Anonymous
Anonymous asked in Business & FinanceSmall Business · 1 month ago

Buying a business at 22 with little experience?

Hello I am currently attending my last semester at community college and will be transferring next year to a university. I have always wanted to own my own business in the future in the food industry such as a Cafe/Restaurant or anything related in food. I currently work at Chipotle and have been working here for about 6 months and have gain some experience in the food industry. So today I hop on bizbuysell and just look at some food businesses that are for sale in my area just to see what's up. I noticed a café I occasionally go to that was ridiculously listed at a low price at $30,000. It is near my community college campus and it is on a very busy road. I have about $5,000 saved up and my family and friends could lend me $25,000 to fully buy it out, but the thing is I have no idea on how to pay taxes, do payroll, manage employees, heck to see if the business is healthy or not, and all the things related to business. How would I go about learning these things and doing my due diligence? I feel like they wouldn't treat me like a buyer because of my age and inexperience. How did y'all go about it or get started at such a young age.

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  • 1 month ago

    If your major is not in business, I would highly recommend switching to it. 6 months of experience working in a restaurant may help you in the day to day operating procedure although you have little or no knowledge in managing and operating your own restaurant. Restaurants have one of the highest failure rates and with the current COVID crisis I'd strongly recommend finishing your education for the time being.

  • 1 month ago

    If you've been working in a fast-food place for 6 months, and think you understand the food industry, think again. There are many things you DON'T understand yet--and you've named a few of them--and there are many many more. 

    I would suggest you do NOT spend that money to buy a cafe now--not when in-person dining is so iffy. And you already said you have no idea how to do taxes, payroll or manage employees--you're just setting yourself up to fail miserably. Your age doesn't matter much--it's the lack of experience and knowledge that DO  matter. A lot!

    Instead, spend the time you have left in college to LEARN about businesses. How to make them work--why they fail. Something like 80% of new businesses fail within the first year.  You need to know WHY that is. Mostly it's because expectations don't meet skill levels. You don't have the skill levels yet--or even at all--and you DO have high expectations. That's almost a classic scenario for failure. 

    You can take classes that would help you at your community college, Better Business Bureau, Small Business Owners groups--lots of places. THAT's what you should be doing instead of dreaming about owning a cafe. There's nothing wrong with the DREAM--it is a fine objective--but you need a huge dose of reality in order to understand what to do to make it happen. There's a good reason that business is only $30K.  It already DID fail. Try to put your efforts into researching why and what mistakes you can fix, and how to RUN what you buy into. 

  • 1 month ago

    Great idea/terrible timing.

    The #1 reason for failure is not seeing HOW it can fail. Under funded is a great way to fail. You haven't addressed inventory, equipment, signage or advertising beyond your face. 

    In New Orleans we are known for our local cuisine and this pandemic is killing our local businesses. Sadly, too many good ones couldn't take a whole year off.

  • Eva
    Lv 7
    1 month ago

    You are getting ahead of yourself. Restaurants have the highest failure rate of any business, so it would be foolhardy to go into it before you know what you're doing. Find a small business development center, SCORE chapter, or SBA office in your area.  They can help you do your research and design a business plan.  6 months in fast food doesn't even begin to give you enough experience to run a cafe.  You don't even know what the $30,000 covers.  It may be for the business only, which means you have to pay more for equipment and rent, or it may be for the business and equipment.  It certainly wouldn't include the building.

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  • 1 month ago

    You really need to understand how to find and order from suppliers,  get a tax accountant,  find out about permits, city health inspections,  research a ton more about building rental (especially who is accountable for repairs,  roof issues,  snow plowing,  window damage), arranging for commercial garbage pickup, grease trap cleanups, rat control,  liquor license (only so many are allowed in the city,  you have to talk to the common council), not to mention advertising budgeting. 

    This is a pandemic,  restaurants are hit hard and many are going under because of it.   My city has already lost over 30% of our small restaurants in the past 7 months. 

  • L
    Lv 5
    1 month ago

    Just because you're in college - does NOT mean you are ready to own anything.  Plus, if you have NO idea how to pay taxes, do payroll, manage employees or anything else related to owning a business - then you have NO business owning a business and due diligence will NOT cover it all.  NO one will work for you if you have NO idea what the heck you are doing.

  • 1 month ago

    You might fail, but I wouldn't recommend spending $50k on a worthless University degree. Then you get out of university and can't find a job. We're in a pretty serious recession with covid, so my recommendation would be to ditch university, keep getting more food industry experience, save up some more money, and perhaps in a few years you could go entreprenuerial once you've learned more about the industry. 

  • 1 month ago

    Businesses usually sale for 1X-1.5X annual earnings.

    We can surmise that, this cafe is being sold for a ridiculously low cost because it has ridiculously low profits.

    Working 6 months at Chipotle has given you some experience in "an itty bitty bit" of the food industry.  The concept that you can write this and expect people to beleive you have any credible experience shows how unaware you are. 

    - Working 6 years as a District Manager would give you enough experience to go it alone.

  • not
    Lv 7
    1 month ago

    Food can be very profitable. All you need is great recipes, a great chef and great staff with a great location and a great profit per plate. Do you have those things? I would need 3 out those 5 and a solid plan on getting the other 2 quickly. I can handle the payroll and management side but I don't have those things so I'd serve slop and fail. You can learn management in school or in action, there are companies to do payroll for you. 

    With an existing business you also buy their debt and their reputation good or bad. They should share financial documents with serious buyers to outline the current health of the company, profit and loss statements normally. 

    Starting our you need money in the bank to pay staff if your income isn't enough. You need money in bank to buy food. Much more money needed.

    School and more hands on training is ideal at this point. 

  • Anonymous
    1 month ago

    Even if you had years of management experience, you would likely fail.

    All that stuff is learnable and you can do it but the problem is SALES.  Most of those little places do not have enough and the rent and overhead would be too much. 

    A buddy of mine had 3 years management experience.(Not assistant manager, head manager) Came up with $30,000 from savings and family. Got an SBA loan for $120k and bought a BBQ business with land and building.  After a year and a half, he closed, gave them the keys and went back to managing for others. He made less than half what he could make working for someone else. And lost the entire $30k. And worked longer hours.  He suffered 7 years bad credit from that failure. And he had EXPERIENCE.  That was 30 years ago. You would fail within months. Even if we were not in a pandemic.  SBA loans are impossible without years of experience, good credit and 20-30% down. Even then they are a paperwork nightmare to apply.

    If you can work your way up to unit manager and do that for a few years your odds improve but they are still bad. (Maybe 15% succeed)  

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