How To Avoid Getting Ripped Off When Taking Over A Restaurant Business
Scouring the market for the perfect business venture can be challenging. It's all about finding the right foundation in which you can take the existing business model and launch it into the next level with your own ideas and expertise. If you've come across what seems to be the perfect business opportunity in the restaurant industry, your main goal is likely to create a profit and run a successful company. Here are a few things to keep in mind before you decide to close on the deal.
Run A Market Statistic Report
It's important to take a close look at the sales history of the restaurant business that you're going to be taking over. Most sellers will have records from previous years regarding the amount of revenue the business was receiving. A qualified marketing analyst or legal assistant may also be able to gather data and generate a report for you. Examining profit margins is a good way to create a cost comparison to see if certain menu items are selling more than others. By gathering this data, you'll be able to decide what food items you wish to change or add to your menu. Looking at marketing trends that relate to your specific type of restaurant and area eateries will help make sure you don't lose money once your purchase the business.
Conduct A Thorough Inspection
If you're purchasing the building outright, you'll definitely want to have an inspection of the structure inside and out. A building inspection will pick up on potential structural issues as well as anything that could pose a potential health violation in the future, such as a faulty plumbing issue or compromised refrigeration unit. Making sure that the building is in good shape will keep the business flowing and generate as much revenue as possible. Any issues should be addressed with the seller prior to making the final real estate transaction.
Check Property History
Examining the property history is important for your business because it indicates any change of ownership over the past ten or more years. A change in business may mean that the overhead was too high or construction expenses or repairs were needed to bring the building up to code. This may be an advantage to you if there have been significant updates to the property including:
- Newer roof and siding
- Updated or enhanced parking lot
- Revamped kitchen and dining area
- New driveway or easement access
- Additional building space that has been sold or acquired
A property history report can generally be obtained through your realtor or attorney and can give you a good indication of how the property value has improved over the years.
Consult With A Business Attorney
Examining the existing business trends and the condition of the building itself, requires careful examination by a business attorney, like the ones at Abom & Kutulakis LLP. An attorney who specializes in business law will be able to determine if the business deal is beneficial to you. He will also be able to negotiate with the existing owner to set up the terms of the sale or co-ownership agreement to ensure that it's legitimate and fair to you before any funds in the real estate transaction are transferred.
Deciphering business terms and finances requires the expertise of a business law attorney. Protect your investment and seek the right legal counsel before you make a significant real estate purchase.