Owning/Running a Small Business Help!!

[nathajw]

So my fiancee has a great job in tax technology software but she is also a yoga instructor on the side and has been for several years. Yoga is her true passion and why not make ~30 bucks a class while doing it by teaching? Anyways, today the owner of her studio just offered her the whole company basically for free. The LLC, everything. She just has to take over the least payments of the space and there is a 2.5 years left on a 5 year. Now this guy is an idiot and has been horrible at running this studio. He's fairly wealthy and is obviously just trying to cut his losses here. The only reason he did is because it has a juice bar and his wife loves yoga and juice apparently. He basically has too much money and just decided to play with it by owning a juice bar/ yoga studio that his wife "managed" by stopping in to ******** with people, drink juice, do a lil' yoga, and pretend that she did more in life than spend her husband's money. After speaking to an assistant manager I do know for a fact that his cute lil' juice bar was the the main reason he was losing his ***. We'd most likely bail on that pronto.

So do any of you have any suggestions (other than walk the hell away) on first steps, questions, things I need to look into, etc. before I actually even start contemplating this? April has an accounting degree, is extremely intelligent and maybe the hardest working female I know but even she knows how brutal owning a small business can be.

This post was edited on 2/25 4:59 PM by nathajw

 

[hollywood]

1. Start your own LLC, Corp, etc. and then buy it from his LLC. That way whatever liabilities he may have on the books (back taxes, etc. )stays with the old LLC and does NOT transfer to you. Should cost you less than $150. If you/she is shown to have been an owner of the old LLC, no matter how long the time period, anyone with a claim could come looking to you to satisfy it as you would likely be on the hook as much as he is (in general, exceptions may apply).

2. Negotiate someone with the lessor to basically eliminate his LLC from the picture. Taking a sublease for that amount of time can be a problem, it's just much "cleaner" to get the landlord to tear up the old lease and start fresh. Unless it's a really hot property, I wouldn't think that any landlord would walk away from a 2 1/2 yr lease offer.

3. You should a strong purchase contract in place as you want to have everything in writing, especially the provision about how you are taking the business free and clear and have him indemnify you to the point that he covers legal fees and liabilities if someone were to bring suit against you, while he was owner.

That's the first few things that springs to mind.

 

[dude02_rivals]

Profit and loss statements so you at least know what the current financial situation is. But I don't know how much you could trust them given the description of the current owner, especially the expense side. What liabilities are there besides rent? I know studios are mostly empty space, but there has to be some furnishings and equipment? Is this included for free? Is any of it leased or have debt? Are there permits or licenses needed? Are they in place? Liability insurance costs? P&L statement is pretty key to start.

I want a copy of the lease so I know what is expected of me. Some leases are triple net, with the tenant paying rent with additional charges for property taxes, building insurance, and most maintenance. These three charges can be variable, rarely go down, and can go up in many cases. Others are gross, with the landlord paying for these things. Some are in between. Some specifiy that they cannot be transferred to new tenants. You have to have a copy to understand obligations on both sides.

You didn't mention employees but that opens up a world of questions.

 

[MegaPoke]

For what it's worth, here are my thoughts based on my own experience as a small biz guy.

Research similar businesses and get a business plan put together. Biggest reason businesses fail is lack of a plan. You'll rarely stick completely to the plan, but a plan is helpful as a skeleton of the business you wind up building. Tons of research on what works, what doesn't, what's trendy, what's marketable etc. Try to find forums of other Yoga studio owners. It's out there somewhere. You can absorb a ton of wisdom in places like that. Look for some high-end facebook closed groups to join. See what the big fish are doing. It's very motivating and can really help you keep up with local competition.

Find a Niche and own it. Don't try to be all things to all people. In most things anymore, it's about owning a higher parentage of a smaller piece of the pie. Find a piece and specialize in it. Yoga for seniors. Yoga for stay at home moms. Yoga for singles.

Marketing - figure out what works for a business like that and don't skimp on this. It's instinctively where most retail businesses try to save money and it's a big mistake. Don't just throw money at it and hope for the best. Go back to your research and see what successful studios do to brand themselves, and then thieve their ideas remorselessly and bend them to your own purposes.

Outsource. Your lady may be an accountant but ultimately what she really wants to do is run a Yoga business (I think), so don't automatically decide to do your own books. Do a cost analysis of everything and include time as a cost. And speaking of time...

Owning a business is the most time consuming thing you'll ever do in your entire life. Make sure she's absolutely in love with this or it can burn you out. I have no business hours anymore that anyone pays attention to. I get emails and texts all hours of the evening, work a lot of weekends etc. You really can lose your sense of boundaries. One thing about a 9-5 "job" is that usually, once you are off the clock, you can for the most part, leave it at the office. Can't do that when you are the boss. It's your life.

It can take awhile to show a profit if you aren't taking over a business that's already making one and it sounds like you aren't. On the plus side, it sounds like you know where you aren't and already have a plan to address it. Just make sure that you don't confuse a loss leader with something that just isn't profitable. A juice bar might well be something that doesn't pay for itself, but it you might find a significant percentage of your clientele chose this studio because of that amenity, and eliminating it could cut into your current membership and limit your attractiveness to new members.

Then again it could just be a freaking albatross that you need to dump and move on.



This post was edited on 2/25 11:51 PM by MegaPoke

 

[osujfro]

Yoga is dying.

Barre is the thing now. Convert the studio to a barre studio

 

[anon_ph7vrsh7abnty]

Originally posted by SamuraiFred:
Yoga is dying.

Barre is the thing now. Convert the studio to a barre studio

There is a lot of truth here.


If you need a new logo, we could probably work something out.
A fitness logo would be fun enough to do in my spare time.

 

[giddyup]

What Hollywood said, form your own LLC and buy the assets. You buy the other guys LLC you assume any payroll, sales tax and other liabilities

Good advice from everyone, check the finances, client list, operating costs etc

Make biz plan to maintain and grow revenue
Good luck
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[Headhunter]

Great advice from everyone especially the don't take over their LLC, ever, and get a completely new lease. If the property owner is smart a new lease is better than having a business fold and them having to go after the old LLC.

Sounds like this business is basically bankrupt. I wouldn't agree to purchase any asset you don't want and can't use. If you don't want the juice bar, don't buy the equipment unless it's a deal breaker and I'd still insist on a rock bottom price.

Good luck.

 

[cactusjackosu]

Barre3 has all that locked up in OKC. Andrea Mason, Desmond's wife.....remember the OP moving to OKC not that long ago, but may have moved back to DFW....if so then ignore.

Yoga is still huge here in the city.
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[nathajw]

Thanks for all the advice in this thread, I've definitely taken a boatload of notes for the future since there is great stuff in here.

After a lot of thought we've decided to open a studio for her in the future just not now. She's still going to teach in her spare time but we're going to be working on a kid soon and decided that starting a business and get it running with a newborn/toddler would just be too much. It's definitely a dream of hers but we're going to open it on our own time, location, and terms. Thanks again for all the help!
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