Hospitality Conversions – Value in Buying an Existing Business

There is real value in buying an existing hospitality business that may not be performing, for you to convert into your dream business.

Have an Idea

  • What is the product or service?
  • Write a Business Plan.
  • Have a clear idea of your branding.
  • Who is your target market? Are they being serviced successfully.
  • Will it work in the existing business location and space?
  • Will you need to apply for further consents/ licenses? It may be currently run as an unlicensed café and you would like to convert it to a restaurant. What would the Council require you to do?


Make a Plan

  • Have a detailed start-up budget, ask different professionals in the hospitality industry to help guide you – always shop around and remember commercial equipment can last over 10 years verses domestic equipment.
  • Buying an existing hospitality business, can reduce timelines, Council consent processes and expensive set-up costs, such as grease traps, extraction hoods, the number of toilets required.
  • Look at the reasons why the existing is not preforming; offerings, cash flow problems, bad management, dated or location?
  • Write a cash flow with at least three different scenarios on turnover; fantastic/good/bad.
  • Look at both successful and unsuccessful businesses in similar concepts, why do they work or not work.
  • Know your industry KPI’S (Key Performance Indicators). This is where it is beneficial to be a member of Hospitality Associations and talk to your local specialist business broker who will have an understanding of current guidelines.
  • Have a good amount of working capital – expect not to make profit for the first couple of months.
  • Use your Specialist accountant or mentor to keep you on track for the first year or two, and do this by having monthly or bi-monthly meetings about the business. Remember the plan.


Reality – Open

  • Open when you are ready, soft openings (no marketing) are a great way to iron out kinks before you get too busy!
  • Weekly tracking of your KPI’s. Don’t wait for the accountant to tell you how much money you have made, or worse, lost.
  • Set up a GST account – it’s not your money to spend.
  • Refer back to your cash flow and business plan regularly.
  • Keep in touch with your business broker for regular appraisals of your business and knowledge of what is happening in the market. This will help you keep your business sale ready for the best results.


The hardest thing about business is turning the idea into a reality that makes money!

This article written by Theresa Eagle – Business Broker at LINK Bay of Plenty