Before purchasing a restaurant, cafe, club, bar or area of land to develop into your hospitality project, it is imperative to undertake an exhaustive investigation to ensure no dangerous surprises spring up after you buy or build your business.
Market Research Reports exercise due diligence to achieve this important milestone of any business development.
So what exactly is due diligence?
Due diligence reporting minimises risk for errors to be found after purchasing a business. Due diligence gives some “insight” into issues that may arise at various stages after purchase. By completing due diligence reports, we are able to uncover potential risks or threats in a business or its structure to provide you with the information you need to make an informed and intelligent decision regarding your investment.
Due diligence reporting is not about auditing just financial information, but doing that exhaustive research into all aspects of the business. From the concept behind the business to the management team driving the business.
Prior to making decisions or making any offers to buy a business, you must consider the following:
- Check directors’ qualifications, experience (usually found in the executive summary of the seller’s business plan)
- Assess quality of staff training and documentation
- Site review
- Assess competitors
- Check average spend against historical financial data
- Compare menus with competition
- Compare pricing schedules
- And other relevant matters
There are many factors to consider when purchasing a business. In the example above, there are no comments made about design, plans, building costs, repairs and maintenance issues and serviceability as we have made the assumption that the business premises are not freehold.
Each report is individual and unique to each client just as each assessment will reveal individual results. Getting advice from your accountant is important. Your accountant may be able to suggest ways of cost reduction and assist in the preparation of financial data, however it is always wise to seek advice from an industry expert consultant prior to any purchase.
One way or another, these measures that you take, can save you thousands of dollars. Due diligence reports are highly recommended.
Contact us today on +61 8 9316 8699 or admin@hospitalitytotalservices.com.au for an obligation free discussion at our office or at your premises.
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