How to Sell a Café – The Three Stages of the Sale

How to Sell a Café – The Three Stages of the Sale

 

The Sale Process – Stage one – Planning

 
Selling a café or any hospitality business is not like selling a business in (most) other industries. I am sure that I don’t need to spell out the main difference, the subject of the “C” word is probably a whole post on its own.

 
Whilst the cash side of things can add confusion and complication during the process, especially if you are trying to explain the situation to a newcomer to the industry there are ways to make it easier on yourself.

 
The Sale Process has three distinct stages that when followed correctly make life much easier, in this post I will cover a few things to consider in Stage One – Planning
 

Stage One – Planning

 
If you skip this stage then you run the risk of coming across nasty surprises later on that can stall the sale, i.e. problems with your lease or problems that may mean that you end up with less from the sale than you expected.

 
I have had both of these things happen to me and trust me it can be pretty upsetting. When I sold my second shop I overlooked the fact that the sale triggered a capital gain. Basically the government ended up doing nearly as well from the sale as me although it had been me slogging it out building the business up.

 
To make this even worse my accountant later told me that we could have avoided most if not all of the tax with proper planning – A very expensive lesson! That was about fifteen years ago now and writing about it now is still upsetting me, don’t let this happen to you.

 
When you get the planning stage right you go into the sale knowing exactly what you need to sell for to move you on to the next stage of your life after clearing all of your liabilities.

 
Its easy overlook some of the fees involved in relation to the sale, things like the landlord’s legal fees, managing agent’s fees and so on.

 
Going into the sale with a clear plan makes sure that you are fully aware of everything that you are going to need to pay out and gives you the time to make sure you sell for the right price. Getting this stage right helps you to keep the sale on your terms.

 
Some of the key things to consider doing during the planning stage are:

 
✅ Check your lease – Make sure that there is nothing in your lease that could slow the sale down.

 
Finding things like the DA usage not matching the permitted lease use, differences between outgoings in the lease and the lease disclosure document can really slow things down at the later stages of the sale.

 
Savvy buyers will always focus on the lease early on so it’s a good idea to know the key points so that you can answer questions quickly and get the deal moving. Things like what level the annual increases are, is there a market review in between terms? How much is the bond etc.

 
✅ Speak with your solicitor – If you are not confident reading the lease then ask your solicitor. It’s a good idea to put them in the picture about your plans at this stage as well, we have a list of questions that we like to suggest our clients ask their solicitor.

 
✅Check the assignment clause in the lease, this will outline the terms and conditions about you coming off of the lease and the buyer going on. This clause will (usually) also outline that you are responsible for all of the associated costs of the assignment. We have a way of reducing this which we will cover in stage three (upcoming post) once the sales advice is given to the solicitors.

 
✅ Get your books up to date – If you are not already up to date with your numbers then this is a must, getting the price right (next stage – preparation) will depend a lot on the numbers so make sure they are right!

 
✅ Speak with your bookkeeper and accountant and let them know about your plans, get them to help you prepare all the financial info that buyers are likely to ask for.

 
✅ Once you have accurate up to date figures ask your accountant what they think the value of the business might be. Generally speaking this figure is usually a long way off the actual market value so don’t stress too much if its not in line with what you are expecting.

 
The reason for doing this is to get an idea of how a buyer’s accountant might appraise the business, this gives you the chance to pro-actively push the value and overcome any potential objection before the buyer takes the figures to their accountant.

 
✅ Get on the front foot with your tax – Make sure that you know what any tax liabilities might be and get some advice on what the split between apportionment and good will should be when you sell.
Based on your business and personal tax situation your accountant will be able to give you advice on how best to split the sale price % wise. Knowing this upfront will allow you to get this into the contract of sale early on and potentially reduce that amount of negotiation around this point.

 
✅Check and double check your outstanding liabilities when you sell. Make sure that your accountant gives you a clear idea of what you would need to pay out when you sell. Don’t overlook things like lease agreements and loans etc.

 
✅ Check your agreements – If you have equipment “on loan” like coffee machines, grinders, POS Systems, sparkling water systems etc are the agreements transferable or will you need to pay out a sum to break the contract?

 
I hope this gives you a bit more insight into some of the first things that you should be considering and doing when selling.

 

Stage #2 – Preparation

 
This stage is where we get everything prepared for dealing with inquiries and work out what the sale price of the business is going to be.

 
The preparation stage in my opinion is the biggest chance you have to make the sale as easy as it can be for yourself, this stage can also make a big difference in the time that you spend on the market.

 
You are probably aware that in the current market there are a lot of other cafes for sale, most buyers are typically looking at several businesses at the same time. If you are not ready to deal with inquiries or if you do not have the answers to the most common questions ready to go then you are risking losing your buyer to another business.

 
When it comes to valuing your business then it is a fine line, if you undervalue the business then you will stand the chance of walking away with $10K – $20K (or more) less than you deserve. Go too far the other way and you will find that you get little or no interest from the market.

 
The old way of pricing cafes and then adding some on to allow for fees and negotiation simply does not work in the way that it used to. Buyers have never had more information readily available and you need to price the business correctly right from the start.

 
If like most people you are concerned about keeping the sale as confidential as possible then the preparation stage can also help here. Its pretty simple really, if you are priced right you will get more inquiries. If you have all of the information that buyers are likely to ask for ready then you will be able to move them through the process quickly.

 
The combination of these two things being done properly is going to mean that you stand the best chance possible of reducing your time on market, this will help you to reduce the chance of staff, suppliers and customers finding out that you are selling.

 
In summary, when you get the preparation stage right you will be confident that you are priced right and that you have everything ready to be able to deal with buyer inquiries quickly and efficiently.

 

So what does the preparation stage involve?

 
• Document preparation

 
I find it quite amazing how different buyers look at cafes in different ways when considering the purchase.

 
Some people are completely focussed on the financials, some get wrapped up in the location, some the décor and the smart ones get obsessed with the lease.

 
You need to be prepared to deal with all of these areas and if you work through the previous stage as well as this one you will find that the process will also help you to have important information front of mind.

 
To make it easier for yourself to share information with buyers you can use a cloud storage system like Dropbox or Google Drive to store all of the information that buyers are likely to ask for.

 
Having everything in one place like this will mean you can easily share multiple files quickly and this will save you a lot of time.

 
As mentioned above different people focus on different things and that means that there is potentially a lot of information that you need to have at hand. Rather than list it all out here you will find a check list here https://www.gsebusinessconsultants.com.au/document-checklist-download

 
Some of the most important information to have ready is:

 
✅ A soft copy of the lease.
✅ A copy of the liquor license.
✅ An inventory of the fixtures and fittings
✅ A schedule of employees

 
The other items on the checklist you will also need to have ready to progress inquiries but the four above will allow you to answer some of the most commonly asked questions.
[TIP] We actually build a lot of the information from the fours points above into the business profile and/or adverts to answer the questions early on.

 
The other key benefit if gathering all of this information is that it is going to help you with the process of valuing the business.

 

What is your business worth?

 
As mentioned above this part of the process is crucial to get right so taking some time here to make sure that you have not missed anything will really pay off.

 
It is not really possible to go into all the detail of this process in this post, I am considering running an online workshop to go through this properly, if this is something that might interest you then please let me know in the comments. If there are enough people interested I will put something together.

 
The general “rule of thumb” with a (smaller) food business is that the value will be 1 -3 times the annual net profit of the business.
Whilst this sounds like a fairly basic method of valuation there are a number of factors to consider.

 
The actual net profit of the business will need to be adjusted for “add backs”, these are expenses that may appear in the P&L but may either be one off expenses or may not relate to the running of the business.

 
Examples might be:

 
• Motor vehicle expenses
• One off equipment or repair costs

 
Once you have accurately calculated your annual net profit then the amount that you multiply that figure by will be affected by the following factors (in no particular order)

 
• The current market.
• Your Lease terms.
• How established the business is.
• Your location.
• How many day/hours you trade.
• How much competition you have.
• Local infrastructure plans.
• Your involvement in the running of the business.
• The quality and condition of the fit out.
• The inventory of fixtures and fittings
• The future growth potential of the business.

 
Some of the points above will have more impact on others in relation to how much they will push you up or down that scale of the multiple.

 
The current market is a good example of this, if you look at trying to sell for a multiple at the level it was 3-4 years ago (or even less) then you will most likely be in for a nasty surprise. The current market value can be gauged by talking to brokers or industry professionals who are dealing with similar businesses.

 
A word of caution, as with the real estate market the practice of “buying listings” goes on in the brokerage world too. This is when a broker will effectively tell you what you want to hear in relation to selling price in order to get your listing. Be careful not to give away too much early on and ask for information about recent similar sales.

 
Your lease is also going to play a big part in how far you can push the multiple, if you have a long term with reasonable increases and a reasonable bond you can expect to push for a higher price. By contrast a lease with a demolition clause is going to significantly reduce the asking price.

 
This all comes back to the principle of return vs risk, buyers want to know that they are going to have enough time to get a good return on their investment. It typically works that the higher the perceived risk then the lower the price. With this in mind it seems like a good opportunity to revisit the last post and the first suggestion – check your lease!

 
As I am sure you will appreciate there is more to this than we can squeeze into a Facebook post but I hope this gives you a better idea of what you need to consider during the preparation stage.

 
Look out for the next post where we will cover the advertising, marketing and selling stage.

 
I am also in the process of recording a four part video series designed to give a it more information on the selling process so keep an eye out for that.

 
In the meantime if you have any questions about anything in this stage feel free to post them in the comments below and I will do my best to answer them for you.
Paul

 

Stage #3 – The Selling Stage

 
Once you have your business fully prepared for sale and you have worked through the appraisal process to make sure that you have priced the business right it is time to get the word out there that your business is available.

 

Writing the Advert Copy

 
This is where you decide how to describe your business to prospective buyers in the adverts that you will run business on for sale websites and social media or wherever else you choose to advertise.

 
The purpose of this advert is to get people to make an inquiry and request further information so that you can get the conversation about your business started.
With the advert copy the idea is to give enough information to people so that they can decide whether or not they would like to find out more. We also want to do this without giving away too much.

 
It is a good idea to try and keep the text fairly generic so that people are not able to work out that it is your business. You want to do all that you can to avoid people wandering in and asking you about the business being for sale in front of staff, customers or at difficult times of the day, it does happen!

 
[Tip] Whilst the ad copy needs to show the key features and selling points of the business don’t overthink or overcomplicate this, sometimes less is more. This advert is trying to sell an appointment or an inspection of the business, that meeting is where you will start really trying to sell the business.

 

Choose Where You are Going to Advertise.

 
There are many publications and websites where you can choose to advertise your business, prices vary from the low end (Gumtree) up to the top end (SEEK) and the results can also vary greatly.

 
Generally speaking we have found that the quality of the leads is in line with the cost of the platform i.e. Gumtree will bring in a lot of inquiries but many of them are can be timewasters whereas the more expensive options such as Commercial Real Estate and SEEK tend to give you lees quantity of good quality inquiries.

 
Despite the rise of the internet the cost of advertising in traditional print advertising still seems quite high. We have helped a couple of clients to run these ads but the results have been pretty poor in relation to the cost.

 
Social media, in particular targeted Facebook ads can produce good results for a relatively low spend. You will of course need to consider from a confidentiality point of view whether or not you want this information in your feed. One way around this is to use Facebook Ads manager to set up your post, this way you can choose to just run this just as an advert and it will not show in the feed.

 
[TIP] We use nine different websites to list our client’s businesses and the best results typically come from SEEK, Commercial Real Estate and Australian Businesses For Sale.

 

Qualify Inquiries and Get Rid of The Tyre Kickers Early On.

Regardless of where you decide to advertise you will want a system in place in filter the leads as they come in so that you are only talking to serious buyers.

 
Think about asking buyers to take a simple action such as signing a non disclosure document before giving out any information about your business.

 
You would be surprised how many buyers can’t be bothered to do this, with our clients businesses we follow up 5-6 times to chase people to return these. We use multiple methods such as email, phone, SMS and FB messenger.

 
If we do not get the signed form back after that we assume that they can’t be that serious and we then remove them from our list.

 
I don’t know about you but whenever I was seriously looking to buy a business I had no problem being asked to sign and return an NDA, in fact I expected it.
You can easily find examples of non disclosure agreements or confidentiality agreements online and then just edit them to suit your needs.
[TIP] You can read more about qualifying leads in this Blog Post https://www.gsebusinessconsultants.com.au/get-rid-of-the-tyre-kickers-early-on/

 

The Business Profile or Information Memorandum

The information memorandum or business profile as it is sometimes called is the document that you can to use to provide more detailed information about the business to qualified buyers (after the previous step).

 
These are people that have made initial contact through viewing the adverts and have completed a confidentiality agreement and whom you may have spoken to about the business.

 
You send out the information memorandum to give buyer details such as business name, location, sales, and profit etc. The idea is to provide enough information for them to decide whether or not they would like to arrange a viewing of the business.

 
The information memorandum also provides details about the sales process and reminds buyers about the importance of confidentiality when viewing the business.

 
After you have sent out the information memorandum it’s a good idea to make a follow-up call within 2-3 days to ask for feedback and see if they would like to have a look at the business either as a customer or out of hours.

 

The Inspection

 
If all has gone well with the previous steps then you should have a qualified buyer or buyers that are keen to come and have a look at the business and discuss the operations etc with you.

 
Whilst the inspection is an opportunity to answer all the questions that the buyers might have it pays to remember that this is also where you have the chance to further qualify the buyer. Try and make sure that you use this time wisely and gather as much information as you can about the buyer’s background and their financial position. You would be amazed how many people get to this stage (and beyond) and do not have the experience or financial capacity to either gain approval from the landlord or complete the deal.

 
Make sure that you keep things positive about the business and try to just answer the questions that you get concisely but without talking too much or giving more information than you need to.

 
Whilst you do not want to mislead people in anyway there is no point in offering information that could potentially put people off of your business. Your role now is to start selling so focus on the features and selling points and use the information that you have gathered from the buyer to help to draw them in emotionally.

 
Don’t give away too much about your personal situation, buyers will often try to find out your motivation for selling. Be careful not to give any indication that you are desperate to get out or that you have any problems as this can be used against you later on and lead to a lower offer.

 
A big part of the sales process is identifying what the buyer’s objections are and then overcoming them. Ideally you will have a good idea of what potential objections could be and you will have addressed some of these in the business profile or during early conversations.

 
The chances of somebody coming along, looking at the business and making a decent offer without some sort of objection is quite slim. I love it when people tell me that they are not interested in a business because it gives me the chance to then isolate and overcome their objection. If somebody tells you that they are not interested in your business don’t give up, find out what the issue or concern is and then present them with a solution.

 

The Offer

 
After a successful viewing and after thoroughly qualifying your buyer the next step is to push for an offer.

 
At this stage it pays to remain unemotional and try not to take anything personally. Buyers use a lot of different tactics and strategies to try and get a deal and try to convince you to accept a lower offer.

 
I find this much easier to deal with when it’s somebody else’s business as opposed to my own as I can remain totally impartial. It’s quite easy to get upset when somebody gives feedback about your business especially when it has cost you blood, sweat and tears. Try not rise to it though as it could cost you a drop in the price or even the deal.

 
If you have gone through the appraisal process thoroughly you will be confident that your business is priced right and with this in mind don’t feel that you have to negotiate on price.
The approach that we take is to price properly without adding in too much if anything at all for negotiation. The idea that you have to allow room for negotiation is quite dated and, in the current market if your business is perceived to be over the market value then you probably won’t even get any decent inquiries. You are far better off pricing correctly and getting some people to start talking to early on. “Testing the market” and listing with a view to dropping the price later on if you don’t get offers quickly enough are not effective these days.

 

Keeping Your Deal On Track

 
Once you have the price and terms agreed this is where the real work starts! Many people think that getting to this stage i.e. weeding out the tyre kickers and getting the offer are the hard part but the reality is this is where you have to work hardest to keep things moving.

 
In the early stages your buyer has been led by emotion, they have been imagining themselves in the business, thinking about the changes that they might make and now they are going to start justifying their decision logically.

 
At this stage the buyer will be going through more due diligence and most likely seeking second opinions form their advisors, friends and family.
Having all of the information that they are likely to ask for ready is going to help you to answer questions and overcome objections quickly. What you don’t want is to be asked for something that takes a while to find or prepare, any stalling or slowing of the deal at this stage can be fatal.

 
At this stage you will be instructing your solicitor to prepare the draft contract and you will also be starting the process of the lease assignment.
If you have followed the steps and advice above as well as in the previous two posts then you are probably well prepared for this stage, you will just need to be willing to chase all three solicitors, you must remain in control and keep pushing the deal forward.

 

Preparing for Settlement

 
As you get closer to the settlement date your solicitor will prepare most of the documents in relation to what the buyer must pay upon settlement, this will include any pore payments that you may have made such as rent etc.

 
Depending on what you have agreed about stock you will also need to prepare to do a stocktake. Whilst there are companies that you can get to do this I have always done it myself with the buyer present.

 
It’s a good idea to discuss with the buyer what they will/won’t require when they take over, if there are certain lines that they will not be continuing then this will give you a chance to run that stock right down.

 
[TIP] Remember that if the value of stock when counted is higher than the stock figure in the contract then the buyer is not legally obliged to take it. i.e. if the contract states the stock value to be $3000 and it ends up being $4500 then the buyer can choose just to take the $3000 worth of stock that they want and you will get stuck with the rest.

 
Whilst this post has really just scratched the surface of the sale process I hope that it has at least given you a few ideas and things to think about.

 
If you would like to learn more about preparing your cafe for sale then feel free to book in a call with me. On this 30 min call I will cover the following with you:

 
• What the current market value of your cafe might be.
• The steps you need to take to prepare for the sale.
• What the market is like at the moment.
• How to make sure that your cafe stands the best possible chance of selling.

 
There is no charge for this call and there is no obligation. At the end of the call if we think that we can help you we will let you know about how we work and, if we don’t think we can help we will give you some advice about alternative options.

 
Either way you will come off of the call with a much clearer idea about the potential value of your business and of what you need to do next to achieve a sale.

 
Click on the link below to book in a time that suits you best, once you have selected a time you will be taken to a form which has around 7-8 questions about your business that will help us to get a better understanding and save time on the call.

 
Book your call here
https://www.gsebusinessconsultants.com.au/apply

 

Are the outgoings that you are paying actually due?

Are the outgoings that you are paying actually due?

 

 

 

Its quite common for outgoings to be charged by landlords in addition to rent, the amount charged varies from lease to lease.

 

Some landlords will pass on charges like business rates, land tax, strata fees etc and some charge for many more items related to the building in which your business operates.

 

Many people believe that if outgoings are listed in the lease then they have to be paid but this is not the case. Changes to the Retail Leases Act in July 2017 mean that if outgoings are not listed in the Disclosure Document then the landlord cannot legally charge you for them.

 

 

What is a disclosure document?

When you were looking to take over the premises you should have been given a copy of this document (via your solicitor). The disclosure document is basically a summary of the key points of the lease, the document is given to you so that you can be sure that you know what you are signing for.

 

 

 

How Lucas just reduced his annual outgoings by $5,000 per year.

 

I was recently looking through a lease for a client, Lucas, to help him work out the potential value of his business when I noticed that the level of outgoings seemed quite high.

Lucas was not entirely sure what the outgoings that he paid monthly actually covered so the first thing we did was get the managing agent to send through an itemised invoice for all charges.

 

Looking through the lease along with the invoice for the outgoings we noticed that although the amounts charged seemed to match what was stated in the lease some of the charges did not appear on the disclosure document.

 

In addition to this the landlord had also miscalculated the way in which the land tax was being calculated.

 

I asked Lucas to contact his solicitor to check this and he confirmed what we had found and followed up with the landlord’s agent with the letter below.
Without going into too much detail the outcome resulted in a reduction of just over $5000 per year in outgoings and a rebate of the over payment since the lease was signed, not a bad result!

 

If you are currently paying your outgoings without being 100% sure what they cover it may well be worth checking.
Here is what you should do:

 

✅ Ask your agent or landlord for an itemised breakdown of what the outgoings on the rent invoice actually cover.

✅ If you do not have a copy ask the solicitor that acted for you when you signed the lease for a copy of the disclosure document.

✅ Make sure that all of the charges on the invoice are listed on the disclosure document and that the amounts being charged match up (allowing for declared annual increases).

✅If you find any differences then it may well be worth double checking these with your solicitor.

 

This whole exercise took Lucas only a few hours and resulted in a refund, a reduction of ongoing costs and a more saleable and valuable business. The $5000 saved per year drops straight into the overall profit of the business which ultimately will help to increase the value.

 

I hope that this inspires you to double check your own outgoings, good luck and let me know if you have any questions about this.

 

If you would like to have a confidential chat about your business anytime feel free to book in a time that suits you here https://www.gsebusinessconsultants.com.au/apply

 

Get rid of the tyre kickers early on.

Get rid of the tyre kickers early on.

 
A lot cafe owners that I talk to about selling their cafe ask me about how to deal with time wasters or “tyre kickers” as they are affectionately known.
 

Dealing with inquiries in the early stages does not need to be nearly as time consuming as you might think it is.
 

The reality with the the sale process is that the real work begins once you have been through this early stage and you have accepted an offer (but that’s a whole post on its own)
 

When you advertise your business for sale, the WAY that you advertise it and WHERE you advertise it will make a big difference to the volume and quality of leads that you generate.
 

Regardless of what you decide to do you will want a system in place in filter the leads as they come in so that you are only talking to serious buyers.
 

Think about asking buyers to take a simple action such as signing a non disclosure document before giving out any information about your business.
 

You would be surprised how many buyers can’t be bothered to do this, with our clients businesses we follow up 5-6 times to chase people to return these. We use multiple methods such as email, phone, SMS and messenger.
 

If we do not get the signed form back after that we assume that they can’t be that serious and we then remove them from our list.
 

I don’t know about you but whenever I was seriously looking to buy a business I had no problem being asked to sign and return an NDA, in fact I expected it.
 

If you get somebody objecting to doing this then it’s unlikely they are that serious, chances are they are just being nosey or are a competitor or both!
 

Once you have the signed form back the next stage is to qualify them over the phone, resist giving out too much information just yet.Getting the buyer on the phone is your first chance to make sure that they are a good fit for your business.
 

This stage is not just about you just answering questions to do with the business it allows you to make sure that they are genuine, that they have the ability, funds and experience to proceed with the sale.
 

Plenty of people might be interested in your business but not all of them are going to stack up, keep control here and for the rest of the deal.
 

Then….
 

Release Some Information
 

Once you have gone through these two stages and you feel like they may be a qualified buyer for your shop then it’s time to send out the business profile.
 

The business profile will give the buyer just enough information to confirm that your business is exactly what they are looking for. At this stage you do not want to give away too much confidential information, let’s leave that until you have qualified them face to face.
 

This document will also save you answering too many questions about things like the lease, liquor license, staff etc. Our document is about 20 -25 pages but to be honest if you are selling on your own a 4-5 Word document would probably do it.
 

Think of this step as selling an appointment to come and look at the business rather than selling the business itself.
 

You know that when they take time out for an inspection they are genuinely keen, this is also where (when done right) you can get them emotionally engaged with the thought of buying your business.
 

The face to face meeting is also the perfect time to finish your qualifying process, when you get the hang of this you end up getting more information than you give.
 

At the end of this meeting you should have enough information about the buyer to know whether or not they are genuinely interested and whether or not they are qualified to buy.
 

Remember also that in the current market, more than ever, you need to present a good case to your landlord to have the lease assignment granted. Putting in some work at this part of the deal with save you a lot of time and stress later on.
 

There is nothing worse than thinking that you have sold only to find that the landlord does not approve your buyer.
 

Once you have your buyer fully qualified then you can move more into sales mode and of course try and move then towards an offer and from there hopefully towards settlement.
 

To summarise, don’t give out too much information early on, especially the confidential stuff. Ask the buyer to make some small commitments such as signing the confidentiality agreement, taking a call to discuss the business, reviewing the profile and then coming down to see you.
 

I hope that you find this useful, as mentioned above try and stay in control of the process and make sure that you sell on your terms.
 

If you would like to learn more about preparing your cafe for sale then why not book in a call with me. On this 30 min call we will cover the following with you:
 

  • What the current market value of your cafe might be.
  • The steps you need to take to prepare for the sale.
  • What the market is like at the moment.
  • How to make sure that your cafe stands the best possible chance of selling.
  • What the market is like at the moment.

 

There is no charge for this call and there is no obligation. At the end of the call if we think that we can help you we will let you know about how we work and, if we don’t think we can help we will give you some advice about alternative options.
 

Either way you will come off of the call with a much clearer idea about the potential value of your business and of what you need to do next to achieve a sale.
 

Click on the link below to book in a time that suits you best, once you have selected a time you will be taken to a form which has around 6-7 questions about your business that will help us to get a better understanding and save time on the call.
 

Book your call here
 

How to Prepare a Cafe for Sale

How to Prepare a Cafe for Sale

How to Prepare a Café for Sale.

 

Running a cafe cannot really be compared to running many other businesses. From the outside it can look like a dream lifestyle business but for many people that’s not the reality. The first cafe that I setup and run for 11 years certainly didn’t improve my lifestyle in the early stages!

 

There are many things to think about when selling a cafe and this article takes a quick look at how to prepare your cafe for sale.

 

With all the blood sweat and tears that you’ve put into running your cafe during the time that you’ve owned it it’s really important that you sell for the right price and get a fair reward for all of your hard work.

 

During the time I have spent building up and selling cafes I learnt a lot of valuable lessons. I soon realised that whilst you can make a good living running a cafe the real money is made by increasing their value and selling them on.

 

It’s no secret that a business which is well prepared for sale generally sells quicker and for more money. Organisations such as the Exit Planning Institute suggest that a business with a well planned exit can be worth as much as 50-100% more than an unprepared business.

 

In my experience I have found that this exit planning process works just as well with cafes and I have developed a system that is designed specifically for food businesses.

However you decide to proceed with the sale of your business, if you do nothing else then look into how you can best prepare your cafe for sale. Even if you went through the process and increased the value by 20% imagine the difference that money could make to you.

 

 

Planning

When thinking about selling your cafe the first phase is a planning phase. During this part of the process, you will consider many different things to really make sure that now is the best time for you to sell.

 

Some of the key things for you to consider during the planning phase are:

 

Tax implications – If you have a good accountant then it’s a good idea to sit down with them and let them know of your intention to sell. Make sure that you cover your personal and business tax situation. Make sure that you’re fully aware of any capital gains tax or personal tax liabilities that may arise from selling the business.

If you don’t have a good accountant this is a great time to find one! Getting the right advice at this point can save you a lot of money further down the track.

 

Timing – Is now the best time to be selling the business?

If you are anything like me you could well have two answers in your head right now. The emotional side of you which feels the pain of the long hours, staff issues customer dramas and so on may well be saying SELL but the business side of you maybe well saying hold on.

Only you are going to know the answer to this question but, try to make the decision more with the business side of you than the emotional side. If you feel that there is an opportunity to improve the situation that you’re currently in (and therefore the performance of the business) then you should seriously consider taking action to achieve this.

If you don’t have to think about this too much then you know the time is right and you also know that you’re not going to look back in a couple years’ time and regret the decision you’ve made now.

 

Legal matters – The early stages of this process a good time to sit down with your lawyer and make them aware of your plans to sell. It’s good idea to check the current lease to make sure there is a good term remaining or at least an option to renew. As these matters generally take quite a while it’s good to get this underway early on.

 

Valuation – Do you know what the business is worth in the current market?

It’s good idea to take advice at this stage from professional broker, agent or valuer about what the business may be worth. There are many factors that go into valuing a cafe and although there may be similar business is listed for sale at a certain price range this doesn’t mean that’s what they are actually selling for. Brokers and valuers will have access to industry information including recent like for like sales, this will give you a much more accurate idea of what the business may actually sell for.

 

If you go through this part of the process and find the business is not work maybe as much as you expected then don’t despair you have plenty of options to improve this. Increasing the value of cafes is a big part of what we do so feel free to contact us or use some of the free resources on our website.

 

Once you are confident that the timing is right for you to sell then you can move on to the preparation phase.

 

 

Preparation

 

The preparation phase is definitely the part of the process which requires the most work, on the plus side it’s also the part that can add the most value to the business and really help you to sell quicker.

 

 

During our six weeks to sale program we work with our clients through a step-by-step process to get everything that a buyer will need prepared. Having all of this documentation prepared makes the whole process much smoother and less stressful for you the person selling and it also helps to reduce risk in the buyer’s mind. In my experience, reducing risk has had the biggest effect on achieving higher multiples when selling food businesses.

 

 

How to sell your cafe

 

Imagine a buyer looking at your cafe at the same time as another cafe that makes about the same profit, the same turnover and is in a similar location. If you’re able to present all the information that the buyer needs (as well as things they may not ask for) you are sending a clear message that the business is well organised, structured and systemised. This will help to build the buyer’s confidence that the business will continue to perform well even after you’ve gone and therefore reduce risk in their mind.

 

If you’re having two scrabble around and put information together after somebody has shown interest it’s going to tell them that the business is a bit unorganised.

 

Once a buyer senses risk of any sort one of two things usually happens, firstly they may begin to question things more which can cause the whole process to slow down or even fall through. Secondly the buyer will start to see an opportunity to negotiate on the price, it’s our job to make sure that neither of these things happen.

 

As mentioned previously the preparation phase involves a lot of different pieces of information being drawn together, I won’t go through them all in this article but some of the important ones are as follows.

 

Documentation – As mentioned previously, having all your documentation at hand is going to reassure any buyer that the business is well organised. Ideally you want to keep all your documents relating to the sale in one place where it’s easy to share, this could be something like Google docs Microsoft OneDrive or Dropbox.

Some of the key documents that we provide our clients with templates for include, inventory, stock take, operations manuals and policies manuals etc. Other documents that can be stored on the same drive are things like a copy of the lease, supplier agreements and sample invoices etc.

 

Staff information – Again, this information can be stored on the shared Drive and the templates that we set up include things like staff contracts, job descriptions and rosters. I’ve always also included a short bio about each staff member as well which helps the buyer get a better idea of the team and may help to reduce risk. A lot of buyers will worry about staff leaving and anything you can do to help prevent that worry will be a benefit.

 

Financials – If you talked to your accountant during the planning stage then hopefully they will have given you the heads up about what needs to be done to get the books in order for the sale.

If there is one area where the sale is going to slow down, stall or fall through then it is if the buyer’s accountant or advisor find something in the figures that they don’t like. The more work you can do in the front end to make sure the books are all straight and that the figures add up in relation to the valuation the better.

It’s good idea to have up-to-date profit and loss statements, balance sheet and tax returns (you may be asked for up to 3 years) and I would suggest putting all of this information on the shared drive in a folder called “financials “.

 

Business as usual – This part covers a lot of different areas but is basically making sure that from the outside there is no sign of weakness and the business looks to be running as it always has.

When I’ve looked at buying businesses if I noticed things like negative reviews, lack of activity on social media, outdated website etc I generally saw that as a sign that I could negotiate a lower price. To a buyer these signals suggest that you might be a bit over it or have lost interest and may therefore be willing to accept a lower price.

 

As hard as it is at times, try and keep the momentum up during the sale process and the preparation phase and run the business as if it’s not for sale.

This is by no means all that you need to do during the preparation phase but should give you a good starting point.

Once you feel that you are fully prepared it’s time to move on to the Decide Phase.

 

 

The Deciding Phase

The deciding phase – In the final phase you have a couple of big decisions to make.

 

The first of these decisions is whether or not you still wish to go ahead with the sale of the business.

This might seem like an odd thing to say at this stage but I have found that a lot of people I work with decide to keep their business after they’ve been through this process.

 

By spending time organising systems, processes, documentation and so on the business becomes easier to run, some of the stresses are gone and there is clearer direction. I’ve found myself in this situation, it’s almost like you press the reset button and start it all over again.

If you find that you now want to keep the business a bit longer then make sure you keep updating all the information you put into the shared drive. By doing this your business will be ready to sell at any point and will be worth more than competing businesses and be much easier to sell.

 

 

How to sell your cafe

 

 

If you’re still committed to the sale process then the next decision is whether you will sell the business yourself or sell through a broker.

 

If you going to sell through a broker it’s a good idea to bring in at least three different ones to get a feel for how you might work together. It’s also good way to cross check the valuation of the business and to get feedback on the current market, there could be external factors that your unaware of that may influence the price.

 

Naturally the commission charged on the sale is an important factor, I have been amazed over the years how much this fluctuates from one broker to another.

 

Advertising costs are also something else which seems to vary quite a lot, on the last business I sold I had advertising quotes from brokers ranging from $900 to $3,000. The interesting thing I found with this was that all the brokers also told me what a strong database they had!

 

I would expect to pay cost for advertising and no more, check with the brokers where they will be advertising and ask for a breakdown of costs for each area.

 

 

If you decide to sell the business yourself then you need to consider writing your advertising copy and information memorandum and think about how best to filter enquiries.

 

One of most time-consuming areas of selling a business can be dealing with enquiries from people who are not serious buyers. One of the things that we do on the six weeks to sale program is prepare non-disclosure and confidentiality agreements that can be sent out in the early stages to help filter out any time wasters. These documents also cover you legally should any confidential information be disclosed.

 

At the same time the confidentiality agreement is sent out we generally ask buyers to complete a ten question survey that gives us much better idea about their current situation. For example, are they currently operating another business? Do they require finance? What time scale are they hoping to work too? and so on.

 

This is a very useful process firstly to qualified buyers and secondly if you have more than one enquiry it gives you some information on each buyer but you can use to decide who might be the better option for the business. You can easily create these email questionnaires for free in applications like Typeform.

 

Once you have a buyer interested in the business with the document system you have organised it will be easy for you to share the required information to allow the buyer to carry out their due diligence.

 

When you do receive an offer on the business you will need to draft a heads of agreement document that instructs the legal representatives for each side about the transaction.

As the deal progresses you will then need to co-ordinate with your lawyer and potentially the managing agent for the landlord as well.

 

When dealing with a business sale yourself as well as running the business this part can be challenging at times. With your lawyer, the buyer’s lawyer and the lawyer for the landlord involved in the transaction without some gentle encouragement the process can take a very long time. This is where brokers earn a fair bit of their commission and it can help the transaction to move quicker.

 

As with the previous section this really is an overview of the process and there is more involved which cannot all be covered in this document.

 

Our website contains a lot of useful information for people selling cafes and I am always happy to answer any questions that I can by email.

 

Learn more about how to sell your cafe without paying commission here https://www.gsebusinessconsultants.com.au/sell-my-cafe

Cafes For Sale in Sydney

Cafes For Sale in Sydney

GSE Business Consultants specialise in helping people to sell cafes across Sydney, Canberra,  Regional NSW and throughout Australia.

 

If you are looking to buy a cafe and would like further information about any of the businesses listed please register as a buyer and complete the Confidentiality Agreement. 

 

Once logged in you will be able to view financial information that is only visible to registered users. Once you have read through this information feel free to get in touch to request a full business profile which will show the full details and address of the business.

 

Please note that we do not send these details out without having a conversation with you first, its really important that we understand exactly what it is that you are looking for.

 

Many Cafes for Sale in Sydney that we work with are not listed on the website and, by gaining a clear understanding of your needs this will enable us to offer you opportunities that you may not otherwise have found.

 

If you are considering the sale of your cafe I would love the opportunity to meet with you and discuss your options. As you are probably aware there are hundreds of cafes for sale in Sydney at anyone time.

 

To secure the right deal you need to make sure you work with a specialist and with somebody who has been where you are and knows the business inside out.

 

If you have a cafe for sale in Sydney and would like to have a chat to talk about the best way forward and,  ensure that you sell for the right price and the right time give us a call on 1300 52 21 79.

 

We also have a Private Facebook Group for anyone thinking of selling their Cafe the group is called “Exit Planning For Cafe Owners”  this group is a community of cafe owners and industry professionals who are coming together to share the best tips, tricks and insights to selling cafes and restaurants without the struggle, and without paying thousands in commission!

Find the Exit Planning Group here: https://www.facebook.com/groups/2124440880959192/?source_id=1648444935438475

 

Check Out the Top Cafes in Sydney 2018

Check out Sydney’s Top 20 Cafes of 2017

How to Calculate Your Add Backs When Selling a Cafe

How to Calculate Your Add Backs When Selling a Cafe

 

Video Transcript


 
As we move into the preparation stage, a really important part of that is making sure that we get the price on the asking price of the business right. So, we want to make sure that you’re going to get the best possible return that you can from the sale. We also want to make sure that we’re not overpricing, because if you overprice the business, you’re going to get less inquiries and the chances are it’s going to take a lot longer to sell and you’ll end up having to drop the price later on. So, working out that is extremely important. There’s two main drivers we’re looking at when we look at the value. There’s probably about seven or eight different factors, but the two biggest ones are going to be the lease, which is covered in a separate video, and the profit, which is going to be part of what we talk about in this video.
 

So, when we’re looking at the profit of the business, we want to make sure that we’re maximizing the amount that we can demonstrate that the business is making. The value of the business and the asking price is going to be based on a multiple of the net profit that we can show. So, it stands to reason that the more that we can add back into the profit and demonstrate that the business is making more, then the higher the asking price is going to be. So in this video, we’re talking about add backs and I’m going to run through exactly what they are now. If you haven’t heard that term before, don’t worry. We’re going to break that down. What they are, how you can find them, and then how to present them to the buyer.
 

An add back basically is a cost which is not going to be passed on to the new owner. So, it’s going to be something that you put through the books or that’s in your profit and loss, which isn’t related to the way that the new person who buys your business is going to be running it. So, that’s going to include things like any personal expenses that might be in there, mobile phones, motor costs, that kind of thing; loan interest if you’ve borrowed money to buy the business or set the business up, and also things like equipment loans and so on. Any kind of loan costs that the new person won’t incur. Again, that would be classed as an add back. Depreciation is something that you will see in your profit and loss. If you’re not sure what that is, that’s basically an accounting method that’s used to reduce profit, depreciating the value of the assets that are held in the business.
 

If you’re not sure, you want to find out what that is, do have a look on the profit and loss, but of course just run that past your accountant if you’re not entirely sure. Also going to be wage adjustments. So that would be things, for example, if you weren’t working full-time in the business and the business was being looked at in the basis of it being an owner-operator business, you’d make adjustments to the wage figures there. And, in the same way on the other side of that, if there was yourself and your partner working there, not drawing wages through the business, the profit effectively is going to look inflated. So, you would then be adding costs into the wage line. So, it’s an important thing that you’re demonstrating true and accurate profit and a good representation of what the next person buying your business can expect to earn. And that’s going to be to figure, the net profit figure, used in order to value the business.
 

The easiest way to work out what they are, what those add backs are, is to do what I’ve done here. All I’ve done is export a profit and loss report. In this case, it was from Xero to Excel. You can see on the right-hand column here, I’ve gone through line by line and picked out things here which would effectively be an add back. So, you can see in this example there’s loan interest. There’s also, there was an overspend on consulting and accounting that this particular business spent a lot more money than you would normally expect to spend, so there’s a proportion of that been added back in. What else have we got there? Subscriptions which didn’t relate to this business. So, go through line by line and anything that you can add back in legitimately, make sure that you’re doing that.
 

Again, depreciation showing here is a reasonable figure. So, well worth doing and you’re going through to give yourself a total of what the add backs are going to be at the bottom. In this case, you can see it was $33,000, so well worth doing. Adding that onto the bottom line’s going to make a big difference. The calculations that I’ve put down the very bottom here, you’ll see there is an allowance made in this case for management wages. The net profit which is shown on the P and L is carried across and the add backs that we’ve just identified in the right-hand column there are added down, to give you the true adjusted net profit figure at the bottom. And this would be the figure then that’s used to work out the appraisal figure to be passed on. Now, if you don’t want to give out the figures in this information, there is a download under the video which will give you a schedule for add backs. Looks something like this. So, you would just take those lines from the right-hand column there, add them into this schedule …
 

Again, this is going to total them up at the bottom. You can put notes on the right-hand side there. And, you would then send this out, as you send out the profit and loss, as you send out the other figures. You would go through and you’d include this in it so that the person buying, the person looking at the business, can understand how you’ve calculated the net profit and what those add backs look like. So, hopefully that all makes sense. As always, if you’ve got any questions or feedback, feel free to get in touch in the normal way. Otherwise, I will look forward to seeing you in the next video.

What to Ask Your Solicitor before Selling Your Cafe

What to Ask Your Solicitor before Selling Your Cafe

 

 
 
As part of the planning phase, we’re going to talk in this video about what you need to discuss with your solicitor. Setting up an appointment with your solicitor early on is one of the most important things to do because you’re going to be reviewing the lease with them. If there is an issue with the lease or something which needs changing, it can be quite time consuming, so good idea to kick this meeting off first.

As soon as you start thinking about selling or planning the sell of the business, set up an appointment with your solicitor and start going through some of the things in the lease that could potentially affect the sale. If you’re anything like me, you probably haven’t looked at the lease since you bought the business.
I tended just to deal with the solicitor at the point of purchase and then didn’t give it a second thought. Maybe you might have looked at it when the rent went up if there was a review, but normally, you kind of forget about it, so a great time to dust it off and revisit some of the important clauses in there, which could affect the saleability and the price of the business.

When you get to sit down with your solicitor, some of the really most important things to look at

Looking at how much time there is left on the lease, do you think that that is going to represent good value to the person that’s looking to buy the business? With what you’re expecting or what you’d like to achieve for the sale price, is the value in line with what’s left on the lease?
You have to ask yourself whether the return on the investment for what you’re expecting is going to be viable. That’s a really important thing. Chances are you might well know that off the top of your head but get your solicitor to review that with you and make sure there’s nothing in there that you’re not aware of. In general the longer that there is left on the lease the better.

When and how much are the rent increases?

Secondly, you want to look at rent increases. Chances are, again, you may well know that off the top of your head. How often are the rent increases and how much does the rent increase by? This is something that I get asked a lot in the early stages, so I try and proactively deal with that with the advertising and the marketing. We’ll actually put that out there early on so people know what that is.

Generally speaking, it’s going to be an annual increase. Usually it will be either by CPI or it will be a set percentage. Make sure you understand what that is and let’s use that in the marketing, just to save people asking questions early on. It cuts down the amount of initial inquiries you get.

What does the lease say about assignment?

Now assignment is basically the transfer of the lease from you over to the person buying the business and all leases are going to have something in there about the assignment process. By reading through this and revisiting this clause, you’re going to get a good indication of how much information the landlord or the managing agent are likely to need.

The lease will also state who is responsible for the legal fees. Now nearly always, it will say that you, as the lessee are responsible for paying the legal fees of the landlord. In some cases, there might even be an additional fee for them processing the application, so make sure you’re all over that and you understand who is responsible for paying.

Chances are as I said, it’s going to be you but what you can do at this stage is get your solicitor to make sure when they draw the contract of sale out, that they only put 50% to you and 50% to the buyer. Nine times out of ten, when you do this, the solicitor acting for the purchaser very rarely picks up on it and it normally doesn’t get questioned.

This is a great way just to save a little bit of money or to save 50% of the landlord’s legal fees just by making sure you get that in at the start. You have to give your solicitor instructions to do that because sometimes, they miss it and the contract will just go out. Once that has gone out, it’s very hard to then go back and try to get it changed.

Just make a note of that. It’s a really important think just to try and save yourself 50% of those fees. It’s definitely worth mentioning early on.

How Much Will They Charge You?

Finally, you ought to be asking how much they’re going to charge you. You may have been with them for a long time, but this may be the first time you’ve used them for something like this. Make sure you understand what that cost is going to be to you because when you sit down and start working all of your numbers out, like what you’re actually going to be left with at the end of the sale price, that’s an important figure. The legal fees are a big chunk of the fees coming out of the sale, so make sure you know what your solicitor is going to charge you.

If you feel it’s too much, don’t be afraid to question it. For this kind of thing, if it’s a straightforward transaction, it shouldn’t really be any more than two and a half, maybe push three and a half thousand dollars. If it’s towards the top end of that, then you can probably shop around and get a better deal.

You don’t have to go with the solicitor that you’ve got history with for this kind of thing. It’s really just about making sure you’re comfortable who you’re working with and then they’re not going to be charging you too much.

Well that has covered some of the key points that you should be discussing with your solicitor and in the next video, we’ll be looking at what you need to do with the financials, setting up with your bookkeeper and then going from there down to having a conversation with your accountant.

Well, that’s it for now, I’ll see you in the next video.

What to Ask Your Solicitor before Selling Your Cafe

How to Apportion Goodwill, Fixtures and Fittings

How to Apportion Goodwill, Fixtures and Fittings

 

 

The split between goodwill fixtures and fittings is something that will be agreed as part of your sale negotiation, knowing your tax position and what will suit you best is going give you the best chance of getting the terms that you want.

If you have this figure worked out before you agree the sale then you can make sure that your solicitor adds this figure to the first draft of the contract.

In this video from our Six Steps to Sale Program I break down what the apportionment is and how to go about working out what yours should be.

 

 

How to Apportion Goodwill, Fixtures and Fittings

Video Transcript

Let’s talk about how to apportion Goodwill, Fixtures and Fittings when selling your cafe. Now, if this is a term you’re not familiar with, don’t worry. I’m going to go through and break down exactly what it is and what you need to do.

 

 

The apportionment of goodwill, fixtures and fittings is, basically, it’s a split between the value or the sale price of the business. It’s going to be broken into two parts, so, firstly, all the plant, fixtures and fittings, so that’s all of your kitchen equipment, all of the inventory, furniture and all that sort of thing, that forms one part of it and then, on the other side, it’s the goodwill that’s being applied to the business’ sale price.

 

 

It’s really good to be on the front foot with this and make sure that that you’ve taken some advice early on so that you know what your tax position is and what split your accountant suggests is going to benefit you most. It will always form part of the contract of sale, and it’s going to be the figure that’s used for tax purposes for you and for the purchaser. Its a really good idea as I mentioned just to make sure that you know what your tax position is and what your accountant suggests that you should do in regards to that split, so all you need to really worry about at this point is taking some advice, so talk to your accountant and make sure that you find out what they suggest about that split. It’s going to depend on your personal and business tax situation.

 

 

Now, normally speaking, when you’re the seller of the business, it’s going to be in your interest for that split to be higher on the goodwill side, and for the person purchasing, it’s usually better for them to have it higher on the fixtures and fittings so that they can then write down the depreciation at a higher level, so do take some advice on that. It’s not a one-thing-fits-all. It’s going to be very specific to your business and your personal tax situation, so make sure, as part of that, it’s on the checklist there for what you should discuss with your accountant, but make sure that that’s a figure that you’re aware of.

 

 

Make sure that when you do get to the contract stage of your sale that you’re going to advise your solicitor this early on, so it’s a great idea to put this into the first draft of the contract. Sometimes, this won’t even be questioned by the purchaser, so, as mentioned, good idea, be on the front foot, be proactive, make sure that you know what’s going to suit you best.

 

 

Having said that, you need to be prepared to negotiate. It is usually something that a savvy buyer with a good accountant and a good solicitor is going to probably pick up on what you’ve put in there and realise that that’s not to the best advantage of their client, the purchaser, so you may well need to negotiate on that, so be prepared to do that.

 

 

That’s a very brief look what the split between goodwill and fixtures and fittings is. It’s nothing that that you need to be too concerned about, but it’s something that you should be taking some professional advice on from your accountant just to make sure that you’re fully prepared and, when you do get to that stage, as I said, make sure that you communicate that split that you’re aiming for with your solicitor and get in the first draft of the contract early on. You may find there’s no negotiation about that at all and it’s accepted on your terms, which, obviously, for your tax purposes is going to be perfect.

 

 

Hopefully that all made sense. If you’ve got any questions, as always, get in touch in the usual channels, let me know. I’m more than happy to answer any queries you might have about this.

 

 

 

Industrial Style Northern Beaches Cafe

Industrial Style Northern Beaches Cafe

This well-known Café on The Northern Beaches has been established for more than 4 years and, has been with the current owners since opening.

 

There are approx. 10 seats outside and 25 inside, the café is 54 square metres internally, with additional storage area.

 

Current coffee sales are 23 KG per week and the café also serves breakfasts, burgers, salads and range of cakes. There is also a range of soft drinks, milkshakes, and recently added a small number of smoothies.

 

This business would suit an owner operator that is passionate about good food and good coffee, as its point of difference is unique menu offering that has been recognised by local customers and local media. (a few articles in the Manly Daily) this has enabled them to build up a steady following and substantial amount of regular customers.

 

The café is positioned in the central part of Mona Vale with ample parking, 3 local schools, and passing trade from a major supermarket and other successful local businesses.

 

 

 

Industrial Style Northern Beaches Cafe

Years Est
4 Years

Years With Current Owner
4 Years

Staff No
4-5 Staff on the books in total including a Barista, one chef, 1-2 all-rounders. (All casual)

Lease Info
New 3 x 3 Lease . – CPI increases – A 3 month bond is required

Trading Times
Monday-Saturday 7.00-15.00 Closed on Sundays and Public Holidays

Size of Premises
54 Square Metres

Seats Inside
25

Seats Outside
10

Busy Beachfront Cafe & Restaurant

Busy Beachfront Cafe & Restaurant

This well established Café & Restaurant has an area of approx. 250 square metres and occupies a prime beachfront location on The Northern Beaches. There are 90 seats inside and 32 on the designated outdoor seating area.

The café offers a wide range of breakfast dishes as well as a full lunch & dinner menu, kids menu and dessert menu. In addition to catering for locals and tourists the venue is a popular location for functions and they offer set menu packages to suit different budgets.

The café has been established and under the same ownership for more than 20 years. An exciting opportunity now exists for a new owner to build upon this solid foundation and take the business to the next level.

**For confidentiality the images in this ad are generic **

Busy Beachfront Cafe & Restaurant

Years Est
20

Years With Current Owner
20

Staff No
The business is currently run by the owner, two chefs and a team of casuals.

Lease Info
New 5×5 year lease granted Jan 18 – 5% increases – A 3 month bond is required.

Trading Times
Monday to Sunday 7.00am till 9.30pm

Size of Premises
250 square metres. – Three toilets including one with disabled access. Full commercial kitchen and store room. Outdoor seating area.

Seats Inside
90

Seats Outside
32

Stock Value
8000

Coffee Roasters on The Northern Beaches

Coffee Roasters on The Northern Beaches

 

 

This page is designed to showcase local Coffee Roasters on The Northern Beaches and North Shore to help buyers and cafe owners become more aware of the options available to them.

 

I have added this page as I am often asked for suggestions and recommendations from people buying cafes as well as existing operators who may be shopping around for a new bean or better deal.

 

The roasters listed on this page are all companies that either I have worked with directly or my clients  work with currently.

 

As with anything it pays to shop around when looking for a coffee supplier and, your decision to work with a particular roaster should be based on many different criteria.

 

It is quite likely that whoever you chose are going to become one of your biggest suppliers so you need to make sure that you feel that you can work long term with the roaster and that they will support you on an ongoing basis.

 

Whilst I am a great advocate for driving margins and reducing food costs wherever possible the price per kilo should be lower down your list of questions when speaking to roasters. In my opinion it is far more important to see how you will be able to work together to grow your business, after all the better you do the better they will do.

 

Many roasters will help you out with equipment, training and branding in return for agreeing to buy from them for a certain period of time, currently this seems to range from 1-3 years.

 

One of the best things I can suggest for you to do is to go and visit all of the roasters that you are considering. Meet with the owners, sales reps and roasters and get to know the company, decide whether they are the type of company that you can see yourself working with long term.

 

Once you have visited a few roasters and of course tasted more espresso than you thought possible then you can start thinking about price.

 

In most cases the price per kilo will not vary greatly between like for like roasters, you should really be motivated by taste of the coffee and your feel for the company when making your final decision.

 

As coffee is likely to be one of the mainstays of your business and your customers will vote with their feet if it is not good enough then opting for an inferior bean to save a couple of dollars per kilo will hurt the top line more than it will help the bottom line.

 

I hope this page helps you become more aware of some of the great Coffee Roasters on The Northern Beaches that you have to choose from, if you have any questions, comments or feedback please feel free to get in touch anytime.

 

Quattro Coffee Roasters

 

Coffee Roasters on The Northern Beaches

 

 

 

 

 

 

 

2/3 Apollo St Warriewood NSW 2102

P: (02) 8919 2125

[email protected]
quattrocoffees.com

Quattro Coffee Roasters is all about the highest quality coffee sourced from around the World and Roasted in Australia. Time is spent on cupping to ensure just the right roast profile is applied so the coffee is just right for the best cup of coffee possible.

We are called Quattro because not only do we believe in the heritage of coffee we believe that there are 4 really important aspect to creating the perfect cup

– it starts with People critical at all stages

– then the Bean is selected direct from farms in the coffee belt

– the green bean is then Roasted with care and attention

– finally it’s down to the Brew, whether it’s a stove top, a Siphon or an Espresso machine get the grind right and brew away…

 

 

 

 

 9 Bar Coffee

Northern Beaches Coffee Roasters

 

 

 

 

 

 

 

 

Factory Unit 6/4 Hayes Street Balgowlah NSW 2093

P: (02) 9949 3275

M: 0414 527 663

[email protected]

www.9BarCoffee.com

 

9Bar Coffee are a service company located in Sydney’s Northern Suburbs offering service for most makes of espresso coffee machines and  coffee grinders. 9Bar also trade new and used coffee equipment Australia Wide.

Jason Marks, owner operator of 9Bar Coffee has over 20 years experience within the coffee industry.

Jason’s passion for espresso coffee has led to the creation of a premium coffee brand 9Bar Coffee and more recently the revolutionary espresso machine espressoDECK .

Jason believes that proper training, fresh coffee and well-maintained espresso equipment improves your coffee standard, he sees it as a proven way to a better cup and increased coffee sales.

Feel free call or email Jason any time to see if  he can help you with your espresso coffee needs.

 

 

 

 

 

Little Italy Coffee Roasters

 

Northern Beaches Coffee Roasters

 

 

 

 

 

 

18/8 Tilley Lane, Frenchs Forest NSW 2086

P: (02) 9453 2009

[email protected]

www.licr.com.au

 

Little Italy Coffee Roasters was established since 2007 and since then they have built up a loyal following of wholesale customers.

Brothers Adam and Guy Bortz who run the business pride themselves on offering a bespoke roasting service tailored to their clients specific needs. Little Italy have move than 15 different blends available and, they also work with their customers to develop individual roasting profiles if required.

Many of the house blends that you see in Sydney cafes packaged with the cafe’s logo come from Little Italy’s purpose built facility on The Northern Beaches. In addition to personalising the coffee packaging Adam and Guy also offer bespoke printed cups which can either be co branded or printed with just the cafe’s logo.

A wide range of coffee machines and grinders are available as part of the supply agreement and different options can be put together to suit any budget.

Complimentary barista training of all levels is also available to customers either in store or at Little Italy’s premises in Frenchs Forest.

 

 

Background Coffee

 

Background Coffee are on of our featured Northern Beaches Coffee Roasters.

 

 

 

 

 

 

 

Shop 1/ 61 Middleton Rd
Cromer, NSW 2099
Telephone: 1300 44 26 33 (24 hours)
Email: [email protected]

https://backgroundcoffee.com.au/ 

 

The Background Coffee  journey began back in 2009 when Lecio (owner) set up his first café serving speciality coffee in Manly.

 

After successfully operating the business for 12 months Lecio decided to install a 2Kg top bench roaster inside the shop. The locals loved the flavours of the high quality speciality coffee and the café became a huge success.

 

From there the demand for Lecio to supply other cafes began to grow and in 2012 Background Coffee was established. Since then the wholesale business has grown significantly and is recognised as one of the leading roasters on the Northern Beaches.

 

Background take a wholistic approach with their clients and in addition to providing barista training and equipment maintenance Lecio and his wife Patricia also use their experience of buying and selling cafes to help owners improve profitability and systems in their cafes.

Do I Need To Pay GST When I Sell My Cafe?

Do I Need To Pay GST When I Sell My Cafe?

 

 

 

Do I need to pay GST when I sell my Cafe?

 

The question about whether or not GST is payable on the sale of a cafe is something that seems to confuse many people and, it is certainly something that you should look into before you sell.

 

The short answer to this question is no (providing that you meet certain criteria outlined by the ATO).

 

The term used commonly in this ruling is “supply of a going concern” simply put this means that the business is still trading.

 

The ATO make it quite clear that if the business is being sold as a going concern then there will be no GST payable on the transaction.

 

What determines if a business is being sold as a going concern?

 

In order for the business sale to be deemed as a going concern then you must make sure that:

 

  • The business continues to operate up until and including the date of supply (settlement)
  • All of the equipment required to continue the operation is supplied as part of the sale.

 

Most cafe sales will fall into this category. An example of an exception might be a sale of fixtures and fittings in a shop which is no longer trading.

 

If you are selling your cafe as an operational business then the sale will most likely be considered “a going concern”.

 

What else needs to be considered to ensure you don’t have to pay GST on your sale?

 

In addition to making sure you are selling as a going concern you will need to make sure that both you and the person buying the business have agreed that the the business is being sold as a going concern.

 

This is generally taken care of in the contract of sale, this is quite a standard clause in most contacts and looks something like this:

 

By you both signing this contract you will have effectively agreed that the sale is as “a going concern”

 

The buyer must also be registered for GST

 

Whoever is buying your business must also be registered for GST in order for the transaction to be GST exempt.

 

If you can meet all of the criteria above then your sale will likely not include GST.

 

Where can I get more info?

 

You can read more about the ATO guidelines here

https://www.ato.gov.au/General/ATO-advice-and-guidance/In-detail/Private-rulings/Supporting-documents/GST/Sale-of-a-business-as-a-going-concern/

 

Details about the tax ruling can be found here

 

http://law.ato.gov.au/atolaw/view.htm?docid=GST/GSTR20025/NAT/ATO/00001

 

Speak to your accountant and double check your personal situation and if you are still not sure then the ATO are very helpful in explaining this.

Contact the ATO directly on 13 28 61

 

I hope this helps make the understanding of GST on cafe sales a bit clearer, if you need any help or advice feel free to get in touch at any time.

Cafes For Sale on the Northern Beaches Sydney

Cafes For Sale on the Northern Beaches Sydney

Cafes For Sale on The Northern Beaches Sydney

 

View more cafes for sale in Sydney Here

 

 

 

GSE specialise in helping cafe owners to sell their business at the right time and at the right price.

This page shows some of the Cafes For Sale on The Northern Beaches Sydney that we currently have listed. We also work with many cafe owners that prefer not to list their business on the internet so, if you are looking to buy a cafe in Sydney make sure that you register as a buyer with us.

Once registered you will be able to login to our website and view financial information about the businesses that we have listed, you will also receive advance notification about new businesses before they are officially listed.

 

 

 

Read news about Northern Beaches Cafes Here

How to Increase the Value of a Café

How to Increase the Value of a Café

How to Increase the Value of a Café

 

In some ways selling a café is very different to selling other businesses but there are several ways in which you can add value to a café that are pretty much the same with most businesses.

 

So how can you increase the value of your café?

 

 

Reduce the Risk

One of the factors that will reduce the value of your café and also increase the time on the market is when buyers sense that there is some risk associated with the purchase.

 

Examples of this might be a short lease, a lease with a demolition clause, declining net profit and even a poorly maintained shop.

 

It’s a really good idea to start planning the sale of your business as early as possible, ideally your business should always be ready for sale but I appreciate that this is not always practical.

 

Negotiating a new lease or arranging an assignment can be a lengthy process so, before you commit to the sale process it is a good idea to meet with your solicitor to discuss any potential issues with either option.

 

With an incoming tenant most landlords and managing agents are going to want some proof that the person looking to purchase your business is going to make a good tenant. Make sure you understand exactly what your landlord will require to assess the purchaser and then make sure that the buyer is aware of this early on.

 

Another thing that worries some people is when they think that the business is too reliant on certain employees (barista, chef etc.) or even yourself. Anything you can do to reassure purchasers that you have a café which does not rely on one or more individuals is going to reduce risk and increase the  price.

 

This could be achieved by having a documented system in place for things like recruitment, training and operations. What you really want to aim for is to show that anyone could buy the business and follow your systems to keep it running the way it is currently.

 

 

 

Improve the Bottom Line

 

It seems basic to mention this but I often see businesses that have the opportunity to increase profit without making too many changes.

It’s tough when you get into the mindset of selling to stay focused on profit but a few small changes can often have an impact on the bottom line that can help to increase the value and saleability of the café.

 

Start with your biggest impact areas:

 

  • Wage costs – How is you wage cost percentage? Are there ways that you can tighten the rosters and save a few dollars here and there?

Can you cut back on a few casual hours?

 

  • Food costs – How is you Gross Profit percentage?

 

Along with wage costs supplier expenses are another major weekly outgoing for cafes and often an area to make quick improvements.

 

How does your gross margin compare to the industry average?

 

Are you confident that you have the best deal possible from your suppliers or can you negotiate some more discount?

 

Are you monitoring the food waste and stock control?

 

Are you confident that the margins are right for all of your dishes? When was the last time you checked?

 

 

Why Bother?

 

If your café is taking $10,000 per week and the food costs are 38% a reduction of just 2% could result in an extra $10,400 in annual profit which will in turn increase the value business, lower the risk and make you a few extra $$ whilst the business is on the market.

 

 

Drive the Top Line

 

One of the key metrics that buyers look at are the weekly sales of the café, it therefore makes sense to make sure you are doing all you can to maximise these, right? You would be surprised how many businesses I see that have stopped driving sales because they are on the market or the owner is thinking of selling.

 

Many buyers will see the lack of marketing such as social media posts, new menus and promotions as a sign that the owner has given up or is too busy with other commitments.

 

When I was buying cafes I was always pleased to see a neglected Facebook page or Instagram account as this signalled that I was more likely to get a deal.

 

Try and keep running the business like you just started it, keep the social media up to date and keep working on ways to bring in more business.

 

Focus on the only three ways to grow the business:

 

  1. Get more customers (advertising, social media etc)
  2. Sell more to your customers (would you like fries with that?)
  3. Sell more often to your customers (loyalty programs etc)

 

 

If you combine the impact of improving the margins mentioned above (wages and food cost) with an improved top line the impact can be very beneficial.

The value of the café is ultimately going to be determined by the net profit so the more you can do to improve the bottom line the higher the potential value will be.

 

I hope that this has helped you learn a little more about How to Increase the Value of a Café, you might also find this 20 point checklist useful.

 

If you have any questions about how to maximise the value of your café feel free to email me [email protected]

 

 

 

 

 

 

 

How to Sell a Cafe - Changes to Lending Criteria

How to Sell a Cafe – Changes to Lending Criteria

I wanted to make you aware of some changes that we’ve noticed recently with the lending criteria and the way that banks are looking at small business finance in particular with business loans for cafes and food businesses.

These changes could affect the sale of your cafe in the later stages which is naturally something that we want to try and avoid.

With this in mind, we’re going to change the way that we’re working and the way that we are preparing our clients’ businesses for sale and I wanted to give you the heads up quickly so that you’ve got the opportunity to do the same.

We have become aware of this change through a client of ours who’s got a really good buyer lined up. This person has industry experience, they have got cash in the bank, they’ve got good equity in their property and they have made a solid offer.

On paper these guys are ticking all of the boxes, they are the kind of buyer that you wish there was more of.

The deal has gone really smoothly. up until the point that the bank have looked in more detail about the lease.

The lease is a five by five, there are four years gone, so there’s one plus five left which in terms of return on investment and for the level of the deal itself is quite reasonable.

The buyers had previously spoken with their finance broker about the lease term and he saw no problem with it at all.
When the broker submitted the paperwork to the bank however there now seems to be a shift in the way that they are now looking at the remaining term before the option.

Because there is only a relatively short period of time left on the lease before the time that option is due to be exercised the bank has now refused to lend on that business.

 

It now appears that the time frame that you need to focus on is not the just the overall term but also the period of time remaining before the option kicks in.
If you’ve got a business that you’re looking to sell and, that someone is going to need finance for, you should be aware of this and prepare accordingly.

 

By preparing thoroughly you can overcome the problem before it arises which is really what good exit planning is all about.
Hopefully that’s given you a little bit of an insight into an extra something that’s worth taking into account as you start preparing your cafe for sale and maybe that will be one thing that helps you to get your deal across the line a little quicker.

I wish you all the best with the sale of you business and please feel free to let us know if you have any questions at all.

If you have not already found our Exit Planning For Café Owners Facebook Group why not join us here

https://bit.ly/2CtobUa

 

If you would like to learn more about preparing your cafe for sale then why not book in a call with us. On this 45 min call we will cover the following with you:

• What the current market value of your cafe might be.
• The steps you need to take to prepare for the sale.
• What the market is like at the moment.
• How to make sure that your cafe stands the best possible chance of selling.

 

There is no charge for this call and there is no obligation. At the end of the call if we think that we can help you we will let you know about how we work and, if we don’t think we can help we will give you some advice about alternative options.

 

Either way you will come off of the call with a much clearer idea about the potential value of your business and of what you need to do next to achieve a sale.

 

Click on the link below to book in a time that suits you best, once you have selected a time you will be taken to a form which has around 10 questions about your business that will help us to get a better understanding and save time on the call.

 

Book your call here
https://www.gsebusinessconsultants.com.au/apply

Is Your Cafe Worth What You Want For It?

Is Your Cafe Worth What You Want For It?

 

After an appraisal call with a client earlier today I wanted to quickly post this to give you some help around the thought process of valuing your business.

As I have mentioned in previous posts many people that we work with are concerned about keeping the sale of their business confidential.

One of the biggest factors in selling without too many people finding out is make sure that your business is not on the market for any longer than it needs to be, price plays a big part in this.

Sounds obvious right?

Pricing the business correctly is something that we find people often struggle with.

When you get this wrong there are several ways that this can hurt you and, all of them cost you financially.

Basing the valuation of your business on what you paid for it is a flawed method and here are a couple of examples of why that is:

The cafe owner that I spoke to earlier today had owned her business for three years.

During the time that she had owned the business the sales, profits and expenses had all increased more or less in line with each other.

With that in mind it’s understandable that she thought the business might be worth a similar amount as to what she paid for it but here is what was overlooked.

The current market is very different to when she bought the business, three years ago there are differences in buyer confidence, competition, number of businesses on the market and so on.

The lease had not been renewed meaning that it was less than half the length of the original term and only had two years left.

The suburb had seen about four new cafes open and, whilst this business is holding its own the lack of redecoration during the time of ownership meant that the shop is looking a bit tired in comparison to some of its newer rivals.

When we discussed the figure that they had been trying to sell for I was interested to know how that number had been worked out.

The asking price had been based on what they needed to achieve for the business as well as what they had originally paid.

Both of these reasons are completely valid and can be achieved

BUT….

You need to work backwards and make sure that the numbers stack up, if they don’t then you need to do some work on them before you list the business.

By starting with the end in mind (like any good plan) you can work towards getting the figure that you want or need for the business.

The process of thorough preparation will also make sure that you have a clear idea of the current valuation and, if there are issues holding the value back this process will highlight them.

IT IS POSSIBLE to get what you what for the business if you plan and prepare properly.

Many people think that in order to get a quick sale you need to get the business advertised as quickly as possible and start generating inquiries, this could not be further from the truth.

Think about the sale in a similar way to setting up your cafe, how good would your lunch service be if you just rocked up and opened the doors at 11.45am with no prep done?

I am sure we have all had days where we have been smashed and underprepared, I have one particular Mothers Day that has scarred me for life! Not a good feeling right?

Try and look at the sale of your cafe in the same way, the better prepared you are the smoother the sale will go and the chances of you getting the return that you want increase significantly.

We have created a brand new Facebook community for cafe owners and industry professionals to share the best tips, tricks and insights to selling cafes.

Get exclusive access to live Q&As, actionable advice, and an amazing community of like-minded hospitality professionals.

I would love you to join our growing community and if this sounds like something that might interest you please click here

The group is all about helping cafe owners to sell in less time and for more money, watch this space for more tips, advice and battle stories about selling cafes.

We would welcome your comments, feedback and suggestions about what you would like help with so feel free to post in the comments section below.

If you would like to learn more about preparing your cafe for sale then why not book in a call with us. On this 45 min call we will cover the following with you:

  • What the current market value of your cafe might be.
  • The steps you need to take to prepare for the sale.
  • What the market is like at the moment.
  • How to make sure that your cafe stands the best possible chance of selling.

There is no charge for this call and there is no obligation. At the end of the call if we think that we can help you we will let you know about how we work and, if we don’t think we can help we will give you some advice about alternative options.

Either way you will come off of the call with a much clearer idea about the potential value of your business and of what you need to do next to achieve a sale.

Click on the link below to book in a time that suits you best, once you have selected a time you will be taken to a form which has around 10 questions about your business that will help us to get a better understanding and save time on the call.

Book your call here

Cafe - Restaurant For Sale - City Fringe

Cafe – Restaurant For Sale – City Fringe

This European & Mediterranean style café is well known for its unique breakfast and brunch menu. Dishes served here include meat, seafood and vegetarian specialities as well as a wide range of house made drinks such as juices & smoothies.

 

The coffee sales are around 15kg per week (mostly takeaway) and there is also a range of more than ten different teas to choose from.

 

The average spend per head for dine in customers is around $30.

 

The business has been established for five years and has shown continued growth year on year. The current owners have perfected the menu over this time to balance customer demand with ease of preparation as well as maximising profit margins.

 

The shop is approx. 28 square metres and has been fitted out in with a stylish European feel. The seating area inside has seven tables and seats fourteen and there are an additional six seats outside. The kitchen is custom made and is designed to utilise the space required for the menu and style of service.

 

Behind the kitchen there is a customer toilet and at the rear of the shop there is a cool room, custom built storage area and car parking space.

 

The tables in this café turn over very quickly and at the weekends they can easily serve more than 150 covers. Customers have welcomed the waitlist system implemented at busy times and most people are more than happy to wait 30-60 mins for a table.

 

During the five years that this café has been operating the owners have built a very loyal customer base, the café also has strong ratings on all the review platforms and a good social media presence. The café also benefits from a lot of tourist trade and has become a destination for many overseas travellers.

 

The current trading hours are Tuesday – Sunday 8am-4pm which leaves plenty of opportunity to extend the hours to Mondays and/or evenings if you wanted to.

 

The Current lease runs until 31st August 2020 with an option to renew for five years plus another 5 years. – Annual 3% increases. A 3 month bond is required by the landlord.

 

Summary

An established and well organised café in a prime city fringe location that makes the most of every inch of space to maximise the return. Ideal for a chef, couple or foodie that would like to walk into a business which is set up and already producing high net profits.

 

The owner is prepared to fully train the new owner and is committed to the continued success of the business.

 

For further information about this business Please Complete this Confidentiality Agreement.

 

**For confidentiality, the images in this advert are generic and do not accurately represent the style, décor or food of this café**

 

View all Cafes for sale in Sydney

 

Cafe – Restaurant For Sale – City Fringe

Years Est
5 years
Years With Current Owner
5 years

Trading Times
Tuesday – Sunday 8am – 4pm

Seats Inside
14

Seats Outside
12

Stock Value
5000

Unique Northern Beaches Cafe with Lifestyle Retail For Sale

Unique Northern Beaches Cafe with Lifestyle Retail For Sale

This unique Lifestyle Café in a thriving Northern Beaches suburb has established substantial patronage in just 20 short months since opening. Known for its ‘great vibe’ with lots of natural light, this café has positioned itself in an ideal physical location attracting regular customers and has built a strong reputation for quality coffee, while offering quintessential products in a popular lifestyle retail shop.

 

Coffee sales are still in the initial growth stage with current sales at 30kg per week and consistently increasing. Breakfasts and simple lunch items are also available, with an easy to manage style of menu, plus a wide range of cold drinks, smoothies and milkshakes. The café currently holds a 5 star health inspection rating, received with the first inspection.

 

Designed with ease of workflow in mind, the cafe fitout is of a very high standard. All equipment in the café is owned outright, including top of the range coffee machine and grinders, as well as a range of top quality appliances. No lease payments to factor in.

 

With the café and retail shop spread over two adjoining shop fronts under one lease, there are approximately 22 seats inside and 24 outside, with room to further increase outside seating. Total internal size is approximately 80 square metres (approximately 40sqm each shop).

 

The current owners have owned and managed the retail side of the business for over 10 years, only adding the café 20 months ago. They are selling due to a desire for a change of lifestyle. Although they are extremely proud of the café they have built, they know that someone with experience or drive can step in and take this business to the next level.

 

Years Est
2

Years With Current Owner
2

Staff No
2 x owners plus 7 casual staff (3 baristas, 2 cooks and 2 café assistants).

Lease Info
The 3×3 year lease commenced on 1 December 2015. CPI Increases. A 3 month bond is required.

Trading Times
Mon to Fri 5:30am to 3pm Sat 6am to 3pm Sun 7am to 12pm Retail shop open until 5pm Mon to Sat, 3pm Sun. A large doorway between the café and retail can be closed at any time to suit.

Size of Premises
80 m2

Seats Inside
22

Seats Outside
24

Stock Value
$32,000

How to Transfer a Liquor Licence NSW

How to Transfer a Liquor Licence NSW

 

 

Transferring your liquor license is not a lengthy or complicated process, the steps outlined below walk you through what you need to do.

 

 

Transfer of your liquor licence

 

You can transfer a liquor licence when you buy or sell a business. This allows the new business owner to trade under the existing licence.

Liquor & Gaming NSW allow a business to continue operating while it considers a licence transfer.  Provisional approval is usually given and the official confirmation of the transfer with follow later.

The licence transfer does not become effective until Liquor & Gaming NSW give provisional approval.

There are 4 ways you can transfer a licence but transferring with consent of the outgoing licensee is the most common.

Transfer your licence with consent of outgoing licensee

This is a straightforward process for both individuals and corporations.
Transferring a liquor licence this way takes two steps:

• provisional approval
• confirmation.

How to apply for provisional approval

You must give Liquor & Gaming NSW the following inforamtion:

• Evidence of Responsible Service of Alcohol (RSA) qualifications.

• If required, evidence of Responsible Conduct of Gambling (RCG) qualification.
(not relevant to cafes)

• If the liquor licence includes gaming machine entitlements, you will also need to provide a direct debit form and data monitoring forms to show there are no outstanding payments. (not relevant to cafes)

• A copy of your NSW National Police Certificate that is less than 3 months old.

• Corporate licensees must provide a current ASIC extract showing directors and officeholders. You can buy this document through the ASIC website

Liquor & Gaming NSW usually confirm your licence transfer within 60 days.

Fees

Please note that fees vary depending on the type of licence you want to transfer.

Online transfers

To complete the online form you will need to download and complete by clicking the button below, once you have filled it out you can submit it using the instructions on the form.

How to Transfer a Liquor Licence NSW
What to ask your solicitor when selling a cafe

What to ask your solicitor when selling a cafe

 

 

When talking to your solicitor about the sale of your one of the most important things to review is the current lease of the business.

 

In most cases we don’t tend to look at this document after we’ve bought the business but during the sale process it’s important to go through this again in detail at it can have a huge impact on the valuation and the ability to sell, I always suggest that my clients make the solicitors meeting one of the first in the process.

 

If you do find it there is an issue with the lease then this can take some time to sort out so its always better to get this checked out early on.

 

Key questions to ask.

 

A few of the key points to review with your solicitor during this meeting are

 

How much time is left on the current lease and do you feel that buyer’s will feel it is long enough in relation to the price that you’re asking for the business?

 

• If you’re not already sure check how often the rent is due to increase and how this is calculated. This is a commonly asked in the early stages it’s good to answer it in the initial marketing.

 

• What does the lease say about assignment?

This is the transfer of the lease from yourself to the person buying the business.

Most leases will state that all costs relating to the assignments to be paid by the lessee (you) and it’s a good ideas at this stage to make sure your solicitor pushes for you to only pay 50%.

 

By giving your solicitor the heads up about this early on you can make sure that this agreement to pay 50/50 is drawn into the contract of sale and its an easy way to save yourself a good chunk of money on legal fees.

I’ve always advised my clients to do this and it’s very rarely gets questioned by the purchaser’s solicitor but, it is important that you instruct your solicitor to do this it can be missed.

 

• How much are they going to charge you?

I’ve noticed that solicitors fees of my clients seem to vary greatly for very similar transaction.

It’s a good idea at this stage to get an indication of what the solicitor is going to charge you in relation to dealing with preparation of the contract of sale and helping deal with the assignment of the lease

 

Understanding what your legal fees are likely to be is important when you work out the sale proceeds you will be left with after all of your costs.

 

If you feel that their costs are too high don’t be afraid to question them or seek other quotes, a lawyer working for you on this does not necessarily have to have any history with you.

 

I work with a couple of lawyers in Sydney who specialise purely in business sale transactions so if you need a second opinion feel free to let me know and I’ll happily pass on their details.

 

Also, just so you know I don’t take any kickbacks or referral fees from anybody that I work with and I only recommend people who I know can genuinely help the people that I work with.

 

I hope this helps, feel free to get in touch if you have any questions about selling your café.

 

 

 

 

 

 

What to ask your solicitor when selling a cafe