We have just helped some close friends buy and set up a coffee shop on the Sunshine Coast and it's a story worth sharing.
Finding the right opportunity: Searched Coffee Shops for sale on the Sunshine Coast and worked through the businesses in the agreed price range. The plan was to find something cheap, in a good location, that wasn't being run very well and transform it as cost effectively as possible.
Location We found a cafe in a busy shopping centre with an asking price slightly higher than our budget but given the location and future potential we decided it was worth spending some time trying to negotiate the price down.
Purchase Price: The purchase price was based on financial statements presented by the sellers agent (business broker). From past experience we new these are very often incorrect. In this instance the buyers accountant had made a simple but significant error with the financial information they had prepared. Having identified the error we were able to secure a price reduction of $20,000 which brought the price down to within the budget we were working on.
Negotiating the lease: The current lease only had 2 years left without an option. This wasn't a great situation. What if the landlord refused to offer a new lease in 2 years or demanded too much rent? As part of the purchase process we stipulated in the business sale contract that it was subject to the landlord granting a new lease on terms acceptable to ourselves. Armed with a good business plan and a decent amount of confidence we negotiated a 3 year extension to the existing 2 year lease (5 years) and an additional 5 year option. If you are buying a business having an option on your lease is like having another level of insurance over your business. Try and get one!!!
The Refurbishment The coffee shop was older style, tired looking and dark. Within 2 weeks our friends had transformed it into a bright fresh modern looking cafe for under $20,000. Here's a list of what they did,
- Rebranded and upgraded all signage (special mention to Kyle at The Ageing Sea and Jeff from JPG Signs)
- Painted the internal walls white
- Changed the table tops
- Replaced the external shade sale
- Replaced the counter tops
- Upgraded all of the lighting
- Added wall features
- Removed and upgraded old cabinetry
- Installed a Pot Rinser
- Installed a Jug Rinser
As part of our coffee supply, we provided free on loan two new coffee grinders and a really cool looking Mirage Triplette Coffee Machine.
Employment and staff management Our friends are great with people and did a great job recruiting their team. They used online job sites Indeed, Jora, Facebook Jobs and Seek to attract staff. Completing the recruitment process and the continued management of your staff is a complex process which you need to get right. We referred or friends to Employment Hero. Employment Hero set up two platforms that our friends use to onboard staff, create employment contracts, manage awards and pay rates, create rosters, pay their staff and meet ATO and superannuation obligations. It really is a one stop shop for Employment!
Financial Management We used Xero for the accounting package along side a simple financial forecast / tracking system. Xero is easy to use and has a great App on your phone to process receipts on the go. Using Xero to Xero integration for bills makes processing weekly supplier bills quick, easy and accurate. Keeping track of the businesses financial performance is critical so we set up our friends with a weekly (hotsheet) to track sales and wage costs, and a monthly financial forecast vs actual profit a loss sheet. On a weekly basis to make sure your wage costs are within your budget compared to sales and on a monthly basis you are comparing your actual profit and loss to your target. These are great tools to make adjustments to your business to make sure all of your hard work is actually resulting in PROFITS.
Making it special Our friends are amazing, they are great with people, they know hospitality and are incredibly hard workers - their business will be a success!!!
If you are buying a business its success lies with you. It's your passion, enthusiasm, determination, resilience and willingness to partner with the right organisations that will determine your businesses success.