Legal Advice, Small Biz Owner, Pub

[Koolblue13]

Hey ho y'all. So I'm buying a bar.

Over the last two months, I put together a business plan and presented it to anybody with a buck and an ear. Me and my partner each have over 15 years experence in the Rest biz. and we are going it together. I was unable to find a silent investor in the time frame needed and under my conditions. It's not easy to convince somebody to give you half a million dollars and then leave you alone. I had two people who were interested, but niether would give me 100% creative control, so I was in a possition to buy it, got my money, but had to say no. One of the hardest things i've ever had to do.

So anyway, the reason i'm asking. In the last hour, I decided to take the advice of two of the advisors I had dealt with, who knew me and the bar. I rolled the dice.

The place has a lot of support, from before the present owner started to dismantle the sucsess of the joint and I have no doubt we can bring it back and turn it around.

I am working out a deal with the present owner to secure him 75% of the profits he is making now, while signing us on as GMs. We have complete control and he is moving down towards y'all. With the additional profits made by us, we will put it all into an escro account and have five years to pay it off. If we can't do it in 5 years, the account gets split 3 ways and he gets the bar back.

I'm sitting down with him tomorrow to set up the demands between both sides before we take it to the lawyers.

Anybody want to throw me some advice, i'm all ears.

[Kosher Ham]

If he gets 75% and you get 25% does that make you THE owner... or an investor. Not to mention you seem to have an out.

Good luck with it bro. I am considering opening a business in the near future, but I will be the sole owner.

You need to see the books for the past few years. There are trends and certainly you can turn things around if the spot is hot and the location is good.

What have the profits looked like over the past few years ?

[Koolblue13]

If he gets 75% and you get 25% does that make you THE owner... or an investor. Not to mention you seem to have an out.

Good luck with it bro. I am considering opening a business in the near future, but I will be the sole owner.

You need to see the books for the past few years. There are trends and certainly you can turn things around if the spot is hot and the location is good.

What have the profits looked like over the past few years ?

The profits have been on the decline over the last year and 8 months the present owner has had it.

Basically, if I DO turn it around and make the profits I think it'll make (300%), I should be able to pay it off inside of two years.

I have looked at all of his books. He has no idea how to organize things, but he is only making money off of beer. I can add a lot to that.

[2006Skins]

The profits have been on the decline over the last year and 8 months the present owner has had it.

Basically, if I DO turn it around and make the profits I think it'll make (300%), I should be able to pay it off inside of two years.

I have looked at all of his books. He has no idea how to organize things, but he is only making money off of beer. I can add a lot to that.

KB, first I want to congratulate you implementing your goals. Many people spend a lot of time and money just to bed told no and give up.

I'm in business banking and hear your story quite a bit. This is a good plan and there's a couple of reasons for this...

1. Credit is tight. Anyone with money is holding it close to their hips and isn't lending it out unless it's a surefire bet. Which means that a lot of loans are being declined, just because credit is tight. I have had numerous businesses like this, and it's frustrating.

2. Minimizes your risk. I do believe you should request 25% ownership of the business now, since you're taking on 25% of the profits, and this will probably be good for tax purposes. But since I would bet this is a corp/llc, this is considered a separate entity, you take 25% ownership, however, you haven't taken the business over. This way, it's an easy transition.

3. The food serving industry has one of the highest failure rates for new businesses. 80% of restaurants fail within the first 3 years, so instead of taking on a brand new restaurant, this one has been around for a while, and you have a customer base to work on.

Overall, I think you have a great idea. My personal opinion, you should make sure there is a solid contract guaranteeing rights to the business in X amount of years if the plan goes through.

Best of luck!

[Koolblue13]

^^Thanks^^

That is the type of advice i'm looking for.

I will have 49% ownership of the LLC and 0 of the LL. I will get that in my name, but can't right now.

I will have 100% creative and business control, nothing for him. He just has to go away and take the money.

[jbooma]

^^Thanks^^

That is the type of advice i'm looking for.

I will have 49% ownership of the LLC and 0 of the LL. I will get that in my name, but can't right now.

I will have 100% creative and business control, nothing for him. He just has to go away and take the money.

It sounds like you have everything be covered. As someone who has been involved with restuarants try not to think you will get the 300% in profits so it will make you work that much harder. One of the hardest things to do is recreate and old place because you could upset the current crowd some. The reason why many places fail as the other poster mentioned is poor location. Location is the key for restaurants. If you have have a waterfront bar you will make money period.

Good luck, and remember to keep your bartenders in check and be nice to the local government since they will be nice in return.

Let us know how it works.

I plan on opening something in the future possibly connected to a winery or vineyard That is my goal at least.

[Koolblue13]

It sounds like you have everything be covered. As someone who has been involved with restuarants try not to think you will get the 300% in profits so it will make you work that much harder. One of the hardest things to do is recreate and old place because you could upset the current crowd some. The reason why many places fail as the other poster mentioned is poor location. Location is the key for restaurants. If you have have a waterfront bar you will make money period.

Good luck, and remember to keep your bartenders in check and be nice to the local government since they will be nice in return.

Let us know how it works.

I plan on opening something in the future possibly connected to a winery or vineyard That is my goal at least.

Damn, a vineyard would be increadable. What a great goal. I didn't think there we're to many wine drinkers around the board.

Right now, the present owner has a dwindeling crowd, mostly from the old reputation. I should have no problem reviving it.

The 300 is a goal, but i'm being realistic. Personally, I think I can make it even more profitable, but am planning for the worst.

I'm setting up a five year deal, inwhich I could pay back the entire thing, even if it stays at the same production level, based on my 25%, so I should be good.

I know all about working with the "important" people in the area too. Already on repairing any damaged bridges there.

Thanks jbooma.