Читать книгу Start & Run a Catering Business - George Erdosh - Страница 10

If you buy into an existing business as a partner, make sure you know that business well: the owner, the staff, and the style of catering. There is only one way to know a business really well, and that is to work in it for some time. This usually means forming a partnership with someone who has common goals and interests, and complementary expertise. The business must be able to run profitably without serious friction between the two of you.

Business partnerships are unpredictable. You may get along well with a partner today but you may grow in different directions later. Like marriages, some partnerships succeed, some fail, and some float along without much satisfaction for either partner. If you find a good business partner, you have many advantages, including shared workload, responsibility, expenses, and decision making. In a partnership you don’t have to be an expert in all aspects of catering. In the best circumstances, your weakness is complemented by your partner’s strength. It is also pleasant to take some time away from the business without worrying about leaving it in dubious hands. Taking a week or two off for a well-deserved vacation is especially hard when you are the only key person. There is an unwritten law that says that the week you take off for your own pleasure will be the week every client you have calls about an important event.

You have two choices when buying into a business. You either buy or earn part of the business up to a predetermined share and become a partner, or you work toward becoming a full owner over a period of several years. For instance, you may have worked in a catering business for a while and the owner is approaching the age when he or she wants to retire. This is an ideal situation since you have the time to pay for the partnership slowly over time or add the so-called “sweat equity” of your own labor toward ownership instead of cash. You work for little or no compensation and the value of your time applies to your equity in the business at a predetermined rate. This is not easy unless you also have an income-producing job and the effort you put into the catering business is part time. It is also hard to work for something that gives no immediate return. What if you have worked 1,000 hours over a year (averaging 20 hours a week), which earned $10,000 equity in the business (at a rate of $10 per hour) and all of a sudden business drops off significantly because of an unexpected economic downturn? Since you have not earned enough equity yet, you have no control. You may see your equity slowly lose its value as the business suffers from neglect. At this point your best option is to borrow the money to buy the business outright in order to save the equity you have already built up.

Look out for diminishing personal interest in the business by the current owner. Once the end is in sight, enthusiasm weakens, and you may find yourself taking the brunt of the responsibility, worries, and workload while the owner takes much of the profit.

However you approach buying into an existing business, you must be sure that there is a crystal clear understanding between you and the owner. Everything must be on paper and legally binding. The help of a lawyer familiar with partnerships is essential.

Resolve critical issues before a partnership deal is finalized. For instance, define contributions to the partnership (cash, expertise, property) and the percentage of ownership granted to each partner at the inception of the deal. Arrange for a method of obtaining additional funds in the event of operating cash deficits. Define the responsibilities and remuneration for each partner. Also define when and in what order of priority cash will be distributed. Finally, make sure there are adequate provisions for buying out or removing a partner in the event of unexpected problems, if a partner wishes to terminate the venture, or if a partner dies.

Before making the decision to get involved in a business, here are some sobering statistics to consider:

• According to the National Federation of Independent Business (NFIB), owners who have worked with the same products or services in prior jobs have a 10 percent better chance of surviving over owners who have not.

• Another study conducted by the NFIB and American Express states that 80 percent of small-business people who worked between 60 and 69 hours a week remained in business after three years.

• The same study found that companies emphasizing good service had a higher survival rate than those offering low prices to promote business.

• Of the firms surveyed, 84 percent that started with $50,000 or more investment had a 10 percent better chance of making it than those that started with less than $20,000.

• A survey by the US Small Business Administration found that 65 percent of all new businesses fail within the first five years.

No doubt, the first year or two are going to be critical. There are many government websites, both in the US and Canada, and small-business oriented websites that feature information on starting a business. Here is a list of good places to start your research:

• The United States Small Business Administration: www.sba.gov/smallbusinessplanner/index.html

• Welcome Business USA: www.welcomebusiness.com

• Canada Business, services for entrepreneurs: www.canadabusiness.ca/eng/125

• Business Development Bank of Canada: www.bdc.ca

• Small Business Information: http://sbinformation.about.com