Have you ever considered owning a restaurant? You aren’t alone. Running a restaurant is a common desire for many people who strive to be business owners. In fact, out of all of the types of businesses that are desired, restaurants are always popular! Instead of starting one from scratch, buying a restaurant can reduce your risk because it allows you to take over an established business with customers, vendor relationships and community goodwill in place. Read on for steps to buying a restaurant.
Determine if you are ready – Purchasing a business is an exciting and challenging adventure. It is smart to think about yourself to make sure that you’re ready to take the step. This decision will have a significant impact on your life.
Have you checked your credit score recently? The closer your score is to the perfect 850, the more likely you’ll be able to pay off long-term loans at lower interest rates. This is important to ensure you can get the best deal possible and thrive as a restauranteur. However, if your credit isn’t perfect, don’t despair! There are plenty of quality lenders that are willing to make your situation work!
Find what restaurant you’d like – Start by thinking about location. Are you interested in something local or are you willing to commute or move if the opportunity is right? Now finding a specific restaurant for sale is an easier process as you already know where you’d like to look.
Now, you can take a closer look at what type of restaurant you want. You can get an idea of the specific restaurants in your area by taking a look at one of the many online sources that have restaurants for sale listings. SBDA represents many restaurants which can be seen here.
Understand the business – After you have found a restaurant that you’d like to purchase, you have to educate yourself on it. You can do this by getting in contact with the owner to find their motivation for sale plus details about daily operations. A good suggestion is to work for a while at a restaurant if you don’t have experience. You will be more comfortable making a decision if you know the challenges and rewards you will have on a day to day basis.
Do your research – When you are considering the purchase of a restaurant, it is important to understand it inside out. You can start out by checking their sales and prices to see where you believe you could improve its performance. You may also be able to purchase the building along with the restaurant.
Secure financing – There are many different options available for you to get the capital needed to purchase a restaurant. Small Business Administration loans, for example, are one option for buying a business. Having the seller finance a portion of the deal may also make sense. Please keep in mind that all of these options will require buyer cash up front as well.
Due diligence – Once you’ve signed a letter of intent, it’s time to perform due diligence. This phase consists of checking every detail dealing with the restaurant to make sure it is up to your standard. This includes examining their equipment, liabilities, and legal documents. We advise consulting an attorney to make sure that the contracts are done properly.
Prepare for closing – Now it’s time to consider the terms of the transaction and the contract. It is important to be thorough in the contract to make sure that everything is how you expected it to be. You may want to consider adding a non-compete clause so that the seller doesn’t have the option to open a competing restaurant nearby.
The process of buying a restaurant to spark your entrepreneurial desires can be a very exciting one. However, it is important that you go through all of the steps necessary to do so. This makes it a much smoother process and ensures that you are getting what you pay for. Buying a restaurant is an amazing way to fulfill your dream of becoming a business owner while simultaneously minimizing your amount of risk.