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Home » A Cafe Buyer Mistake Costs Jane $140,000

A Cafe Buyer Mistake Costs Jane $140,000

  • 4 min read

This is a story of Jane, an individual who came to me just a bit too late.

Not knowing special tricks for making the lease owner love her cost her $140,000. Here’s her story…

Jane signed a contract to purchase a cafe in the city 6 months ago for $200,000. It was a 5-day cafe with short trading hours.

Most customers were regulars working in the building and in the nearby offices.

The staff were great.

So, Jane did the 2-week trial and was happy with the takings. Everything seemed perfect…until when she moved onto the final stage of the purchase – the transfer of the lease, that’s when the problem began… her landlord.

Her landlord was a body corporate.

The body corporate involves a committee made up of a group of owners of the building, who only meet twice per year.

Jane’s application to take over the lease needed to be approved by the committee.

Being a first time business owner and not knowing the rules of the game, Jane submitted a couple of references and bank statements as advised by her solicitor.

She was requested by the committee to submit further documents to prove her ability to run the café successfully. So she did…but the committee didn’t meet until 6 months later…

In the 6 month period the sellers moved on and bought another cafe. They took their great staff, lost most of their customers and ran the business into the ground.

When Jane finally got through the lease issue and took over the business, the café was really worth only $60,000.

Jane’s cafe business options:

  1. Go ahead with the contract, overpay $140,000 for the business and hope to build it up again.
  2. Break the contract and risk losing the whole lot if she was taken to the court to dispute this decision.

Jane took option one.

Lessons From a Cafe Buyer Mistake

The lesson to be learnt here is that having a good understanding of the cafe buying process is extremely important.

Many times a solicitor will not have the special knowledge of the industry needed to get you the best outcome. Make sure you are aware of the following pieces to a great application:

  1. Business plan
  2. Contract Conditions and
  3. A well-prepared presentation to the body corporate committee or owner if necessary would have won her the leasing approval.

These are just three things you can use to enhance your application to an owner.

There are other parts of the buying process in this story that lead to questions.

Did Jane check the books and other financials to make sure the cafe was actually worth $200,000 to begin with?

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Did she bargain properly to get the best deal at the start?

The $140,000 loss could have been avoided if Jane knew what to do.

Don’t fall into the trap of making the same Cafe Buyer Mistake!

You can learn these and other strategies for buying a cafe in our Cafe Start-Up Workshop.

If you are unable to attend the Live course, don’t worry. You can purchase the recorded version in the Cafe Entrepreneur Boot Camp CD Pack.

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