Advice for finding funding for purchasing an existing shop

[Trencherman]

Advice for finding funding for purchasing an existing shop ?

Hi everyone, I'm a new poster here and was hoping to get some advice - this seems like a very knowledgeable and helpful forum!

My wife is the manager at a local coffee shop in a military town and has really turned the shop around and made it profitable in the 1.5 years she has worked there. The owner's family is being relocated to the other side of the country by the military, and we want to purchase it from. I've got a business degree in small business management and management experience as well as my wife.

We've ran the numbers and it looks like a really great opportunity, but... I just recently got that business degree while working part time and we built up some consumer debt and used up our savings while I was back in school. The owner doesn't can't offer us financing at this time, so I need to find a loan to purchase the shop. I plan on visiting banks and the SBA center this coming week, but any other advice you could offer us would be great as well! Thank you so much.

 

[John P]

The reality of funding.

1) a) Your own sweat, blood, and $$$ b)Mortgage your house

2) People who love you

3) People who want a piece of your business

In the end, you will need to have collateral for 100% of your loan.
You need to be willing to risk everything you have to start your business, if you are not willing to, you can't expect anyone else to risk their money.

Have industry averaged numbers specific to what you are proposing that will present well to anyone financing, and then also have realistic numbers for yourself. You will likely get a far better rate as a home equity loan than a SBA loan. The rates they show for SBA are for someone who has had a previous SBA loan or a business for at least 3 years. The actual first time rates are a few points higher.

Refrain from signing anything at the lender's office until you take it home and read it thoroughly. It's always a big investment. Proceed with caution.

 

[Coffeehelper]

Start selling a coffee that you love make the money buy the shop and continue to buy your coffee wholesale and sell retail, I can show you how!

 

[CoffeeJunky]

As Johns said, it will cost all your money you have saved and some more.... ... go look through ebay and see how many used coffee machine are for sale.... and tell me how many have failed... and they all thought it would be great to get into the business with their dream.... You just need to be smarter then those who have failed.....

 

[JRMobile]

You can also approach building the business from a completely different direction. Most people don't adequately etch out an effective marketing plan prior to setting up a business, so this can be a good process for building the proper lead flow channels before investing too much (getting space, equipment, employees, etc).

One of the most effective areas for local marketing is of course online - most people don't realize it but whether you are online or not, your customers are going there first before they decide to go to your business, so having a good presence online is critical to building a successful business.

If you take the route of establishing web presence first - by selling beans online and marketing locally, establishing yourself as a local presence - then when you have a following online you will be better placed to establish a storefront. You will have fans who would undoubtedly visit your cafe from day 1 and who would bring their friends, giving the retail space a nice boost out of the door.

Depending on your goals, you could also consider using Kickstarter to get the ball rolling.

 

[CanadianBrian]

Hello trecherman;
What about a vendor takeback? Approach the current owner and see if they will finance you partially or for the whole amount? You won't know unless you ask.
Brian

 

[CoffeeJunky]

Some people just post up questions and never come back to check the answers... Many of us take time and give them honest opinion but they never show up to check.... Sometimes is it even worth taking your time answering these questions we are passionate about....

 

[cotatiadam]

Keep the answers coming, there are many of us (I assume) who mostly read and never post. I have been romanticizing opening a roastery/coffee shop for a while and then I read the posts from those of you on the front lines and become a bit more grounded.

Thanks for all the answers I assure you they are not wasted efforts.

Adam

 

[CoffeeJunky]

Adam.... Thanks..... When I give the advise- shared experiences, I try to give my very best effort to help who are in need of... Time to time it is hard when you feel like you are shouting to the empty room...

 

[PinkRose]

Sometimes I wish I could figure out a way to "collect" the posts from people who offer good advice, so I can refer other people to those particular posts. We often get new members who ask the same types of questions, and if I had a way to catalogue the good responses, I'd be able to type a response and include links to the answers within the Coffee Forum. I often recall reading a great response in another thread, but sometimes when I use the search feature, I still can't find what I'm looking for.

It's fantastic that we have active members on this Forum who take the time to respond to people's questions. You're certainly not talking in an empty room here!

Rose

 

[CoffeeMate]

I'll concur that the advice from this forum will never fall on deaf ears.

A follow-up and thank you is the courteous and mannerable thing to do but rest assured that many are reading the questions and replies including the original poster and going "ahhhhh!"

So on behalf of all those who got caught up with the positively encouraging responses and forgot to say thank you; I say "Thank You Very Much"

 

[CoffeeMate]

PinkRose,

I see this forum is powered by vBulletin which has been around for a while. Perhaps when you get some free time you might Google on how to group the post or something like that.

How to Search vBulletin.org effectively - vBulletin.org Forum

 

[PinkRose]

Thanks, CoffeeMate.

I was thinking of creating a spread sheet on my computer, and saving the links to outstanding responses that are posted on the forum, particularly responses to questions that are asked over and over again, such as coffee shop startup costs, equipment, cost of goods sold, etc. That way, I could easily find the post and be able to share it. I have a feeling it would be a huge project, so for now, I'll just keep on using the search feature.

Rose

 

[CoffeeJunky]

Great thinking... I am sure you are tired of answering same questions over and over again every few weeks.....

 

[PinkRose]

I've noticed that we have several long-time members of this forum who take the time to answer the same questions over and over again.

New members often ask the usual coffee shop "start up" types of questions, not knowing that they've been asked and answered many times before. I was hoping to be able to quickly direct people to some of the good, well-thought-out responses that we already have available on the Coffee Forum.

Then, hopefully, they'll start to participate in the discussions, and we won't feel like we're talking in an empty room.

Rose