Cycle Saga Results


S

S. Tanner

To those of you who were kind enough to take a passing interest:

The final results of the information requested to complete the financial
picture of the cycle business is now having been given to me. Yesterday the
estate agents phoned me up to tell me that basically they still did not get
the requested copies of the VAT returns or bank statements that I
specifically had requested more than two weeks ago on more than one
occasion. She said that according to what she had got/been told the vat
amount paid in August 2003 was £1900, further to that the next one of march
was a £90 rebate. Apart from those two figures there was no further
information for the past twelve months.

It seems that the people who took an interest were having the correct
impression before I even managed to get the information. I fear that the
business indeed has gone down to a point that their is no business that can
be called a "going concern". Although I wonder why two persons are employed
and why the takings are so low. (recorded takings). There can be several
explanations. 1. The business is in fact pocketing the cash. (likely
explanation). 2. The business truly is not selling anything except basic
repairs and such like. I favor the fact that the business is being run on a
cash basis/ non official basis.

The facts to be extracted are that: 1. The location is still superior. 2.
The business once was successful in the not to distant past. 3. As many have
mentioned the business as a going concern is not worth £10,000, in fact I
don't know if it is actually worth anything. 4. The value of the stock is
not worth much due to it being whatever is not having been able to be sold.

Thankyou to all who contributed I was amazed at the depth of understand of
the situation that you have gleaned just from the basic figures without
actually knowing the "in situ" details.

I feel that it is a valuable proposition if I could obtain the premises
without paying for the business as it is difficult to put a value upon that.
 
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S

S. Tanner

S. Tanner said:
To those of you who were kind enough to take a passing interest:
I am in fact almost embarrassed to point out how low the recorded past 12
months figure was. However, for anybody who is interested
I will happily scan and send you the original advertised brochure from the
estate agent which clearly states a business for sale with a £3000 per week
turnover
in 2001 or 2002 can't remember which. If that is not misleading I don't know
what is.
 
T

Troy Steadman

There can be several explanations.

1. The business is in fact pocketing the cash. (likely explanation).

2. The business truly is not selling anything except basic
repairs and such like.
This is a shop so why don't you toddle down there and have a look. If
there are bright gleaming bikes on sale, then probably she is just about
holding it together. It sounds as though she may be unable to buy
stock in which case she *soon* wont be able to pay wages (or redundancy
pay for that matter), and probably has already stopped paying the rent.

So the lease will be up for sale and you can make your move then. I know
this woman has been seriously ill but she has also been seriously
negligent in allowing things to get so bad, you are well out of it.


--
 
P

Peter Saxton

I am in fact almost embarrassed to point out how low the recorded past 12
months figure was. However, for anybody who is interested
I will happily scan and send you the original advertised brochure from the
estate agent which clearly states a business for sale with a £3000 per week
turnover
in 2001 or 2002 can't remember which. If that is not misleading I don't know
what is.
I'd love to see the advert.

If you want to get into this type of business I'm sure you could start
one up yourself. It may be a good idea to learn more about bikes while
you are looking for premises though.
 
S

S. Tanner

Peter Saxton said:
I'd love to see the advert.

If you want to get into this type of business I'm sure you could start
one up yourself. It may be a good idea to learn more about bikes while
you are looking for premises though.
Yes, I think your right. I am not any less keen on the business. I think it
can be an excellent business
but the fact is you have proved along with the figures that the business is
not worth £10k.
It doesn't mean it would not be worth to set up a business at that premises.
I'm still just as interested.

Its just not worth 10K, I think to start with you would still get business,
when I was there for a three hour period with the owner
there was a steady stream of visitors, not buying large things but popping
in for bits and pieces.
 
S

S. Tanner

I didn't really mean that to sound as it did. I rather meant that the
business has kind of "all but closed down" and
had probably/possibly deregistered from vat/tax and was more or less
"selling off old stock". And in fact was not really working and
functioning as a proper business.
This is a shop so why don't you toddle down there and have a look. If
there are bright gleaming bikes on sale, then probably she is just about
holding it together. It sounds as though she may be unable to buy
stock in which case she *soon* wont be able to pay wages (or redundancy
pay for that matter), and probably has already stopped paying the rent.
Yes, I will do that again. I am now going to consider saying that I am
willing to take on the lease as I don't think the business is worth
anything. If it had a decent "official turnover", then that could be worth
something even if it is not making a profit, but as far as I have been told
the past twelve months their have been 2 persons working their and
officially their is not more than a turnover of £12,000 during the past
twelve months.
Therefore that can't be constituent of a "turnover". Due to the excellent
location, incredibly low rent and retail planning permission it could be
worth taking over the lease and popping in decent stock.
So the lease will be up for sale and you can make your move then. I know
this woman has been seriously ill but she has also been seriously
negligent in allowing things to get so bad, you are well out of it.
Perhaps she's just selling off the stock and plans to close it, in fact the
estate agent told me that she would be closing it. So it seems the true
picture was of a business that was being run down to close rather than an
existing business. This was not at all apparant from the first set of
accounts.
 
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A

Alan Terry

S. Tanner said:
I am now going to consider saying that I am
willing to take on the lease as I don't think the business is worth
anything.
Well done you. You have moved on so far - it was only a few days ago you
were saying something like you'd be too embarrassed to offer much less
than £10,000.

That's real progress :eek:)

In terms of taking over the lease:

1. Have you read it?

2. Since you seem to think the current rent is below commercial levels,
be careful about the difference between taking on an existing lease
(with determined rent levels) and leaving yourself to negotiate a new
lease with the freeholder. Have you spoken to the freeholder at all?
 
S

S. Tanner

Alan Terry said:
Well done you. You have moved on so far - it was only a few days ago you
were saying something like you'd be too embarrassed to offer much less
than £10,000.
Really Alan you guys on this forum made it quite easy :) I have you guys to
thank for comming to such a concrete decision.
In terms of taking over the lease:

1. Have you read it?
Seems a straightforward lease as far as I can tell.
2. Since you seem to think the current rent is below commercial levels,
be careful about the difference between taking on an existing lease
(with determined rent levels) and leaving yourself to negotiate a new
lease with the freeholder. Have you spoken to the freeholder at all?
Points taken onboard. I would possibly go directly to the owner of the
property via the estate agent.
 
M

Martin

S. Tanner said:
Points taken onboard. I would possibly go directly to the owner of the
property via the estate agent.
IANAL, but I assume the present occupier is committed to paying for the
balance of the term (3 years?), and the landlord is not free to re-let until
then. So (a) if you want the premises, you may have to contract with the
existing leaseholder - so make sure you agree only to pay the landlord, to
protect yourself against her defaulting with your money and you getting
turfed out. (b) if you want to stay on after 3 years, and your business is
then flying, the landlord might get greedy.

It mat be possible to get the landlord to release the woman in return for
you signing up the 3 years, in which case perhaps you could agree a renewal
rate (or some kind of indexation formula) and effectively get the right of
frst refusal.

But in any event DO NOT SIGN a lease without using (and paying for) a
lawyer. I've seen too many clients get into a tangle with this sort of
thing. But as I say, IANAL
 
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S

S. Tanner

Martin said:
IANAL, but I assume the present occupier is committed to paying for the
balance of the term (3 years?), and the landlord is not free to re-let until
then.
Ahh yes, that is true. I presume that the present owner will not continue
loosing money and therefore will just close the business within a matter of
days.
The lady with whom I've been dealing with from the Estate Agent told me she
will just stop trading, although there are still large adverts going into
the local newspapers.

So (a) if you want the premises, you may have to contract with the
existing leaseholder - so make sure you agree only to pay the landlord, to
protect yourself against her defaulting with your money and you getting
turfed out. (b) if you want to stay on after 3 years, and your business is
then flying, the landlord might get greedy.
Then perhaps it might be a good idea to increase the period on the lease to
take that into account.
It mat be possible to get the landlord to release the woman in return for
you signing up the 3 years, in which case perhaps you could agree a renewal
rate (or some kind of indexation formula) and effectively get the right of
frst refusal.
Oh yes, thats another idea. In case she's not interested in extending the
lease right now.
But in any event DO NOT SIGN a lease without using (and paying for) a
lawyer. I've seen too many clients get into a tangle with this sort of
thing. But as I say, IANAL
Martin
Thanks Martin, I definitely definitely will use a lawyer.
 

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