I'm watching a business fail
- Thread starter depreciator
- Start date
Just look at this in a very simple way "x" sells a business to "y" and to stop "x" after having 12 weeks off,then walking up the same street and setting up the same business model in a different but a very close location to the one "x" has just sold with the good-bad will,, a very simple stand0alone clause may stop "x" from doing that,it may not always work out like that,but a contract is a contract and it works both ways..
A local bloke I know sold his business to a very large nationwide rural merchandise company. (I'll give you a clue they have white writing on a red background). There was a clause that he couldn't start up a similar business. Some time later one of his top salesman started a small rural merchandise business. I thought he had no hope of succeeding. He began making a lot of business, undercutting the corporate. Turns out that the original bloke was backing him, they are now in a partnership. And the corporate has shutdown in that town, and doing very poorly nationally. The local bloke now has at least 5 stores.
But in this case, the lady has not done any of those things right ? so why would coastymike suggest a laywer could be tied up for years ? What has she "done" ?
The Silk Wig is only used when the said Lady does not play the game..
Understood... I think coastymike's wording made it sound like he jumped thegn & suggested she would already be in trouble, maybe the way I read it.......
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We had these sorts of clauses inserted into our contract when we bought the workshop....within 10 km's, within 10 years and so forth.
I already knew about these two clauses before we bought, but the lawyer mentioned them (along with others) straight away when he and I began discussions.
Generally, when you are buying cafes/restaurants/take aways, anything say roughly under the $100k -$200k mark is a real tricky one.
and yes for more expensive ones you do pay for good will, there are heaps of cafes that sell for $500k+ to even $2.2m, these cafes have tremendous turnover and generally the profits justify the sale price,
My friend owns a cafe which is probably about 20sqm, equipment is basically 2 big coffee machines that are on lease/rent, a fridge and a cash register, and its on the market for $1.1m.
as for the Chinese people buying business, yes, I must admit every time I go to a shopping centre food court or a local food strip they seem to own about 80% of them. Maybe a Chinese person could elaborate on why they do it. One thing I am very certain is that its one of the easier ways to get a permanent residency into the country, a certain amount of turnover for a certain number of years and you get a PR. even if the business was making no profit, for some that would be considered a very good deal.
and yes, unfortunately, like a lot of people, regardless of race, people seem to think, owning your own business = freedom, lots of money and work your own hours, and buying a business=continual success. Reality is very different
ive noticed a lot of people in the last 12 months (who are in this industry, like I am/was) who frimly believe the cafe/restuarant/take away industry, they have never seen it this bad ever, rising rents, utilities, competition etc. etc. Just go down to your local shopping strip or centre and see how many for lease signs are up or go to realcommercial.com.au and type in the subrub to see how many businesses are for sale, have a look at the sale prices, if they are asking sub $100k, thats a really bad sign
and yes for more expensive ones you do pay for good will, there are heaps of cafes that sell for $500k+ to even $2.2m, these cafes have tremendous turnover and generally the profits justify the sale price,
My friend owns a cafe which is probably about 20sqm, equipment is basically 2 big coffee machines that are on lease/rent, a fridge and a cash register, and its on the market for $1.1m.
as for the Chinese people buying business, yes, I must admit every time I go to a shopping centre food court or a local food strip they seem to own about 80% of them. Maybe a Chinese person could elaborate on why they do it. One thing I am very certain is that its one of the easier ways to get a permanent residency into the country, a certain amount of turnover for a certain number of years and you get a PR. even if the business was making no profit, for some that would be considered a very good deal.
and yes, unfortunately, like a lot of people, regardless of race, people seem to think, owning your own business = freedom, lots of money and work your own hours, and buying a business=continual success. Reality is very different
ive noticed a lot of people in the last 12 months (who are in this industry, like I am/was) who frimly believe the cafe/restuarant/take away industry, they have never seen it this bad ever, rising rents, utilities, competition etc. etc. Just go down to your local shopping strip or centre and see how many for lease signs are up or go to realcommercial.com.au and type in the subrub to see how many businesses are for sale, have a look at the sale prices, if they are asking sub $100k, thats a really bad sign
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as for people stating that the old owner could get into trouble if the turnoever isnt to what is expected,
that i've personally never heard of, especially in the sub $1m range, maybe for other industries or sizes, it may be different,
but in a nutshell, its buyer beware!
thats why there is a by standard due diligence period, followed by a trial period followed by an assistnace period unless otherwise negotiated
that i've personally never heard of, especially in the sub $1m range, maybe for other industries or sizes, it may be different,
but in a nutshell, its buyer beware!
thats why there is a by standard due diligence period, followed by a trial period followed by an assistnace period unless otherwise negotiated
Not blowing horns or anything ... but I am a chatty, friendly, smiley person in personal and business life and find, even on the phone, that image comes thru.
It means I find people I am dealing with go out of their way to do friendly business back, answer noob questions, do unasked for research for me - and often go above and beyond what I initally require. Both male and female, so it's not a flirting thing.
I can't imagine someone who is serious, to the point (I tend to chat about non-business stuff as part of the business conversation), hurried etc getting anywhere near the amount of assistance and positive experiences.
What I'm getting at is that some people are suited to some types of business, and others to different types - their suitability to a type of business has very little to do with money, drive or ambition.
The money, drive and ambition are all vital - if they are in the right business for them.
Hope that makes sense
It means I find people I am dealing with go out of their way to do friendly business back, answer noob questions, do unasked for research for me - and often go above and beyond what I initally require. Both male and female, so it's not a flirting thing.
I can't imagine someone who is serious, to the point (I tend to chat about non-business stuff as part of the business conversation), hurried etc getting anywhere near the amount of assistance and positive experiences.
What I'm getting at is that some people are suited to some types of business, and others to different types - their suitability to a type of business has very little to do with money, drive or ambition.
The money, drive and ambition are all vital - if they are in the right business for them.
Hope that makes sense
Jaycee
I think you must be reading too much into my comments. I don't know whether she has done anything wrong or not. To be honest I don't care as I didn't buy the business.
As Wylie has said you only need to get the lawyers involved where things dont work out to plan. Restraints of trade, warranties, performance measures, duty of care to transition clients/customers, etc are all things to consider in a contract and if the figures are as indicated then that is the end of the story. The business continues along its merry way. The seller is happy the purchaser is happy. If things don't work out then out come the clauses.
Property Meister now you can say you do know someone who purchased a sub $1m business with the previous owner required to make good and pay back the purchaser funds after acquisition. It was me. If people don't want to mitigate their risks that is not my problem. If they want to overpay and have no protection again I don't really care. It's not my money. But when I buy something I like to have the option of seeking recourse if required.
I think you must be reading too much into my comments. I don't know whether she has done anything wrong or not. To be honest I don't care as I didn't buy the business.
As Wylie has said you only need to get the lawyers involved where things dont work out to plan. Restraints of trade, warranties, performance measures, duty of care to transition clients/customers, etc are all things to consider in a contract and if the figures are as indicated then that is the end of the story. The business continues along its merry way. The seller is happy the purchaser is happy. If things don't work out then out come the clauses.
Property Meister now you can say you do know someone who purchased a sub $1m business with the previous owner required to make good and pay back the purchaser funds after acquisition. It was me. If people don't want to mitigate their risks that is not my problem. If they want to overpay and have no protection again I don't really care. It's not my money. But when I buy something I like to have the option of seeking recourse if required.
Understood.
It was your wording that made me think you wee suggesting she did something wrong
Hopefully he had some good clauses in the sales contract that will keep her lawyers busy for some time. Unfortunately for him he may not have those relevant clauses in the contract.
Perhaps you mean to pretext that post with something ?
It was your wording that made me think you wee suggesting she did something wrong
Hopefully he had some good clauses in the sales contract that will keep her lawyers busy for some time. Unfortunately for him he may not have those relevant clauses in the contract.
Perhaps you mean to pretext that post with something ?
Well, I like Chinese food if that qualifies to comment, and my take on it is that they are simply buying themselves a job, because with their limited communication skills it's one of their few viable income options available to them.
It uscks to be a first-generation Asian migrant to this country (or any other, I suspect).
English for a start is an utter sod of a language for Asians to master, and I know this from first-hand experience because I spent a few years teaching it to Asians. Moreover, new Asian arrivals are horribly exploited in employment (sadly too often, but not exclusively, by other Asians). I know this from first-hand experience too (my wife is Japanese so don't get me started, and my business is often beaten in tenders by others that simply don't pay award wages, workers comp or super to their Chinese employees). But to top it all off Asians are very family-oriented: The parents will go to desperate lengths to give their children a good future, and if that means 100 hours of hell a week running a cafe they'll wear it.
(If I've offended any Asians reading I genuinely apologise for the above sweeping generalisations. If I've offended any WASPs I genuinely don't care.)
hi Property Meister
I am not chinese but you are right
the cut off is 500k
so if they invest 500k and keep it going for 1 year I think they can get a passport its that simple
so for a few people that expensive but for sum its not
if the bis makes a profit thats better.
the problem here is not the bis its a couple of things
1 its food
we have master chef our kitchen rules etc and we all think we can cook
well we can but does that make us a chef food is not just throw it in a pan and try to sell it
you have to market to a market and if you don't understand that market its like selling meat to cheese buyer they are both foods but very different.
food selling it an art as is with any business and its not something you jump into.
coffee is the same
2 location a site could draw people because of 1 but that does mean they wish to go there if the item is not the same and so will drift back if the item is less or less quality
I deal with business all the time where it not major changes that make major profit movements its minor
and food is the sharpest point.
with food you only get 1 chance to get someone to come back and thats why its so hard
chinese making good or bad coffee thats not true I have alot of people that make money out of coffee and they also are chinese the issue is not the coffee
with coffee there are three things that people come back for
1 price 7/11 do it a 1 dollar
2 presentation (what does the coffee look like in the cup)
3 whats the person like that gives you the coffee ( do they look like they are giving you the coffee of the v figure)
all of these change but when you have some at 5.00 and 7/11 at 1 dollar there is alot of coffee around so you have to be sharp to make money in that market.
as for watching business fail I see them all the time but I also see them exceed
and thats the difference.
to see a failing business turned around and to see the v turned into how can I help u
and see the business work make you see that business can work
I just don't like food as its just to fickel
I am not chinese but you are right
the cut off is 500k
so if they invest 500k and keep it going for 1 year I think they can get a passport its that simple
so for a few people that expensive but for sum its not
if the bis makes a profit thats better.
the problem here is not the bis its a couple of things
1 its food
we have master chef our kitchen rules etc and we all think we can cook
well we can but does that make us a chef food is not just throw it in a pan and try to sell it
you have to market to a market and if you don't understand that market its like selling meat to cheese buyer they are both foods but very different.
food selling it an art as is with any business and its not something you jump into.
coffee is the same
2 location a site could draw people because of 1 but that does mean they wish to go there if the item is not the same and so will drift back if the item is less or less quality
I deal with business all the time where it not major changes that make major profit movements its minor
and food is the sharpest point.
with food you only get 1 chance to get someone to come back and thats why its so hard
chinese making good or bad coffee thats not true I have alot of people that make money out of coffee and they also are chinese the issue is not the coffee
with coffee there are three things that people come back for
1 price 7/11 do it a 1 dollar
2 presentation (what does the coffee look like in the cup)
3 whats the person like that gives you the coffee ( do they look like they are giving you the coffee of the v figure)
all of these change but when you have some at 5.00 and 7/11 at 1 dollar there is alot of coffee around so you have to be sharp to make money in that market.
as for watching business fail I see them all the time but I also see them exceed
and thats the difference.
to see a failing business turned around and to see the v turned into how can I help u
and see the business work make you see that business can work
I just don't like food as its just to fickel
He's not a recent arrival.
The sale would have been done properly. She was a good operator and a decent person. The two staff stayed, the menu is unchanged, she would have been diligent in the handover, and she’s having a baby, so there will be no new cafe opening down the road.
I think the problem the new bloke will have is that the place must already have been operating at capacity. He would have bought a well run business making decent money and the sale price would have reflected that.
I would never consider buying a business, but if I did I would look for one where I thought I could increase the revenue i.e. I would back myself. I suppose it's a bit like looking for a property that you can change in some way to increase the value.
There is a bit of seating inside the place across the road and it was always full. There were always people waiting outside on the footpath waiting for coffee. And she was fast. I doubt whether it would be possible for anyone to get more coffees out of that window than she did.
So what are his options? Cut staff? Impossible. Reduce the quality of the coffee and food? Not ideal. Charge more for coffee? She was already more expensive than any other coffee place in the vicinity.
People went out of their way to go there and they paid a premium for the coffee.
The sale would have been done properly. She was a good operator and a decent person. The two staff stayed, the menu is unchanged, she would have been diligent in the handover, and she’s having a baby, so there will be no new cafe opening down the road.
I think the problem the new bloke will have is that the place must already have been operating at capacity. He would have bought a well run business making decent money and the sale price would have reflected that.
I would never consider buying a business, but if I did I would look for one where I thought I could increase the revenue i.e. I would back myself. I suppose it's a bit like looking for a property that you can change in some way to increase the value.
There is a bit of seating inside the place across the road and it was always full. There were always people waiting outside on the footpath waiting for coffee. And she was fast. I doubt whether it would be possible for anyone to get more coffees out of that window than she did.
So what are his options? Cut staff? Impossible. Reduce the quality of the coffee and food? Not ideal. Charge more for coffee? She was already more expensive than any other coffee place in the vicinity.
People went out of their way to go there and they paid a premium for the coffee.
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depreciator, it seems that you almost want the business to fail
are you interested in buying it?
I dont like wathching people fail at business, especially if they've paid big $$$ for it, however,sometimes people do make some dumb decisions.
are you interested in buying it?
I dont like wathching people fail at business, especially if they've paid big $$$ for it, however,sometimes people do make some dumb decisions.
I don't wish failure on anybody - well, apart from the odd politician maybe.
It's just been interesting to observe.
I would never get into a business that involved food and people.
I've been buying coffee and often food off him every day to support him. He's a nice bloke.
It's just been interesting to observe.
I would never get into a business that involved food and people.
I've been buying coffee and often food off him every day to support him. He's a nice bloke.
If he manage to keep up with what the previous lady did, then he would have a profitble buisnesss right, what he paid for.. ?
Why would have have to consider other "options" ?
with coffee its not all about how fast/efficient or even quality.
Im going to get in trouble for saying this, but in my experience (which is fairly extensive) 90% of coffee drinkers have NFI what they are talking about, and its these sort of people that rant and rave about the temperature of the milk, the sharpness of the blades of the grinder, the roasting time of the beans, the extent of blonding etc. etc. One of my good friends has her coffee weak, and she craps on and on about this place doing a good job, while this one doing a bad job, one day I got sick of listening to her BS and confronted her and she said, "the better place makes it weak enough while the bad place makes it too strong". So I said to her, you are not harping on about quaility at all, but whether their interpretation is in line with yours! Weak is subjective, her judgement of these two venues was based nothing on the quality of the product!! The world is full of people like this,.
as for the the current place in question ,the woman could have brought a personaility and an identity to the business. Once that goes, unless its replaced by something better or completely different. Being nice sometimes is not enough to sell a coffee.
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Ratchet clauses are pretty common I thought. Many businesses are bought with some upfront payment and some ongoing payments (usually paid from the business cash flow) the ongoing amounts are often subject to ongoing performance hurdles and can be ratcheted up or down based on that.
