Mgt 418 - No Franchised Small Business Analysis

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this could possibly cause the sell price to increase and would need to be negotiated for a price both parties are comfortable with. The negotiations would need to cover not only the business but also the equipment, negotiations need to be made to ensure the new owners are ready for business immediately and do not need to go out and purchase equipment. Purchasing a business that is established could be very beneficial to a prospective business especially if negotiations are successful and a reasonable price was arranged and agreed upon. Negotiations need to be taken seriously it can be the difference between obtaining the business and not being able to acquire it at a fair price. If a buyer would just settle for whatever the asking price was without trying to come to a fair price and not investigating the company prior to negotiations they could pay more than what the company is worth. Another thing to consider when negotiating an agreement is to make sure that everything is included, there can be situations where they may own the business but rent parking space, you do not want to be surprised after the deal is done and end up with extra fees that were not anticipated for the new owner to be successful every negotiation must be extensively thought out.

Advantage and disadvantages

The biggest advantage to purchasing MEL’S Country Café is that it has been established and already has a customer base set. Being in business for so long and offering a home cooked style meal has allowed the café to build a large customer base. Another benefit would be the opportunity to start operating the business immediately and not having to put a lot of money into the current business. The disadvantage of purchasing an established company is that with the customers already used to the current restaurants style and menu it does not leave a lot of room for major changes to the company. If the prospective buyer wants to re-invent the menu they are risking losing some of the established customers, this means that a majority of the menu needs to remain the same and there is not a huge opportunity for too much change.

Conclusion

Mel’s Country Café has been a popular restaurant in the community with a well-established loyal customer base. A potential buyer would need to consider the advantages and disadvantages to purchasing a business that is established. The purchase of the café must be well thought out and the buyer must ensure they are getting the business at a price that will allow for profit. The restaurant can be a good purchase for anyone looking for a company with a good reputation and is ready for business immediately.to be successful the owners need to adapt to the business, learn what makes the customers loyal and know what they can and cannot change to remain a popular establishment.

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References:

Mel’s Country Café (2015) obtained from http://melscountrycafe.com/#Catering_&_Gift_Cards

Business dictionary.com (2015); feasibility study: http://www.businessdictionary.com/definition/feasibility-study.html

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