Restaurant for Sale – A Short To-do List
“Placing Your Restaurant For Sale? Before You Do Read This!”
In my experience restaurants are one of the most common business types that you will see for sale on the market. Some challenges buyers maybe faced with in the Canadian market when getting involved with a restaurants can be as follows margins, reputations and the taste of your local community. Well, good news for you that most of these things are not in your control. The CAN dollar moves at will, Anyone can post a a negative review online (Including your competition!) and not everybody likes the food you make. It’s that simple. This article focuses on things that you can control and will help you get the most out of your busienss. Things such as Is your busienss clean and organized? (Financially and physically) How much is your business worth and What’s your asking price? A lot of these things will seem like common sense and they are but, they are easy to forget when posting your Restaurant for sale.
Compared to selling a regular business enterprise, a restaurant for sale is a bit complicated.
In addition, you need to undergo a lengthy process to execute a perfect exit plan (selling) for your business. Planning ahead is the best option to make it faster.
When the revenues of your restaurant cannot keep up with your bills, it might be the time for you to begin the process of preparing your sale which can go in six months. It can be earlier, but the preparation is more on getting the best price for your restaurant more than anything else.
The following are some of the processes you need to attend to in order to make the best out of your decisions.
Prospective buyers of your restaurant would be impressed if your financial system is organized and in order. This will prove the worth of your business in terms of its professional business handling.
Potential buyers, like any hard-nosed businessmen, would like to see some hard evidence that the business can produce some profits. At the other end, they will also be able to find out what took out most of the profits. The balance sheet can help you attract more potential owners.
With the records of income, losses, expenses and other financial details, your prospective buyer can see and evaluate the factors himself. You also would need to list down your assets (specialty equipments, furniture) and your inventory.
This would also include disclosure of your present debts and loans. The details can improve your chances of better selling profit.
Like any other offered item for sale, your restaurant must also have that appeal that befits its status among its customers and would-be customers. This includes the potential owners who are continually looking for such signs in your place.
The list of things to do is not that long. The first things that need the right upkeep are your equipments which must be working perfectly and are up-to-date. Nothing beats cleanliness inside and out of your place, and this includes the kitchen and the bathrooms. The décor can help keep your style appealing.
The other factors that set your place as unique can be accentuated in many other ways. You can emphasize your location as one that is easily accessible and near people traffic generators (offices, malls). It might have a fantastic view to go with the unique food you serve.
Like in the other areas in real estate, a restaurant or a property can be valued three ways: 1) through the income approach, 2) comparative approach and, 3) cost approach.
Normally, restaurants are usually bought on the strength of their current cash flow. Sometimes, they are bought as an “asset sale” by bigger companies. Some buyers would like to convert your restaurant to their own particular plans.
Setting the price
The selling price of your restaurant for sale should be as realistic as can be. Taking all the elements together (present financial status, leases, loans, payables and receivables, and projected incomes), you still need to be as hard-nosed on yourself and on the present circumstances.
The obvious factors are as realistic as can be: overpricing the asking amount will certainly drive away the buyers. They might normally be able to afford it but they would want a realistic value as they are in business themselves. Underpriced offers are also out of context and can set off red flags even if there are no troubles at all.
In calculating the price offer, it is understood that you have included in the equation some other unseen and often-neglected points. Are there lease agreements in your business that need to be addressed? Are your equipments yours or under lease?
If your place is under lease, what is the current status in time for the new owner? How does the projected change of ownership status of your place sit with your landlord? Do you need to negotiate a new lease terms for your oncoming buyer? (Landlords normally like to have their spaces filled up with no empty time frames spent on negotiations.)
Is your business part of a large restaurant franchise? What is the status of your current standing? You need to know the details and ramifications of your agreements with other companies connected with yours. Hiring a lawyer (if you don’t have one already) is one good option to be able to navigate the legal grounds better-equipped and well-informed.
Sometimes, getting yourself a business broker might just be the grease that can speed things up. He can smooth things out for you and your prospective buyer. He also brings with him a wealth of advantages better than most in the business.
The biggest is his established and built-in network of buyers for your restaurant. You can have your set of prospects quick enough, although the downside is his fee which can be as high as 10% to a stratospheric 25%. However, as they say in the business, most things are negotiable.
If you have been through the process of selling your restaurant and your have something you would like to add to this article please comment down below.
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