Being given a great opportunity
I have been offered a five year deal to buy an existing cafe I am currently managing. This August will be my second year as a manager there and just tonight, the ownership asked my wife and I (newlyweds as of 6-12-10) to purchase their investment. They gave us a very sweet deal, knowing we do not have any real capital to our names, as they do not plan on owning the shop forever. WE ARE THRILLED!!!
The plan is this:
We are given 95% control over the business for a year, starting September 1. On that day, a record of the business checking account is made, and over the next year, it is my job to make an increase in savings to use toward purchasing. Basically, any dollar I keep in the account that is over the starting balance is ours to reinvest in purchase. I will still be paid a salary, and in the end, if I can't realize any new capital, then the only loss I experience is the year I worked my ass off to try this proposal out. That I can hang with. Now, my challenge is to identify areas that cause unavoidable waste or lose money. I get full control of the advertising, marketing, and product line, in addition to my full control of scheduling, purchasing and training.
Anyone want to come work for me in the next 4 years?? ;) I think it will be a GREAT TIME!!
Any ideas (I already have a few of my own) of places to look for waste/cost reduction??? Overall, I am SO FREAKING EXCITED!! This is the realization of one of my life's big goals. To own a successful coffee shop with a great customer base and the freedom to make it all the way I want.
Now, all I really want to do is make sure I can perform at this level. I am going to lean on some of you fine folks here on bX for support. Any ideas?
Thanks.
ART
Replies to This Discussion
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Permalink Reply by Mike McGinness on
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What does 95% control mean? What does the remaining 5% control mean? What is the business structure: LLC, Corp, Sole Proprietorship or ? What's the asking price? What's last year's Gross & Net? Why do they want to sell? What are the business's current assets and liablilities? Location/building owned or leased and what terms? If lease is it assumable? Are you executing an Option to Buy or Contract Purchase or what? Are you buying the business or just trying it out? What's to stop them from selling to someone else should they receive an offer? If your ass isn't fully on the line what's to stop you from walking away if finding out ownership isn't just a GREAT TIME but could mean 12 to 16 hour days 7 days a week?
Not saying don't go for it. I am saying go for it all in, or don't go for it at all. Buy or buy not, there is no try:)
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Permalink Reply by James Druschke on
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Where is it? What city?
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Permalink Reply by Andrew R. Tucker on
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95% means that I have access to all the credit/checking accounts, pay all the bills, complete payroll and get sales tax figures to our book-keeper; where only now I submit invoices, submit payroll totals, submit tax information totals, and pay no bills personally. The only 5% that I don't have complete control over would be drastic changes to the setup, layout or large purchases, which would only need be discussed with my direct bosses and myself before any big action is taken. The business structure is Incorporated, and there is no set asking price yet. I have a ballpark figure of what the four owners invested totally, (under 180K) and have a good idea of what our lease agreement is with the building owner. Now, this was just a first introduction to the possibility of ownership, and I have some time to think about it, and I know that as far as they are concerned, the business will not (in 5 years) go on the market. The owners are phasing out their ownership because they are all professionals, have jobs that support them and their families, and spend next to no time in the shop itself, because of the above obligations. They identified the manager position as one that would keep the business in good working order at all times, and since they are not working everyday, the manager (me) gets paid what would see as profit instead. This was the model from day 1. They all realize that they don't want to own a shop for the rest of their lives, they only opened it because they saw a market in our town that wasn't being served. Now that there is an extensive support system of great customers and vendors, they see this as an opportunity for me to take the reins.
As far as my commitment, I am all in. My workdays will extend considerably, but the payoff is very large.
Thanks for the comments, Mike. I'll post more as time allows.
miKe mcKoffee aka Mike McGinness said:What does 95% control mean? What does the remaining 5% control mean? What is the business structure: LLC, Corp, Sole Proprietorship or ? What's the asking price? What's last year's Gross & Net? Why do they want to sell? What are the business's current assets and liablilities? Location/building owned or leased and what terms? If lease is it assumable? Are you executing an Option to Buy or Contract Purchase or what? Are you buying the business or just trying it out? What's to stop them from selling to someone else should they receive an offer? If your ass isn't fully on the line what's to stop you from walking away if finding out ownership isn't just a GREAT TIME but could mean 12 to 16 hour days 7 days a week?
Not saying don't go for it. I am saying go for it all in, or don't go for it at all. Buy or buy not, there is no try:)
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Permalink Reply by Southeast Grind on
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What a great opportunity on your hands! I do hope that you will share your experience along the way because I am very interested in doing something similar myself in the future. I currently own my coffee shop but love the idea of creating an opportunity for someone who doesn't have the financial means to buy their own shop but is willing to put in the sweat equity. As the owner, I'm looking for ways to cut down waste and control costs always so we can share ideas!
Congratulations!
K
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James,
The business is in a small college town in north Idaho.
It is very well connected to it's community and has a great following. As far as specifics, Im going to leave that up to anyone else to figure out ;)
James Druschke said:Where is it? What city?
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Permalink Reply by Jeremy Perrine on
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Do you know Adam Naranjo?
Andrew R. Tucker said:James,
The business is in a small college town in north Idaho.
It is very well connected to it's community and has a great following. As far as specifics, Im going to leave that up to anyone else to figure out ;)
James Druschke said:Where is it? What city?
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I don't know...I know a few people named Adam, but I'm not sure of their last names... Its quite possible.
ART
Jeremiah Perrine said:Do you know Adam Naranjo?
Andrew R. Tucker said:James,
The business is in a small college town in north Idaho.
It is very well connected to it's community and has a great following. As far as specifics, Im going to leave that up to anyone else to figure out ;)
James Druschke said:Where is it? What city?
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I will be sharing my experience along the way, for sure. It is a road I have never traveled, and am excited to see where this takes me. It's a big step for me, but I have wanted to be in this position for several years now. This job fell into my lap, thanks to some good connections, and now I know why.
Southeast Grind said:What a great opportunity on your hands! I do hope that you will share your experience along the way because I am very interested in doing something similar myself in the future. I currently own my coffee shop but love the idea of creating an opportunity for someone who doesn't have the financial means to buy their own shop but is willing to put in the sweat equity. As the owner, I'm looking for ways to cut down waste and control costs always so we can share ideas!
Congratulations!
K
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UPDATE:
I have accepted the offer. Now what?
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Permalink Reply by Lisa Kettyle on
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Hey there,
How much of these responsibilities are you already fully involved in? I would advise spending the next few months learning everything from COGS spreadsheets to taxes. : )
Awesome opportunity!!!
Ways to pinpoint loss quickly:
OT - no OT for folks
Labor - varies shop to shop Ours is set at 28%
COGS - Make sure your COGS are between 30-33%
Inventory - very detailed inventory once a month, minor inventory weekly with orders
Maintenance - Get every single piece of equipment on a maintenance schedule. It costs way more in the long term.
That's my sage advice. I hope it helps. Best of luck to you and your wife! It sounds like a really great opportunity for you guys.
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I responded below, but want to add to what I typed. I would highly recommend reevaluating every vendor annually.
Start keeping a hawk's eye on milk cost, as these prices fluctuate and sometimes they'll sneak in extra costs you can avoid simply by having a good relationship w/ your vendor.
I've learned LOTS in my current position, as the owner does not work in the shop or handle business. If you have any questions about taxes, payroll, purchasing, COGS, spreadsheets, and keeping positive, let me know. : )
Good luck!
Andrew R. Tucker said:UPDATE:
I have accepted the offer. Now what?
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