Seattle Magazine did an analysis of the costs of opening a 2,000-square foot restaurant and the total costs ranged from $671,000 to $856,000, with, as you’d expect, about 90% of the costs for architects, construction, furniture, fixtures, and equipment. The remainder of the costs were the first week’s labor, food, beverages, etc.
Sounds similar to other industries. Want to open a machine shop, you’ll spend a lot of money on equipment. To become a distributor, you have to have inventory. Service businesses require equipment, parts, and (perhaps) vehicles.
The above is one reason I have a business helping clients buy and sell companies. Unless you have an idea for something new, bold, and exciting (I think all people starting a restaurant think that’s exactly what they have) why not buy an existing business? As long as you put the adjectives, mature, profitable, and fairly priced in front of the word business.
Buyers do more than get a profitable platform with customers, employees, and cash flow. They help the seller move on to their next great adventure in life. Or, as I like to say, when sellers do it right, they exit with style, grace, and more money plus maintain their legacy by selling to the right buyer.
But it doesn’t have to be an individual buying a company, it can be another company and that’s why I have a new book almost finished on the topic of Growth by Acquisition. A company can diversify their product offerings, expand their geographic footprint, take a competitor out of the market, or a combination of the preceding and my other 16 reasons why to consider growing by acquisition (Chapter Two).
“A first-rate soup is more creative than a second-rate painting.” Abraham Maslow