Taking Over A Business

[sammmo]

My daughter rents a chair at a local hairdressers. The business owner is retiring and has offered the business to my daughter. The lease has come up for renewal and this is why the owner has decided to sell up now. The business has been going for about 7 yrs and is well established. My daughter has asked if we would give her the money out of her inheritance to buy the business. The books are available to see and the owner is a very good friend of my daughters, this is why she offered her it. Can anyone see any problems with this.

[spathiphyllum]

It will be more work for your daughter. She will have to rent chairs oppose to renting the chair. If it's something your daughter wants (her own hairdressing business) then it really sounds like a perfect opportunity. If it's not then it may be a lot of money, time and effort.

[gollob]

It all depends on the cost of the new lease and how long it is . She should know through working there is it is a good business and if it is go for it. You can always earn more money working for your self and it is a great feeling being the boss and having to answer to nobody

[fiction-factory]

I'd also be cautious about giving an inhertiance now unless you have spare cash you know you won't need and maybe want to deplete your capital for IHT/care home purposes, on the basis that it's not unusual for parents to outlive their children

[Canary42]

As long as the price the owner's asking is fair, and your daughter is aware of all the extra work involved in owning the business, then OK, go ahead. A wonderful opportunity.

[Peter Pedant]

yeah the lease
she has to be sure the lease will be renewed on reasonable terms

so what is she buying ?
clearly the good will - and that has to be negotiated

https://secure.cbonline.co.uk/business/business-news/articles/how-to-value-goodwill-in-a-business

and the fixtures and fittings ( but not at cost)

your d will know if the business is viable
it is a question of whether it is a decent price

[Peter Pedant]

// I'd also be cautious about giving an inheritance now ....//
I have a family filled with parents who say - no we dont have the money ( when they do) [ just as my parents did]
and sammo doesnt sound like one

well done sammo !

[ubasses]

Also ask to see the full accounts, preferably the last 3 years. Make sure the owner is not getting rid because they are no longer making money.

[tamborine]

Confirm with landlord that your dter is acceptible as leaseholder & you as guarantor. Good luck.

[New Judge]

If her costs are anything like they are in my area she needs to tread very carefully.

In my High Street’s small shopping centre there is a single shop to let (about the size that would accommodate three chairs were it a hairdressers. The business rates (2018-19, no doubt more this coming year) are £11,880. The rent is £22,500 + VAT per annum (I’ll assume the VAT is recoverable). This equates to £661 per week. That is the amount your daughter will have to take before she has anything left to pay: Energy bills; water charges; business and public liability insurance; laundry; materials; depreciation (of tools and equipment); quite a few things I haven’t thought of; and I nearly forgot – a bit of wages for herself. That’s a £110 a day that must be taken – each and every day – to pay rent and the council. She will be collecting £38 a day to hand straight to the Council (and for that she will not even get her bins emptied) and £72 a day (possibly plus VAT is she does not register) for the landlord.

It is little wonder that High Streets are “dying”. Your daughter may be in a better position than most if she can rent a chair or two. But for normal shops – especially those who have to employ staff (c. £60 a day plus employers’ NI contributions) the costs involved are simply prohibitive.

[sammmo]

The landlord wants £1250+vat plus £700+vat plus 2 months rent upfront. Is this normal? Or do you think this is worth negotiating over.