How to Value a Cafe?

Overall Picture

How long is a piece of string in some cases. The overall picture of the cafe has to be taken into account before we can give you an accurate appraisal.

Turnover

Let's review your total turnover over the last 2 years and get a picture for an expected average amount.

Lease

The Lease is a massive component to a business sale and can drastically effect the sale price of the cafe. We can assist with negotiations in lease terms and also ensure that the Landlord will approve buyers.

Rent

Well, this one might seem fairly straight forward however with COVID wreaking havoc on many business sales with rent owing to landlords, changes to CPI and Percentage Increases we need to review what your rent is today and what it will be moving forward in the Lease.

Cost of Goods Sold

To get an overall effective appraisal of the business we need a solid understanding of the Cost of Goods Sold in the cafe. These are now volatile and fluctuate however can average this out assist with an effective valuation.

Wages

The big one. This is where Cafes make or break and to add to this is your cafe under management or owner operated?

GST

I once had an accountant tell me "There are plenty of accountants that don't understand how GST works!" Woah! In any case, lucky we know it works so that we can build your average BAS payment into the valuation.

Net Profit

This is where it all comes together once we've reviewed the rest of the data. Depending on lease term, location and rent amount we can give you a fairly good indication on expected sale price. We have unrivalled data of sold cafes across Sydney and can give you a very accurate appraisal.

How long does it take to sell a cafe?

This all depends on you

What do I mean? I'm the business broker right.

Well,

If we do everything perfectly from documentation preparation, to advertising, responding to each and every enquiry and sending through relevant information, if we don't list the cafe at an accurate market price the business will sit there forever. It is imperative that we get the list price correct as well as the additional items that I mentioned.

If we overprice the business, it will be difficult to generate interest particularly with the abundance of cafes for sale currently along with new leases available.

If we underprice the business for a fire sale, the paranoia of the buyers start to kick in and they start wondering what's wrong with this place?

If we do everything right, we can have the business sold and settled within 6 months, if not sooner.

Documents to Prepare

Accountant Prepared Financials

This should ideally include: 12 months profit & loss statement, last 4 BAS Statements.

Lease

Accountant Prepared Financials

A full copy of the lease is required as this will be included in the Contract of Sale for the Business.

Payroll

Accountant Prepared Financials

Inventory List

If not adequately shown in P&L this will need to be provided to show staff pay rates (including the owners).

Inventory List

Supplier Invoices

Inventory List

An equipment list in an essential part of a business valuation and something that many vendors and brokers are completely forgetting.

Supplier Invoices

Time to show off your KG's of Coffee Per Week as well as all key suppliers to cross check against the P&L.

Z Readings

Supplier Invoices

Sometimes the best way to show a buyer your business value is to simply show the turnover. We can work backwards with them from there.

Should you use a business broker?

Why not just sell it yourself

You could definitely sell the business yourself however be prepared for a lot time wasters that might distract you from the day to day running of your business. Let us do what we do best while you focus on you running the cafe. Additionally, when selling through us we are usually able to access multiple purchasers which can put pressure on buyers to make a decision (think, going to Auction) and this drives up the price of the business. We can also advise you best ways to save money through the process of the tips and tricks that we've learnt (the hard way) along the way.

The best way to sell a cafe?

Engage a professional

Did you know that 1 in 12 businesses that hit the market don't even sell? I heard this statistic whilst listening to podcast on Business Brokers in the UK who had done studies on Business Sales in the US, UK, Canada & Australia. This astonished me and really made me worry for my clients and vendors who come to me looking for answers. For some it's your first time trying to sell your cafe. If so, great. If you fall into the category that you've been listed with another broker for some time and haven't seen any traction, then I can also assist.

The biggest issue I see when it comes to selling a business is that vendors and brokers fail to prepare the business properly for sale. The attitude of "she'll be right mate" really seems to have hit the business broker world and this leaves businesses falling short of a price they could've achieved with a few minor tweaks.

Most vendors I talk to initially want somebody to hand over their hard earned cash, and be committed to a new business operation and not show them any relevant documentation. Buyers today are savvy, discerning and have limitless options in our post-covid world. On top of this, I'm not the broker who is going to sell something without the appropriate documentation either.

I will assist you in compiling all documents, and its okay if you don't have something, the accountant hasn't submitted it, you're awaiting XYZ from the ATO, we can work around it. That's what we do. We can utilise a few methods at our disposal to ensure that we can show the value of your business to potential and qualified buyers.

After our initial consult I will sit down with you and discuss what relevant paperwork is available for the business and where we will need to find other avenues to showcase the value of the business for sale.

Once we've prepared all relevant documentation I will sit with my team and write a compelling and engaging marketing piece which is then listed onto 11 different business for sale websites.

We also prepare an Information Memorandum that will be shown to qualified buyers who have signed Confidentiality Agreements before letting them know more about your business.

Learn More

If this all sounds like it's a bit daunting and that there is a lot of information you need to prepare, don't worry. I am more than capable in making this process streamlined, simple and I might even commit to making sure you enjoy the ride.

Find out more

How to Value a Cafe?

Overall Picture

Turnover

Lease

Rent

Cost of Goods Sold

Wages

GST

Net Profit

How long does it take to sell a cafe?

This all depends on you

Documents to Prepare

Accountant Prepared Financials

Accountant Prepared Financials

Accountant Prepared Financials

Lease

Accountant Prepared Financials

Accountant Prepared Financials

Payroll

Accountant Prepared Financials

Inventory List

Inventory List

Supplier Invoices

Inventory List

Supplier Invoices

Supplier Invoices

Supplier Invoices

Z Readings

Supplier Invoices

Supplier Invoices

Should you use a business broker?

Why not just sell it yourself

The best way to sell a cafe?

Engage a professional

Learn More

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