Hello, I've come to /personalfinance because my mother and I are to make a decision of whether or not to purchase a bakery and I need extra input as this is new to me and quite nerve-wrecking to say the least. I will try to only provide relevant information to the deal.
Background of business: It's an established bakery that has been around for more than 30 years in a large metropolitan city in the United States. The owner and their spouse have been planning to retire for the past few years and have had trouble selling it. My mother has baking experience as she owns one in my native country in Europe. The bakery has no walk-ins - it's delivery based using multiple transport to numerous delis, grocery stores and supermarkets.
This is where it gets interesting. We negotiated the cost down from $500,000 to $450,000. My credit was not good enough to acquire a loan in the U.S. My mother took out a loan in our native country to buy the business in cash for $150,000. The remaining $300,000 is the cost of property that the business operates on. This amount will be financed by the previous owner we are purchasing from. In other words, the seller is taking the loan out so we can move forward. We will be paying rent monthly for 2-3 years and deducting the total amount paid in rent from the original $300,000. After the 2-3 years we will take out a personal loan(hopefully our credit will allow it by then) and pay the rest off in due time.
Down to the numbers. Total weekly operating expenses are approximately $17,000. Weekly operating income is $20,000. That is basically the bottom line.
Things to note:.
- Property has joint living space with 2 BR 1BA with around 1,200sq ft.
- 4 vehicles in transport in below average/average condition. Repairs are not uncommon.
- Expenses not included are pest control, handyman, plumbing, etc.
- Business is operating part cash. Employees are 10-99 due to this.
Any additional information that would help give any insight please feel free to ask. My mother and I have conflicting views on this and would like to set the record straight. Please help! Thank you.
Submitted March 28, 2017 at 05:52PM by grandmazboy http://ift.tt/2oeicHw