Considering purchasing a bar

Hello

I'm a young man wrapping up college and I have come across an opportunity to purchase a small neighborhood bar for an extremely low price. I currently do not have any income of significance, but my credit record is flawless, and I feel that the opportunity to purchase this bar is far too attractive to pass up.

The only issue I have is financing. I am considering purchasing it with a friend. My combined credit limit is $23k. Would it be possible to request checks from my credit card accounts, write them out to cash, and purchase my half of the bar in this fashion? Or would I be better off attempting to secure a guaranteed micro loan from the SBA?

Personally I'd prefer to go the microloan route, but I did not have any collateral to offer should they ask for any.

Advice?

I know this may seem a bit a rash but I have done a fair amount of research into the topic, and while I definitely do not think my first few months running the place will be perfect, I certainly think I can grow accustomed to it in the long run and turn it into a moderately profitable venture. I'm just wondering if obtaining the financing via my personal lines of credit as described is possible and/or advisable.

Thanks.

And how much for the liquor license?

dontclickvirus said: BEEFjerKAY said: And how much for the liquor license?

Good question. I'm assuming it transfers.That's a hell of an assumption to make seeing as though the entire value lies in being a BAR.

Glitch99 said: dontclickvirus said: I am considering purchasing it with a friend. Mistake number one, two and three. Unless he has the finances to carry the both of you. Otherwise, within 1 month, you'll want to take a dollar to pay your bills, and he'll insist on needing the same dollar for his bills, when that dollar is really needed to pay the business's bills. And then things fall apart from there.

My combined credit limit is $23k. Would it be possible to request checks from my credit card accounts, write them out to cash, and purchase my half of the bar in this fashion? Or would I be better off attempting to secure a guaranteed micro loan from the SBA?You're going to have a rather large monthly payment to a credit card. And the interest is going to kill you (even if you score an initial promo rate). Much better off with a SBA loan, with fixed terms you can count on.

But if you have no income, no assets, and all of $23k in credit limit, you are leaving ZERO margin for error. Most small businesses fail, and most that fail do so because they are undercapitalized. You will be undercapitalized.

Dont plan on drawing any salary from the bar for atleast the first 6 months (preferably 1 year, especially since you admit the first few months will be a learning experience for you). If you cant make ends meet under those conditions, you are making a mistake.

Personally I'd prefer to go the microloan route, but I did not have any collateral to offer should they ask for any.Wont you have a bar to offer as collateral?

Just researched it, from the looks of things one is allowed to transfer a liquor when purchasing a bar, but a smaller fee still has to be paid.

Show us the cash flow.

BEEFjerKAY said: I'd go back and confirm that the price includes the liquor license. Even in locales where the license is transferable, it's often not as simple as signing over the title on a Buick.

It's common to sucker people by selling them the bar, but not including the license in the sales price. A good attorney will know the ropes.

There was another thread a while back by another young person looking to buy a local bar. IIRC, it raised a number of good issues that OP -- and potentially you -- have not considered.

In general, successful businesses in established locations do not sell for so little. Caveat emptor.

Good luck.

I will make sure to find out whether or not the liquor license is actually included in the sale of the bar.

I am also aware that I will most likely not become wealthy from acquiring this bar, and I realize that it is in all likelihood in trouble financially due to a lack of customers. But I just feel that the low price of it can not simply be neglected, tilting the risk/reward ratio in my favor.

dontclickvirus said: Glitch99 said: dontclickvirus said: I am considering purchasing it with a friend. Mistake number one, two and three. Unless he has the finances to carry the both of you. Otherwise, within 1 month, you'll want to take a dollar to pay your bills, and he'll insist on needing the same dollar for his bills, when that dollar is really needed to pay the business's bills. And then things fall apart from there.

My combined credit limit is $23k. Would it be possible to request checks from my credit card accounts, write them out to cash, and purchase my half of the bar in this fashion? Or would I be better off attempting to secure a guaranteed micro loan from the SBA?You're going to have a rather large monthly payment to a credit card. And the interest is going to kill you (even if you score an initial promo rate). Much better off with a SBA loan, with fixed terms you can count on.

But if you have no income, no assets, and all of $23k in credit limit, you are leaving ZERO margin for error. Most small businesses fail, and most that fail do so because they are undercapitalized. You will be undercapitalized.

Dont plan on drawing any salary from the bar for atleast the first 6 months (preferably 1 year, especially since you admit the first few months will be a learning experience for you). If you cant make ends meet under those conditions, you are making a mistake.

Personally I'd prefer to go the microloan route, but I did not have any collateral to offer should they ask for any.Wont you have a bar to offer as collateral?

Just researched it, from the looks of things one is allowed to transfer a liquor when purchasing a bar, but a smaller fee still has to be paid.

Having the ability to transfer a liquor license is irrelevant to the question of whether the price includes the liquor license. A small bar probably has almost no value. The value is the liquor license.

InsuranceExpert said: dontclickvirus said: Glitch99 said: dontclickvirus said: I am considering purchasing it with a friend. Mistake number one, two and three. Unless he has the finances to carry the both of you. Otherwise, within 1 month, you'll want to take a dollar to pay your bills, and he'll insist on needing the same dollar for his bills, when that dollar is really needed to pay the business's bills. And then things fall apart from there.

My combined credit limit is $23k. Would it be possible to request checks from my credit card accounts, write them out to cash, and purchase my half of the bar in this fashion? Or would I be better off attempting to secure a guaranteed micro loan from the SBA?You're going to have a rather large monthly payment to a credit card. And the interest is going to kill you (even if you score an initial promo rate). Much better off with a SBA loan, with fixed terms you can count on.

But if you have no income, no assets, and all of $23k in credit limit, you are leaving ZERO margin for error. Most small businesses fail, and most that fail do so because they are undercapitalized. You will be undercapitalized.

Dont plan on drawing any salary from the bar for atleast the first 6 months (preferably 1 year, especially since you admit the first few months will be a learning experience for you). If you cant make ends meet under those conditions, you are making a mistake.

Personally I'd prefer to go the microloan route, but I did not have any collateral to offer should they ask for any.Wont you have a bar to offer as collateral?

Just researched it, from the looks of things one is allowed to transfer a liquor when purchasing a bar, but a smaller fee still has to be paid.

Having the ability to transfer a liquor license is irrelevant to the question of whether the price includes the liquor license. A small bar probably has almost no value. The value is the liquor license.

How is it irrelevant? There's obviously a large difference between a liquor license that is transferred upon purchase, and no liquor license at all that I would have to acquire, the latter being much more expensive.

BEEFjerKAY said: In my experience, it's nearly impossible to operate a bar without having an attorney. You might as well start interviewing attorneys and get their advice on the proposed purchase/financing.

You certainly are earnest, but you do not seem to appreciate the practicalities of how liquor licenses really work or are transferred.

I will not lie, I'm fairly ignorant as far as the subtleties of liquor licenses go in my state, and the related website does not seem to be helping much. I will dedicate more time to research it more thoroughly, and I will also call the seller again to inquire as to whether or not a liquor license is included in the transaction.

Now that we're on the subject how can royally can I expect to be raped by a half decent attorney whose proficient when it comes to issues like these and the UCC?

Bear in mind I'm still fairly young, a part of me feels that an attorney would not even take me seriously.

dontclickvirus said: a part of me feels that an attorney would not even take me seriously.

Then why would the liquor commission take you seriously? You do realize you will have to get their approval on the transfer, no?

Do your homework -- beyond just reading the ad. Talk to bar owners in other parts of town. Then ask for attorney referrals. You might just be surprised at how seriously you are taken.

I think I had my first attorney consult at 15.

edit: oh, and I had my first casual contact with local organized crime not long after that.

dontclickvirus said: InsuranceExpert said: dontclickvirus said: Glitch99 said: dontclickvirus said: I am considering purchasing it with a friend. Mistake number one, two and three. Unless he has the finances to carry the both of you. Otherwise, within 1 month, you'll want to take a dollar to pay your bills, and he'll insist on needing the same dollar for his bills, when that dollar is really needed to pay the business's bills. And then things fall apart from there.

My combined credit limit is $23k. Would it be possible to request checks from my credit card accounts, write them out to cash, and purchase my half of the bar in this fashion? Or would I be better off attempting to secure a guaranteed micro loan from the SBA?You're going to have a rather large monthly payment to a credit card. And the interest is going to kill you (even if you score an initial promo rate). Much better off with a SBA loan, with fixed terms you can count on.

But if you have no income, no assets, and all of $23k in credit limit, you are leaving ZERO margin for error. Most small businesses fail, and most that fail do so because they are undercapitalized. You will be undercapitalized.

Dont plan on drawing any salary from the bar for atleast the first 6 months (preferably 1 year, especially since you admit the first few months will be a learning experience for you). If you cant make ends meet under those conditions, you are making a mistake.

Personally I'd prefer to go the microloan route, but I did not have any collateral to offer should they ask for any.Wont you have a bar to offer as collateral?

Just researched it, from the looks of things one is allowed to transfer a liquor when purchasing a bar, but a smaller fee still has to be paid.

Having the ability to transfer a liquor license is irrelevant to the question of whether the price includes the liquor license. A small bar probably has almost no value. The value is the liquor license.

How is it irrelevant? There's obviously a large difference between a liquor license that is transferred upon purchase, and no liquor license at all that I would have to acquire, the latter being much more expensive.

It's irrelevant because that is saying nothing more than the fact that for a small fee a liquor license can be transferred. It's not obvious that purchasing the existing liquor license from the current liquor license holder is going to be any less expensive than purchasing a different liquor license. You don't have a clue as to whether the price includes this license. You say that your only issue is financing, but you don't know what you are even buying.

A good rule of thumb is that if you have the high offer on something that you don't completely understand, you are overpaying. If people who understand the bar business aren't willing to pay that price, why would you?

BEEFjerKAY said: dontclickvirus said: a part of me feels that an attorney would not even take me seriously.

Then why would the liquor commission take you seriously? You do realize you will have to get their approval on the transfer, no?

Do your homework -- beyond just reading the ad. Talk to bar owners in other parts of town. Then ask for attorney referrals. You might just be surprised at how seriously you are taken.

I think I had my first attorney consult at 15.

Liquor commission only cares if I'm over 21 and I am capable of paying the necessary fines, and that I lack any convictions (check for all three).

As far as my attitude with attorneys goes I suppose it's just my insecurities creeping up on me.

dontclickvirus said: and I am capable of paying the necessary fines, Seeing as how you're planning to finance your 50% of the purchase price using your total available credit of $23k, this might not be a given....

If you can't handle an attorney, I shudder to think how you will handle your first biker/pimp/stick-up.

Man up. Get a flesh-and-blood person involved who has been around the block a few times.

hejustlaughs said: dontclickvirus said: Glitch99 said: dontclickvirus said:
Now that we're on the subject how can royally can I expect to be raped by a half decent attorney whose proficient when it comes to issues like these and the UCC? He's not raping you, he's protecting your ass....

I meant it in a financial sense...I can only assume a decent one is expensive, and as you already may know I'm on a tight budget.

People who rely on the internet for legal advice generally tend to get raped financially because they were too cheap to consult a qualified attorney.

?

Not requesting legal advice on the internet, I'm requesting a ball park figure for how much decent legal advice would cost me on the internet.

You've described yourself as a "young man wrapping up college." I don't know why, but a lot of young men of college age want to own bars. They see it as an easy business to get into.

Don't believe anything the owner tells you or what he shows you in writing. Spend two weeks sitting in the bar every day during at the very least the busy hours. The more hours the better. Keep track of the drinks sold and extrapolate. This will give you a good indication of how much the bar is taking in.

I have nothing against bars or social drinking, but neighborhood bars are usually not as innocuous as they seem and the bar business is not as straightforward or simple as it may seem. Bad hours, bad people, bad habits will develop, bad everything. Don't do it.

Have you ever tended bar or worked in a bar? Have you ever supervised employees? A bar is a tough place to manage. Prepare yourself to be there during every open hour and a couple hours on either side of that every day. If you aren't there, be prepared to absorb significant losses of cash, liquor and food. Yes, even your partner will give away free drinks to his friends; you probably will too. Your night manager will do the same.

And that's just the beginning. Your bartenders and waitresses will steal from you. Someone will get arrested selling drugs in your bathroom, someone will commit an assault on your premises, someone will get raped in your parking lot, and someone will leave your bar after a few drinks and kill a child with their car.

Still want to own a bar?

If you aren't going to work there everyday, you also have to be able to hire people you trust. Young bartenders will give away all your profits in free drinks very quickly.

My uncle is a 1/3rd owner of a very small bar in a very small town. He doesn't work there, none of them do. He drinks there on the weekends. They each get about $1k a month. Nothing to get rich on, but when you work a full time job, it's nice side cash.

I think you should get a job working in this bar for now and learn the rope learn about the bar learn the customers learn what it is like to be in this bar all the time.

dcwilbur said: Have you ever tended bar or worked in a bar? Have you ever supervised employees? A bar is a tough place to manage. Prepare yourself to be there during every open hour and a couple hours on either side of that every day. If you aren't there, be prepared to absorb significant losses of cash, liquor and food. Yes, even your partner will give away free drinks to his friends; you probably will too. Your night manager will do the same.

And that's just the beginning. Your bartenders and waitresses will steal from you. Someone will get arrested selling drugs in your bathroom, someone will commit an assault on your premises, someone will get raped in your parking lot, and someone will leave your bar after a few drinks and kill a child with their car.

Still want to own a bar?

I'll add to this:

Does the bar serve food? Microwave / toaster oven, or real cooked food? Ever purchase food in quantity? Manage a cook (they can be prima donnas)? Can YOU cook? *Suggest you google "Kitchen Nightmares" and watch some of the shows, where Gordon Ramsey (World-reknowned Chef) goes in to save FAILING businesses.*

How many bartenders will you need. Will current bartenders (and their clientele) stay? DO YOU WANT them to stay?

Speaking of staying... are you going to keep the interior / feel for the bar the same? Or are you going to CHANGE the bar (make it a sports bar, or a dance club)? How is the bar set up for entertainment? Crappy speaker and old tube TVs? Can you have LIVE entertainment? Ever book a band? Do you need extra licensing for live entertainment?

What about training for your people? Many locales require anyone serving to take multiple classes/courses/tests to remain current. Cost of training (and pay employees to take training?)?

The list goes on and on....

Still want to own a bar?

When you get right down to it, owning/running a bar is like running a Subway in that -- unless you can find the money to pay someone else you trust to manage the place -- you are signing up to spend the foreseeable years of your life standing behind a counter for 12 hours a night, 5 or 6+ nights a week, with maybe only Thanksgiving and Christmas Day off from work.

Except running a bar is more work.