Buying a Business Case Study
| Age: | 42 | | When: | Christmas 2005. | | Total spent: | Simon bought the leasehold as well as the goodwill of the business (in the region of £100,000) | | CV: | Simon's background is in the Merchant Navy. When he left the forces, he decided on a new career - as a business owner. | | Key advice: | “Look at how much you can afford and really set your budget. Try to stay within that. Don’t underestimate costs; they will be more than you think.” |
Disillusioned with corporate culture, looking for something new, Simon Regan and his partner Sandra took matters into their own hands in order to safeguard their future and set up a business. “I am looking for independence so I can control my own finances and look after myself in later life,” he explains. A former Chief Officer in the Merchant Navy, Simon decided he had no future at sea. His fiancée worked in the catering industry and wasn’t earning a great deal so they decided going into business together would be the ideal solution – not only to improve their financial situation but also their lifestyle. Simon insists working out which areas you excel in is crucial when setting up your own business. “Over two years ago my partner decided she was going to set-up a business and we began looking at cafes, juice bars, that kind of thing. “When I came on board we realised we wanted something larger. We started looking at fish and chip shops, hotels, guest houses, restaurants etc…” The couple knew what they wanted before they even began looking at places. “We decided we wanted a cash-based business, a service business. There always seemed to be huge start-up costs with these types of businesses so we looked to take over an existing business. “We also wanted to support welsh culture,” adds Simon. “It is going to be our company policy and running a hotel in a Welsh speaking area is a way of doing that. “When we actually started looking we approached the main brokers and also used other useful sources like the internet, local websites and local estate agents,” explains Simon. “The problem we found was that most agents are based in London and it seemed to me that they were seriously over-valuing properties. They were placing businesses on the general market rather than on the local market. “I feel they weren’t sympathetic to rural areas, and I’m not talking just about just Wales.” After a while it seemed the couple weren’t making any headway so they decided to amend their search criteria – and also start making direct approaches to properties that weren’t necessarily on the market. “I was still working away at the time and it was difficult to find time to look. I was away for five months during 2005. “We were travelling too far looking at places so we reduced our geographic area. We pinpointed an area of around 50 square miles. “Market research is absolutely paramount to being successful.” Simon also did a lot of research before finding the right opportunity. “Market research is absolutely paramount to being successful. You should definitely take your time and do your homework.” “We talked to local businesses, people who may be useful in the area we chose, people in local government, friends, other business people etc… “Everyone gave us helpful advice. If you listen and read between the lines there is always information to be gleamed. You should always keep your eyes and ears open. “A passing statement might give you a tip off. This is ultimately how we found our businesses - someone suggested it.” While continuously researching, the couple went back to school. “We gained experience through business courses. They helped us examine company accounts and work out what other businesses were doing. I think this is really important. It certainly gave us a good understanding of things.” After a two-year search, the former Merchant Navy Ships Officer found an eight-bed hotel and restaurant in Pembrokeshire, Wales. The area is 50% welsh speaking and so fits in perfectly with their plans for a bi-lingual business. “We went to stay at the property to see what it was like, then made a direct approach to the owners and asked if they were interested in selling. They were very positive.” Simon thoroughly recommends staying in full-time employment for as long as you can while you are setting up your own business. “Ensure there is a regular income. Don’t underestimate the amount of money you will need while researching.” Don’t rush Simon revealed that he and his partner looked at between 50 and 100 places before finding the right one. It was a combination of research and waiting for the right business to come along. “Some people can’t wait – they feel the need to rush into it and buy the first place they see, but there are lots of factors you must to take into account. “I think it is important to find out why the business is for sale. Some are for sale because the owners can’t make the business work. “If it is a successful business – you could end up paying a lot of money for the goodwill,” he warns. So how did they ensure they were paying the right price? Simon says: “We still don’t know if we have. What you have to do is analyse a similar business. You have to consider the turnover, cost and the market potential. “Every business is performing at a different level. Cost will be high for a very good business with a good turnover, but you may not get a return on your investment. “What I’m really saying is you really need to evaluate what your market, and your potential market is. You really need to look at the numbers. Go for the accounts.” | 
