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I am intrested in buying a restaurant , but don't fully understand the cash flow. Is this a good time to buy.

looking at a few business that show as ex: 300K gross sales and 60K-90K cash flow, would this number be part of salery to me or pay other expences, can I make a living say of ex:60K- 70K year by these numbers. or is cash flow a number after I paid all expences ie Taxes, food cost, labor, ect or is number what I need to pay these expences. how is this broken down? Also is this a good time to buy a restaurant/Bar business?? wife has 16 yrs experience food service all aspects, I have 20 yrs experience logistics supervisor manager and owner of a delivery business 15yrs past. Both love to cook.

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Try a deli and/or diner. It's hard work, but good rewards and fun. Plus in the right area it is an excellent investment that will grow. And you can do this anywhere there are people. We doesn't like to eat great food? Also, know of 2 possible locations in Florida under a different name that may be available together or separate.

Nov 8, 2009
Cory Hogan
P.C. Hogan & Associates
Helping the Small Business Buyer


Good to hear you have business owner experience. That will likely be more valuable than any food-service experience you have together. To run a successful restaurant, you'll need to be a great business manager, not just a good cook. I strongly believe, and have witnessed, that the reason so many restaurants fail, is not business their food is lacking, but because their business savvy is lacking. A good team of advisers, in areas where you maybe lacking, can make all the difference.

The cash flow represented in business deals typically is the MAXIMUM available to you as an owner after mandatory expenses are paid. But Seller's Discretionary Earnings (SDE) isn't that simple and is subject to a lot of misrepresentation. Scrutinize each "adjustment," or find someone who can for you. Remember that your personal taxes, debt service, and "bad months" and "surprises" will all need to be deducted from your cash flow. Also remember that business-ownership income typically goes farther than payroll income because of the number of tax savings available.

Timing is relative. If you and your wife are ready and prepared, and the numbers behind the deal are good, then now may be the best time in years to buy. However, in this economy you may not have the robust growth that will make up for major mistakes.

Best of Luck!

-P. Cory Hogan
p.c. hogan & associates

Apr 3, 2009
To Be Provided
Loan Officer / Investor
Hennepin County, MN

get processing statements, and financial information from CPA - i'll help you buy it: thanks nik

Apr 3, 2009

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