About LJ Mangold Expertise Over 20 years in Real Estate Lending, including Business/Commercial Financing. Lines of Credit, Import/Export and Equipment Leasing
Experience Acquisitions, Lines of Credit, Import/Export and Equipment Leasing with Nationwide Lenders.
Question I am a fellow expert at allexperts.com, at legal/misc legal.
We went to the state auction in Detroit, Michigan, and got what we hope will turn out to be a good deal on a former bar. It was once a very popular place, with a dance floor, but the owners got arrested. It was vacant for over 5 years. There is a hole in the roof, and rain and snow have come in, as well as thieves and vandals. There is some kitchen equipment.
The location is outstanding, on a major road just before another major road forks off, and has adequate parking. We want to open a restaurant/bar.
My wife is an outstanding chef with training, and also has great skills in supervising workers. I am a lawyer and therefore better suited to the paperwork end of things.
This is going to require a loan. A loan will require a business plan, which will require us to make some sort of projected financial statement. We need to figure out how much to ask for on a business loan.
Well, of course, I don't have any idea how much it will cost to fix up the place, except that one guy wanted to charge us $18,000 for a new roof. Then, I don't know how we would figure out our costs to supply the restaurant and operate it, with any precision. But costs would be easy, compared to projecting the revenue. How do you predict how many customers will come in, and how much they will order? Do businesses just make that up?
I am a reasonably fast learner, but I have no experience in running a restaurant or doing this kind of financial planning.
Questions:
1. Will I be better off paying someone with experience to figure this out, or is this something that is not that difficult for an intelligent novice?
2. If I were to pay for it, how much would such a service cost?
3. If I were to pay for it, how would I locate a good person to do it? What do the yellow pages call someone who does that?
4. If I were to do it myself, where would I find a clear guide on how to do it? Is there anything free on the internet? Perhaps a well-known book I could find at a bookstore?
Thanks for your time.
Answer Jim,
Bars are not that easy to get loans on. Not knowing the value of the property, here may be some ideas.
It would be great of the Auction House had some info on the past business, as far as income, etc.
The Chamber of Commerce may have some info on similar businesses, possibly even on the previous business.
Your accountant may be able to help and may know who did the books on the previous business, and could help with a business plan.
There are some good books about writing business plans, but none that I can recommend.
The local bank may also know something about the business and have some contacts that knew about the business.
You could try an SBA loan. At least check out the SBA sight at:
www.sba.gov (SBA Site)
www.sbaonline.sba.gov/starting/indexbusplans.html
Talk to your insurance agent, there is great liability in a bar, you should check on an umbrella policy.
You could take a 2nd on your house.
You might see about forming a partnership to raise capital.
