For you business owners, I need your advice. I wonder what is the cost of owning a business. What is the cheapest possible? I am thinking about owning a restaurant on a lease property because I believe that is cheaper than building a new one. What is the advantage and disadvantage of owning a business?
At least it's not a bar business. But yeah, don't own a restaurant business. Franchise if you must. But don't own a restaurant. Only a small percentage of restaurants survives in that industry.
I am not sure what exactly you're asking. Are you asking if its better to lease or own your building? Or should you start a business?
What I know about this: 1) Expect to sign a 10 year lease minimum and give a personal guarantee (unless you have LOADS of ownership experience or a super strong business you can guarantee on, this guarantee will be necessary) 2) Leasing is WAY cheaper than owning and you'll usually get improvement credit from the building owner. Leasing will likely run you $20-$50/sq foot/year (depending on location, size, etc, lots of variables), so for a restaurant around the size of a McDonalds that will run you ~$140K/year. Building from scratch will cost you millions, you have to buy land, build restaurant, build insides of restaurant, and you need to cover a decent amount upfront on a down payment. Obviously if you have the money to build out or buy out a space, do it. Long term at least you get real estate, but most people don't have that kind of capitol and banks don't give many loans. 3) Restaurant businesses are awful, 7 days a week 10+ hr days for at least 3 years (likely 5-10 years of this). Once you find a manager, GM etc you'll have more freedom than a job (still need to manage from the outside) and still be making income. You have the ability to expand and grow a lot more than within a job. Higher risk/higher potential reward with business vs job.
No offense, but if your starting point for owning a business is to figure out the cheapest possible, you probably shouldn't be owning a business. Rather than talking about advantages and disadvantages of owning a generic business, what do you know about the restaurant industry? What makes you want to own a restaurant, and what would you do differently/better than others? Do you have theme or food type in mind? A target market? What are your expectations of how this would play out?
yeah your questions don't make much sense. need more questions/info. this might be better route since if your food is good you can develop a following then move to location. Most restaurants run at about 3.5% profit margin: http://smallbusiness.chron.com/average-profit-margin-restaurant-13477.html Leasing and renting cooking equipment, plates etc might cost more but lease before you sink all your cash into buying everything and going out of business after 6 months. Some folks like to spend big on menu design and all these other trivial expenses. That is unless you are swimming in cash and can afford to drop 100-200k like it is nothing/waste it. One thing I learned about business/small business is that it's not all peaches and cream and just because you are 'in business' doesn't mean that you are making good money or making any money at all. People in small business will try to claim 'I can come and go..don't have a schedule' yet if the 16 year old hostess calls in sick guess who is working? you. That is again unless you are a trust fund baby or laundering money and this is just some kind of hobby. Depends on your reality.
Step 1. yeah become a lookout, low level cartel page. Step 2. behead a few people and become a cartel member Step 3. launder money Step 4. Profit Step 5. Get beheaded
For a first time owner of any business especially restaurant. It is better to lease. Building from the ground up is a bigger gamble. You don't want to be rooted in.
Agreed with everyone, restaurants are tough. I know a few people who've tried.. some made it, most didn't. The ones who do decent say it's still stressful. Keeping fresh food takes acute planning. It also can take years to build a viable clientele. The advantage of business ownership is more time, more money, and more freedom. There's a difference between business ownership and simply owning your job. True businesses run themselves like a machine. The owner could disappear for a month and the business will still continue and maintain the same profit. When you own your job, you can make more money, but you'll probably end up working more. If you incorporate, you'll be taxed at a lower rate than individuals. There's also many tax write-offs. Things you already do.. vehicle mileage, going out to eat, etc. One big disadvantage is you always need access to money/credit for emergencies. If you aren't able to quickly handle surprises your money might completely stop until you fix the problem. It's not always easy to pay an unexpected $2000 immediately.
I am acquaintances with some guys who own a lot of bars and bar/restaurants and it seems like they are still working like crazy after all these years. So you have to be really committed and know what you're doing.
I disagree completely and this picture you paint is the exception. The 5% of the time. The disadvantage of business ownership is less time, less money, less freedom.
Did you stop reading after the statement you quoted? Many people think they own a business, but they really just own their job. Owning a job is usually very time consuming.
Yeah, leasing is cheaper short term but it doesn't really make sense either. Grocery stores make more money off lease revenue in shopping centers than they do off grocery sales.
