business is open 365 days a year and there isn't one day in that year that my brother or I aren't there. A lot of people buy businesses thinking they're going to sit back and watch staff bring the money in. These days it just doesn't work like that.

                      This is also the reason I would never purchase a franchise.

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                      • #26
                        Originally posted by prloring View Post
                        Hard to break the bad news but someone else got in before me. Apparently they'be bought a roaster and will be roasting their own house blend, hopefully they know what they're doing...
                        Aha, another ACME instant coffee roaster, buy a can of, add water and whalla.....

                        And its possible they've done you a favour......a very big one.

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                        • #27
                          Considering the economic climate it seems likely that there will be lots of other businesses for sale.

                          you never know this business may be for sale again soon.

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                          • #28
                            Be careful when buying a café. I've just sold mine, so I can speak from experience of buying and selling a café.
                            Don't let your emotions influence whether you want the café or not.

                            Here is the process I went through on deciding which café to buy:

                            http://selfavenue.com/how-to-buy-a-cafe/

                            good luck!

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                            • #29
                              advice guidance

                              Hi i just seen your post and im woundering if you would be able to help with some info. Im looking at buying a cafe and not entirly sure what is involved ie who do i need to have solicitors lawers accountants ect. I also have the added challenge of being out of location being a serving member of the adf my intention is to leave defence and chase my dream of owning and running a cafe any advice would be muchly appretiated



                              93379]Hello,
                              I have been in the industry (chef) for 20 years now and have owned 3 bussiness. My wife and I have just bought a small run down cafe/ milkbar to build up. I can tell you of the many pitfalls first time owners get caught out with. Ok the lease is number 1 what are the terms? Rent will be one of your biggest outgings and will be the first thing you fall behind in if your not makeing money. Are you going to serve food? Heath inspections when was the last one done are there any out standing issues is there a food safty program is there a food safety superviser? If you are serving food you might need a grease trap you will need to know if there is one if not you could be up for big $$$$ depending on local laws. Equipment who owns what is anything leased usualy coffee meachines and grinders belong to the coffee brand being used not the cafe owner. if any equipment is leased there will be pay out figurs which are usualy over priced and not worth owning. Staff If you are taking over a cafe with exisiting staff and you have no experince beware these guys will know your green and walk all over you. You will come up agenst thing like "we've never done it this way before" generaly it's cheaper and easier to start from scatch with staff. You will need a good lawyer he or she will be more of a guide to the take over and make sure you don't loose your shirt. If you would like to have a chat please PM me your phone number and I can go into detail on more points you might find help full[/QUOTE]

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                              • #30
                                I would suggest work for someone in the industry and get some hands-on experience first and ensure it's really what you want to invest your hard earned money on.

                                New business (new owner) café failure rates are high

                                GrahamK
                                Last edited by GrahamK; 6 May 2015, 05:51 PM.

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