<a href=showthread.php?s=&postid=15250210#post15250210 target=_blank>Originally posted</a> by Monkeyfish
Before getting involved with a business ask to see their business plan, past year's expenses and earnings. Find out what percentage of their profit is invested or saved for future needs such as slow periods or unforeseen problems. What kind of advertising do they do and what's the advertising budget? Bring these figures/documents to a consultant or ask if a professional will look at them. Anthony Calfo did so for me. Unfortunately I was so eager and excited that I did NOT heed his advice.
I made the mistake of getting involved with an LFS that was having difficulties. I saw potential. The business was about 6 years old and had a great set-up and location. Unfortunately, a number of unforeseen events coupled with a primary owner who wasn't as knowledgeable as he thought he was (business wise)resulted in the business closing the following year. This cost me in excess of $40k.
Do not get involved if you cannot afford the loss. I was able to absorb some of it, but now have some additional debt.
Do not expect an immediate income.
Don't invest without sufficient capital. Putting a little money in solves a few immediate problems or provides a short term boost, but leaves you in the lurch in the long term.
You mentioned that there were no other nearby competitors. Make sure this isn't because the local economy/interest won't support the industry.
Hi, First of all thanks for the responses!
As far as advertising, I was told they have not advertised except the first six months in business. I do know that she will start advertising again. I have know idea what the budget will be yet.
As far as the money goes and expecting immediate income
I will be hired as the store manager and be paid a weekly $$ amount but would still be a 50/50 owner. ( LLc. )
So you ask why pay a owner to work in there own store? She doesn't want to do it any longer (she is burnt out). So thats only fair if I am doing most of the (physical work). Now, dont get me wrong she has stated that she will def. still be working just no where near what she was doing. Actually who every works that week will get the pay for that week.
For example: If I cant work or need off a week then she will work and just take that weeks pay. Plus I need the money to pay my monthly bills and she offered to do it.
Up front cost for me would be zero dollars. She is willing to self finance at a very low apr.(under 5%) She told me that she had a investor that would buy half of the store but, she would rather sell it to someone who is willing to do the work. (all the investor wants to do is hand over the $$ and collect the benefits and put no physical work in) She cant handle it alone any longer. Not that she is making all kinds of money but, with the way her spouse is, she will not bring in much more unless someone is willing to do more work. Basically Her husband is getting to old and has a bad back and will not take on any more work. He cant handle the tank setups, tear downs and maintenance any more. She cant handle any more business because she cant run the store by herself. Once she gets someone who will do/handle more maintenance and is willing to run the store (work) she says it will only grow.
So I ask her why not just hire a store employee.
Well if she hires someone, she would be taking a risk of them taking some of her accounts/maintenance among the other normal things small business owners fear with hiring people.
This way she doesn't have to worry about those things. (so she says)
Well as far as nearby competitors goes.
There is a market and it is growing. The only other fish store has been there for about 20 years but, it does fresh and saltwater. If that makes a diff. other than that the closest fish store is about 120 miles. It is growing pretty good in the area.
As I said before, I have not made up my mind yet, just simply trying to see all angels and get some important input and to see things that I may have not known to look for or see.
So thanks to those who have responded!
Any more ideas, questions, concerns, etc. please post.
