Pros and Cons of Taking Over an Existing Business

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Getting to be the owner of a restaurant can sometimes be easier than having to start out from scratch. You might want to look into taking over an already existing restaurant. Here are some things to consider before taking that step and investing your time and resources.

Why, exactly, is the current owner looking to sell? Is the property and business being sold because the business is failing, or is the owner just looking to retire? Many times an owner has invested time and resources in a successful restaurant only to discover that he has no heirs or family members interested in continuing after the original owner has gone.

If the business is doing well, it might be more cost effective to take over an already existing restaurant. Some of the advantages and disadvantages to this option include:

- a customer base that is already in place. You would have to do less to attract patrons than if you had to start from the beginning. Some disadvantages might be that the existing customers would have certain expectations as to what kinds of food were offered on the menu and would be more resistant to any possible cuisine changes.

- expenses incurred while running a restaurant could be tracked for at least a year or better. This would give you a more realistic idea of what the actual expenses are involved in running a restaurant on everything from the cost of produce to the monthly expenses needed for things like your insurances, fees, utilities, wages, etc. You would also have a better idea of profits generated by the location. Disadvantages here could be that even though the restaurant looks to be doing well on paper, the owner has little real idea of expenses, and you might find yourself having to raise prices to make sure you break even or earn a profit.

- you can make use of the connections the current owner already has. Chances are that the current owner can introduce you to the greengrocer and butcher who already deliver supplies to the location. The same is true for other services that the owner uses for things like garbage pick-up, restaurant supplies like linens, etc. The disadvantage to this course is that you might not get the same savings and quality of service as if you researched these things and found providers on your own.

- you might be able to make use of some of the licenses and health certificates already in place at the location. If your municipality and state allow it, these licenses might be able to be transferred with the sale of the restaurant. This means that the transition from one owner to the new one could go on with nearly no interruption in the business. If not, the disadvantage is that you would have to reapply for and obtain these before you could open for business.

If the business is not succeeding, is it possible to fix it so that it will? If so, is it more cost effective to make use of the assets the business already has like the equipment, location, etc., as opposed to getting everything new?

The above points are certainly some to seriously ponder as you write out your business plan.

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