Mobile Catering Business Too Good To Be True?

by Helen

Hi,

My partner and I have decided we really want to take on our own catering trailer. We have seen some really good ones on ebay, then we found someone who was selling his whole business...the trailer, the jeep to tow it, the generator, the pitch and all his contacts etc.

We have been to see the trailer while its working twice now and everything seems ok, but we'r very new and naive to this so not really sure.

I know he needs hygiene certifcate which he has and has explained we need it too, but when I've asked him about gas and electic safety certificates, he says its not needed and nothing to worry about.But I'm sure thats wrong??

He is also very vague on paper work and how we would sign everything over etc.He wants £25k for all of this and so as you can imagine i dont want to waste my saving if its dodgy.

He says he had the trailer made 4 years ago but we haven't seen any reciepts/proof etc.
Its all seems too good to be true and im worried that once I've bought it all everything will go wrong.

Finally, he also won't show us the books so we can see profits margins etc.
What do you think??

Thanks Helen

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Oct 30, 2012
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starstarstarstarstar 		Due Diligence Before Buying a Business
by: David

Hi Helen,

It’s smart for you to be cautious when parting with such a big sum of money. You really need to do your due diligence as you want to make sure that you are paying for a legal and proper business.

The first thing I would do is to contact the local council and make sure that the business has a legal right to trade and is registered with them. Find out if they charge a yearly rate for registrations/licence as some councils do and some don’t.

Also ask them if the pitch is for the long-term because you are considering taking it over and would like to know where you stand. If the pitch is on private land, again contact the landowners and confirm the same information - find out if a contact was signed and if he can indeed sell it on to you.

As for Gas/Electric/P.A.T certificates these should really been in place as it’s a safety requirement and all event organisers, landowners will want to make sure that you have these annual/6 monthly safety checks carried out on equipment.

If you are thinking about purchasing this business, I would make this a condition of the sale.

As for the word vague, this term is not a good sign when you are buying a business. You need everything to be transparent, honest and clear from the beginning.

To get a better idea of what this business is making be prepared to spend some time with the owner and monitor sales during trading hours, around 2-3 weeks should give a good indication. For here you will have a good idea of the business turnover and if it’s worth its asking price.

If this business is run as a LTD company you also have the option of going to Companies’ House to find out more about the financials records of the business. Make sure that any vehicles/assets that come as part of the business don’t have any outstanding loans, finance fines etc so get a HPI check

Finally, take your time and do all the necessary checks before you part with any money.

Please keep us updated.

Wishing you every success!
David

PS. Get my free guide on Starting a Mobile Catering Business Guide

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