Читать книгу Start & Run a Catering Business - George Erdosh - Страница 8

Restaurants and catering services are often available for purchase, which makes it a buyer’s market. In the restaurant business, the hours are very long; in catering, the pressure is extreme. In both industries, the profit margins are low and the rate of burnout is high.

If you live in a large town or city, chances are you can find a catering business for sale. Along with responding to advertised businesses for sale, write a letter or send an email to every genuine catering establishment in town. Even delis with sideline catering or small restaurants may be possibilities. Unless they are located in high-volume downtown areas where rents are prohibitive, their health department-approved kitchen facilities may be reason enough to consider the purchase. You can always scrap the deli or restaurant part if the purchase price is right. (If you are interested in the restaurant business, have a look at Start & Run a Restaurant Business, another title published by Self-Counsel Press.) However, if catering is a restaurant’s sideline business, its client base may be too small to be of much value to you as a caterer.

A fair purchase price is tricky to determine. Larger businesses with good record-keeping are easier to assess, but smaller ones are notoriously poor when it comes to bookkeeping. You must know the true annual gross and net of the business for several years back to determine the fair price. The higher the annual gross, the better the business looks in the eye of the buyer, and the more the net profit is, the more the business is going to be worth. Good record-keeping by the current owner is a must, although it is as rare as a new client who pays in full, in advance, for an event three months from now.

Get a lawyer to help you with the purchase and an accountant to decipher just how true the records are. Income tax returns are not reliable and the seller isn’t likely to show them to a buyer since the reported gross earnings on these returns are often not as high as the true gross earnings.

There are different formulas to help determine the fair price of a business: one calculates the percentage of the last full year’s gross profits; another is based on the average of the last three years’ net profits. You should discuss this topic with experts, which is why you need a lawyer who can protect your interests and an accountant who will thoroughly check all records, verify their authenticity, and tell you his or her opinion of how realistic those records are. Naturally, you should study the records very carefully yourself. Working with the present owner for a while will likely give you a clue to how good the bookkeeping records are.

If the books and records have been maintained by professionals, you’ll know they are reasonably accurate. But a bookkeeper can only do as good a job as the records given to him or her allow. You never know if receipts are missing due to neglect or if unrelated receipts have been added. For example, when the owner bought a food processor for her home use, did she include the receipt as a business expense in order to reduce her business’s net income? Always be suspicious.

Check the client list carefully and see how often each one uses catering services. Discuss with the owner the style of catering service, the prices charged, the average size of events, minimum and maximum number of guests, suppliers, credit lines, the labor force he or she uses, pay scale, and so on. Other questions to ask yourself: Is this the style of catering I want to do? Can I run the business without the former owner’s help?

Before you utter even one word expressing serious interest in purchasing the business, ask if you can work in the kitchen for a week or two with the crew and go with them to several events — at no charge, of course. Even better, don’t ask; insist on doing so. You will learn a lot about the business and whether it is for you. Remember, you are likely to be in a buyer’s market and the owner will try to bend over backwards to please you. You can do this frontline work while your lawyer and accountant are doing their work.

Remember, total immersion in every aspect of the business is essential. Do nothing else. Drop your social life to a minimum. Live with the business you are interested in buying. Do your research, either in a library or on the Internet, on legal and financial aspects. Perhaps even check out the suppliers, but for now only a cursory check is needed.

Whenever you have free time, work on your recipe collection and food preparation techniques. Work on your efficiency as well.

Once you have worked in the business for two to three weeks, attempt to figure out the costs of labor, insurance, rent, utilities, taxes, vehicles, and so on. Compare your figures with those reported by the owner. Then estimate food costs, or even better, ask for a current monthly food and supplies total and calculate roughly what the current month’s gross and net profits (or losses) are. This exercise will certainly give you some indication of the authenticity of the owner’s records. Discuss your findings with your accountant. Keep in mind that catering income is seasonal and can vary from month to month. The two and a half weeks of Christmas holiday season could bring you 50 to 70 percent of your annual gross income!

Then it is time to develop the purchase agreement and negotiate the price. The owner will likely come up with an asking price, and you will, in consultation with your lawyer, give a much lower figure based on what you feel the business is worth. No matter how far apart you start, eventually you usually can come to a mutually satisfactory agreement.

How you are going to come up with the dollars is not the subject of this book; it could be cash up front, or payments over a year or two, or there could be conditions attached to your payments regarding the seller’s true representation of the business. It will depend on your situation.

Before a purchase agreement is prepared, you and the owner should do a thorough inventory of all equipment and vehicles that are a part of the business. Prepare a complete list of everything, including vehicles; office furniture and equipment; even an approximate amount of china, glassware, silverware, napkins, and tablecloths. Make a separate list of items that will be excluded from the sale, if any. The owner is likely to have personal items, perhaps a collection of cookbooks, files, pictures, and so on. The list of items included with the business should show anything having an approximate value of $50 or more.

The purchase agreement is now the lawyer’s territory. It should include the purchase price, the full list of all equipment and vehicles that are part of the purchase price, and any contracts or events in progress. For example, if much work has already been done on an upcoming event, the owner could be entitled to some of the net proceeds. That, too, should be outlined and included in the agreement.

If the seller is willing to train you or assist you during the takeover period, contract with him or her for a specified number of hours over a period of weeks or months in the purchase agreement. Be specific about what the contracted work will include. For example, the seller might be contracted to attend all catered events for the first month.

The agreement should also include a list of clients with addresses, telephone numbers, email addresses, and contact names; a copy of the rental lease; and many other clauses for mutual protection, like goodwill. Goodwill encompasses the client list, the name of the business, the value attributed to years of marketing, word-of-mouth recommendations, client satisfaction that generates future revenue, and everything else that is part of a successful business.

The third major piece of the agreement is a covenant not to compete. Insist on this. Without this covenant, the seller could set up in another location and keep his or her faithful clients, leaving you sitting by a quiet telephone. The covenant should be for a minimum two-year period, preferably more, and it should specify a geographic area of a 30- to 40-mile radius around your kitchen.

Chances are, once you take the business over, you will lose some clients: perhaps many. You cannot exactly duplicate your predecessor’s style, charm, food, and service. But why would you want to? You have your own style, cuisine, service, and presentation to develop. If you suddenly lose many clients, start worrying and ask clients what changes they would like to see in your service or menu.