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What does it REALLY involve? (long) - Page 5

post #61 of 135
5/21/09 at 7:01pm
Thread Starter 
Not trying to ignore your posts, I will respond to them......

I have a question. There is certain info that I want from them.....am I allowed to get it? And what else should I make sure to get? I want a copy of the lease; tax returns for the past 2 yrs; list of inventory; profit & loss statement; operating expenses; and their books.

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post #62 of 135
5/21/09 at 8:05pm
i decided to give my input cause i was in a similar situation not too long ago. i had the opportunity to buy an established cake business for 75k. she would have stayed on to transition me, i would have gotten all her brides, equipment, recipes, everything, much like your person is offering you.

in the end i started from scratch, like littlecake and k8 are suggesting. i spent less than 25k and i have my own little space, $500 a month rent utilities included, approx 650 sq ft. very affordable, and very manageable on my own. you said you wanted to be established by september. well let me tell you, i signed the lease beginning in Dec 2008 and by the end of Jan 2009 i had all of my inspections passed and i was in business. it didn't take long at all once i made the decision to follow through with it. my debt is really no more than a car loan, which i plan to have paid off by next year at the latest.

you're looking at 125k in debt to buy the biz, then over $3000 a month in rent. that is a LOT of baggage. i know that if i were in that situation, it would weigh me down.

good luck with your decision, but i vote no as well. for much less $$ and a little elbow grease you can establish your own place. i think you'll find it much more manageable too, to start small.
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post #63 of 135
5/22/09 at 4:37am
Thread Starter 
doesn't establishing my own place require not only the location, but then purchasing the equipment as well?

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post #64 of 135
5/22/09 at 5:03am
Yes sometimes you'll need to purchase your own equipment but it will be a lot less then $125k.

I don't know, after reading through this again, I'm nervous for you.

You'll need to come up with $125k just to purchase the business, so you'll have that monthly payment on top of the $3400 a month for rent.

Like k8 said this business opportunity sounds more like a *moving up* business, not a *first* business.


To me this is just too risky.......especially in this economy. There has to be a reason why this woman is trying to sell, and I don't think she's being 100% truthful with you. (Don't trust that the numbers she's showing you are the real deal.)

Do you know what she purchased the business for? (I think you could find this out at your town/city hall.)
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post #65 of 135
5/22/09 at 5:24am
Quote:
Originally Posted by saberger

doesn't establishing my own place require not only the location, but then purchasing the equipment as well?


.
I'm a caterer so I have more equipment than you would ever need and I spent only $45K. Everything was new except the walk-in-refrigerator (a steal at $1200!), my mixer ($1000) and my dishwasher (a $15,000 outfit that I got for only $7000). You probably won't need a 6-burner stove, a food warmer or a deep fryer, so you'd be able to get equipment for WAY less than I spent.
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post #66 of 135
5/22/09 at 5:27am
There is an absolute treasure trove of information in these 5 pages. I have to say that I vote with some of the veterans here in thinking this is "too fast, to furious" for what you're really looking to do.

I rent a commercial kitchen to have a legal business and to me, that was even a huge step. It's dollars that have to be made up for in labor. I do everything myself but am looking for a part-timer. I repeat, I am renting. With the amount of time caking takes (which I love) I simply can't imagine having to run a full-fledged business, which entails everything from taking out the trash to repairing broken front doors to keeping inventory on that scale straight. Hours tick by... Lord, my husband would end up leaving and I wouldn't notice he was gone for a week! J/K I went to a college that was 4 years of intensive business courses, no general ed. and have written a boat-load of business plans. That right there is enough to keep me at bay for awhile.

Good luck in what you decide but I would definitely heed the advice of K8, Debi, dKelly, etc., etc.
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post #67 of 135
5/22/09 at 5:28am
By the way, your cakes and cookies are beautiful. icon_smile.gif
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post #68 of 135
5/22/09 at 5:47am
Don't know if you've thought about this or not.....

If you have a business you also must have a contingency/succession plan. If you get sick or have a family emergency that goes on for a while you need to know who will take over for you and pay those fixed costs that keep on coming.

I used to work with business start ups in another state and more often than not people have a talent/idea/craft that they excel in and don't want to or don't know how to handle the business side of things. I suggest you contact your local SBDC (Small Business Development Center) and ask for a consultation. They can help you with a business plan that spells out what your known expenses will be (and believe me, there will be unknown ones, too) and what your revenue should look like to break even and make a profit.

Good luck to you!
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post #69 of 135
5/22/09 at 6:04am
Hello....
I just want to add my two cents worth. As everyone has already said, do your homework. Think of every angle you can, on what it will take to run this business. You will be surprised....Just when you think you have it all worked out, something else will come up to consider. You'll have the rent, utilities, phone service, credit card machine charges, maintenance of equipment, maintenance of the building, insurance to take care of. Get all the initial excitement of this out of your system, then settle down and really think about it. Be careful too...when someone tells you that they will do this, and this is the way this has worked, be careful. People are full of goodwill, when half of what they say is crap. I don't mean to knock anyone you are dealing with....But all too often, what is said, to what is really done, are two very different things. People will say anything to get out from under something....
This is only my opinion, but K8 can't be more correct. You will have a hard go of it, if you think you won't put in long hours. Yes, there are days when you can work 8 to 5:30, but don't bank on it being a regular thing. If you really want to make it work, you will put in those hours. When I had my shop, there were many times I was ready to lock up, only to have a customer come to the door. I never turned someone away. You will get orders that will keep you there until they are done. You have to have your product restocked for the next day, ready to sell. It doesn't get done when you do home.....
My biggest concern is the fact that you need to get real serious about doing it all. You need to know what is going on with the finances, EVERYTHING. You simply can not run a business when you don't have your hand in the till for everything. Good luck to you!
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post #70 of 135
5/22/09 at 7:05am
Thread Starter 
I spoke with a friend of mine (finance person on Wall Street) and she is going to sit down with me and go over all of the financials and teach me about what I am looking for and what are potential red flags. I spoke with her this morning - she knows the biz that is for sale and agrees with its potential (she has been a customer there for many years and knows the owner). She is also going to connect me with a biz lawyer.

I AM learning the biz end. I AM learning and trying to put together a biz plan. And I AM NOT making ANY decision until I see numbers. I still haven't gotten them. I am still waiting for those. I do have questions about where there expenses are going, whether they flat out own all of the equipment, what their debt is and all of that.

So, although I would prefer to have somebody else do all of that (after all who WOULDN'T), am doing it. I am not going to wait around for some knight-in-shining-armor to take care of it for me. I will learn dabnabit and know EXACTLY what I am doing. Plus, I think this is a test to see if I REALLY AM interested in doing this...because if I AM, I MUST know this stuff, right?

Too much, too fast.....quite possible. My DH has been looking into buying a biz for a few years, so this isn't an entirely new concept....we just weren't actively seeking it out. Now, having said that, I will learn what needs to be done and what needs to be known. I have been trying to educate myself about all of this and I SOOOOOO appreciate all of your input and feedback.

Keep it coming. I believe that everything happens for a reason and that it is high time for m to learn about the biz end of stuff. Even if this doesn't work out, then I am more prepared for next time and possibly starting from scratch. But I think the key thing is: I AM LEARNING IT!!!! icon_smile.gif I am using that side of my brain. Just don't ask me which side it is icon_wink.gif

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post #71 of 135
5/22/09 at 7:06am
Thread Starter 
Quote:
Originally Posted by CindyD333

Don't know if you've thought about this or not.....

If you have a business you also must have a contingency/succession plan. If you get sick or have a family emergency that goes on for a while you need to know who will take over for you and pay those fixed costs that keep on coming.



I hadn't point blank thought of that. It has been in the back of my mind, because I still haven't seen the numbers on this place. But that is very important....thank you for pointing it out to me.

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post #72 of 135
5/22/09 at 7:08am
Thread Starter 
Quote:
Originally Posted by alanaj

By the way, your cakes and cookies are beautiful. icon_smile.gif



Thank you.

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post #73 of 135
5/22/09 at 7:10am
Thread Starter 
Quote:
Originally Posted by shorty56


in the end i started from scratch, like littlecake and k8 are suggesting. i spent less than 25k and i have my own little space, $500 a month rent utilities included, approx 650 sq ft. very affordable, and very manageable on my own. you said you wanted to be established by september. well let me tell you, i signed the lease beginning in Dec 2008 and by the end of Jan 2009 i had all of my inspections passed and i was in business. it didn't take long at all once i made the decision to follow through with it. my debt is really no more than a car loan, which i plan to have paid off by next year at the latest.



That's it?!?! WOW!! Maybe I should look into this at the same time....can't hurt right? This is going to seriously sit in my mind. Thank you for sharing it with me.

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post #74 of 135
5/22/09 at 7:29am
Thread Starter 
Quote:
Originally Posted by littlecake

it's really not as bad as you'd think.

i think you could get A LOT more bang for your buck starting from scratch...

what is your vision for a place?....do you just want to do cakes?....or cookies and stuff for walk ins?

i only do orders...when i first opened i had cookies and dessert bars cupcakes and snacks for walk ins...but there was alot of waste at the end of the week.....and there is more of a profit margin with cakes.

i'm sorry if you already mentioned it...this has been the busiest week of the year so far with graduation and 4 weddings this week, i'm kinda fried.



Thank you for taking the time to respond to this forum with so much to do!! icon_redface.gif

My vision is to get rid of the pies and tarts. I am not interested in that. That would be replaced with decorated cookies, cupcakes, cake truffles, choc. covered oreos, personal mini cakes, and my brownies. Not all at the same time necessarily...I have to figure that out, but that is the goal. Mind you, her main retail business is on the weekends, so that is when I would offer most of those. Around holidays I would offer my gift box set via orders and some readily available. Also, I would offer BC and fondant cakes (wedding & occasion); my Passover goods; and then classes and parties. I am not looking for a sit down place...I don't want to deal with that PLUS it would be required to have 2 bathrooms, which it doesn't have. And I am not interested in dealing with it. The majority of the biz is custom cakes.

Does that answer it?

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post #75 of 135
5/22/09 at 7:32am
Quote:
Originally Posted by saberger

Quote:
Originally Posted by shorty56


in the end i started from scratch, like littlecake and k8 are suggesting. i spent less than 25k and i have my own little space, $500 a month rent utilities included, approx 650 sq ft. very affordable, and very manageable on my own. you said you wanted to be established by september. well let me tell you, i signed the lease beginning in Dec 2008 and by the end of Jan 2009 i had all of my inspections passed and i was in business. it didn't take long at all once i made the decision to follow through with it. my debt is really no more than a car loan, which i plan to have paid off by next year at the latest.



That's it?!?! WOW!! Maybe I should look into this at the same time....can't hurt right? This is going to seriously sit in my mind. Thank you for sharing it with me.



you asked earlier about getting your own equipment. my space was a photographer's studio before i rented it, so it was basically an empty rectangle with carpeting. i had to do EVERYTHING! plumbing, electrical, flooring, all new equipment, and i STILL did it all in just two months for less than 25k. all of my equipment was new, 20 qrt mixer, big freezer/fridge, double deck convection oven, grease trap, etc. we saved some money by doing the flooring and painting our selves.

you can see in the before pic the space in the back was just empty green carpet. the space in the front was ugly tile and paint.
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