These days I help café owners sell their businesses and help both experienced and inexperienced buyers secure their dream café. Understanding the operational and financial management of cafes is completely second nature to me now.
What seems like an awful long time ago, however, I took my first steps into the wonderful world of Hospitality businesses. I made the decision to quit my ‘day job’, lose my suit and tie and buy my very first café.
Yes, it was daunting (having never worked a day in Hospitality in my life!), but I was determined to go it alone and I had always loved cafes as a customer. How hard could it be?!
I took about 5 months to find my own ‘dream’ café spending the time visiting Business Brokers, teaching myself small business management and visiting many, many cafes! In the end I bought 60% with my heart and 40% with my head and picked a very challenging café that was open 7 days and 5 nights a week. In retrospect, perhaps not the ideal ‘first’ café but I learnt an awful lot (generally the hard way!) and this knowledge and experience helps me hugely when advising others today.
There are many tips I give first time buyers. Some of the key ones are:
- Find a Business Broker that you relate to, that you like, and that you trust. This person is vital in not only helping you find the right opportunity but also in guiding you through the complex sales process and starting you off in business on the right foot.
- Take your time. Visit many cafes and make notes about what you like and dislike about each place. Location? Does it fit with your family lifestyle? Can it generate the income you need it to? Can you see yourself working there day in: day out? Share this information with your Business Broker.
- Work out what drives you. Is it money? Success? Lifestyle? Independence?
- Wheat from the chaff. There are so many cafes for sale in the newspaper and internet – and they all look fantastic! Learn how to weed out the ones to stay away from. Learn how to compare apples with apples.
- Use your Business Broker to help you understand the market. How much do you need to invest to receive a certain level of return? Learn how to understand a typical café’s Profit & Loss statement. Learn what ‘typical’ costs to expect when running a café.
- Talk to a Finance Broker or Bank professional who is familiar with the Hospitality market and learn how much you could potentially borrow (should you need to borrow money). Ask your Business Broker for advice as to who to approach for lending.
- Enjoy the process! This is a major step towards your new and fun life as a café owner. A good Business Broker will be there to help you at each stage of the process.
Nick Giles is a Hospitality Business Broker at LINK. He has sold over $6.5m of Hospitality businesses over the last 2 years and many of these to first time buyers. Nick is currently marketing businesses from $50k to over $2.5m.
