Is this a good business? Follow those ten rules by which you have to abide with to find out.
The 10 Commandments:
Commandment #1 – Purchase the Past, Assume The Present, Buy For The Future!
- The past financials help determine the purchase price but, they will give you a guarantee of the future income.
- The future is up to you. You must evaluate the business for what you will be able to do with it.
Commandment # 2- Buy An established Business and Make It Great again! Buying a cheap business is a waste of money and time. Patching holes on a roof will take all your time. You need all your efforts concentrated on making your venture great again. If you have solid foundations it will be easier to build a skyscraper.
- How do you recognize a good businesses? Good cash flow for one, great lease, tantalizing sales, great P/C, stellar food cost, acceptable payroll. You will rarely get all those criteria in one package––You need at least 2 to 3 of those criteria to make it an acceptable purchase (understanding that the other criteria are within reach with your savvy management)
Commandment # 3- Ingredients Are NOTHING Without A Recipe.
- Understand and write on paper, the costs to make your purchase Great Again.
Commandment # 4- Watch out for a great wrapping the core of the package is what counts.
- Falling in love with a business without smelling the coffee. The bottomline is the key to your purchase not the look and smell of the rose. Remember roses have horns.
Commandment # 5- Do What You Do Best and hire what you need to complete your team
- We have to assume that you already posses a certain level of expertise needed to run an efficient business. Being an entrepreneur you must understand that you cannot do it alone you need a great team. Know before hand where you will get that great team.
Commandment # 6- Autopilot- (can the business be put on “cruise control”?)
- You can take advantage of the technology to improve your business. First you must understand that there is no room for a *Gentleman-Restaurateur any more. This concept was great 40 years ago, in our new and competitive world, the owner is involved 24/7 in his restaurant business. If you can’t give that much time to your business, consider an other avenue to invest your money. This advice is worth hundred of thousands of $, it will save you a bankruptcy.
Commandment # 7- Determining Where you can generate new income
- Every restaurant possess certain components not exploited by previous owners.
- Discovering these “added values“, such as catering or food to go (which is becoming big.)
Commandment # 8- Evaluate what you are buying
- How involved were the previous owners in this business.
- What quality was served?
- How faithful is the clientele?
- What is the main pole of attraction? [Close to a Freeway, the only such restaurant within 25 miles, the décor, the dedicated staff?]
Commandment # 9- Evaluating what you impact will add to this business
- Identify the weak spots, and work in this direction to improve. Small changes sometime are all what’s needed to make the difference. Vive La Difference!
Commandment # 10- How much are you willing to pay for this business?
In the end you are the only judge to evaluate and make the big decision. Be realistic what’s in it for ME, how much do I really want to give to won it?