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Planning to Buy a Coffee Retail Business?                      Most of Time you will be Wasting your Money!   Several times per week I get calls and e-mails from people that invested in an existing coffee shop and are greatly disappointed in its performance. They jumped, without real understanding of the business, into what they thought would be a great opportunity for them to be in business for themselves and make a good living. Instead, they found themselves in a bad dream, in danger of losing their investment. In general, it is much better to open your own in a good location than to purchase somebody's headache. The exception to the rule are shops in good locations that made a mess of their operation because they did not know what they were doing. You are not buying a shop for the equipment or the leasehold improvements. Some owners may have put $300,000 to open a shop, but if it is in a bad location, it is worth nothing. If you are in the process or thinking about buying an existing coffee shop with the hope of improving it's bottom line and operation, you must look very carefully at the following: How long is the existing lease? Can it be renewed for a longer period? If you get a short lease without written guaranty of a renewal, you would be throwing your money away. What is the MAIN product of the shop? That is, where does most of the money come from? If it is from food, that is not a "Starbucks type" coffee shop, it is a deli that happens to sell some espresso; your profit will be much lower than from coffee and espresso based drinks. You can put more money in your pocket buy selling $500 of espresso drinks than $1000 of food. If you start doing drastic changes, you probably will lose the existing customer base, and depending on the location, it may be hard to attract new customers. Small changes won't work if you want to change the character of the shop, like changing it from mostly food to mostly coffee drinks. You have to do it totally, just cleaning it up and changing a few employees won't do any good. The main consideration in buying an existing business is the present - or potential - income that it may generate. Here are some other factors that you must consider: The location of the business: Does the location has great visibility and easy access by a large number of potential customers? If not, forget it, because no matter what you do, you won't be able to increase the sales to any appreciable degree.   Lease terms: You don't want to buy a business with only a couple of years left on the lease. Renegotiate an extension with the property owner. Sales price: Good income coffee shops sell for approximately half their yearly gross revenues. If the shop generates $250,000 in sales, a fair price would be $125,000, (with a rent factor of 10% of gross) provided that it is making a profit of around $65,000. If it does not make a profit of 20%-25%, there is something wrong. Some of the wrong can be corrected, like payroll costs, cost of goods, menu, speed of operation etc. The only thing that cannot be changed is the location. You may save yourself countless aggravations and your money by learning to understand the business BEFORE you jump into it by investing a few dollars in our "Espresso Business Success Program". The cost of this Program includes my personal over the phone consulting with you, which may determine if you should invest in that business in the first place. Get the following information and call me after you order the Program: How long is the lease? Is it renewable? What were the gross sales last year? Last month? What is sold mostly, coffee or food? How much is the rent? How big is the shop? How many pounds of coffee/espresso is used per week? Get a copy of the menu. An equipment list The above information will determine if it is a good deal or not. My book, "Espresso Business Success Program" will show you what to do and how to do it. Consulting Program Return to coffee business success page. Note: I will be happy to talk to you without any cost or obligation about any coffee related business matter. HOWEVER, BEFORE you call, please do your home-work. I do not want to start a conversation with you asking me: "What do you do?", or "What experience do you have?".  Before you call me about a drive-thru, PLEASE do your home-work that I suggest on my Drive-Thru site. Alex Fisenko & Assoc. 6107 SW Murray Blv. PMB 297 Beaverton, OR 97008 503 5909423  - 9am-7pm Pacific time