Question about what I'm getting myself into and cashflow

I have found a place for sale. It is established and open to this day. #'s are very good and the place is staffed with a GM and is absentee-owned which is a plus to me. I grew up around the restaurant industry but have never done anything other than run a register. I also am somewhat close though currently distanced to two different people who combined own literally 45 to 50 different places and are still growing. If the place I am looking at is absentee-ran, what would I personally perform daily if the place is basically operated by a manager? I know there’s more to it than me just filing my personal taxes…

Also, the place has a cashflow of around $81K/year on autopilot. Is cashflow what’s left after 100% of all expenses and after every variation of taxes associated with the business is paid? Is cashflow what will go into the bank and stay there until something in the future arises?

I haven’t progressed far enough to ask the owner, and Google is filled with mixed info provided by people who have never even owned a place, so I thought I’d ask the pros here.


My advice would be that anyone can state what they want but until you sit down and really dig into the real history of sales, taxes, and income… anything you hear or say is pretty much worthless. Why would the current owner sell an almost 6-figure income maker that he has little to do with on a day to day basis. Where is the debt of the business currently at? You need to get the real financials and have a tax or business attorney sit down with you and look into the hard business numbers.

You’re really going to need to have a microscopic look at the books. As you move down this path of purchasing a business you come across a lot of different things to worry about.

I have a friend of mine who is a CPA and a business broker I’m certain he’d be more than happy to advise you - free - to a point. But if you ask him to do some real work - well $$ what can you expect.

A few things to consider.
The current owners sometimes will stick around to “guide” you and assist you to take over the business. Even though this place is “Auto Piloted” the current owner has relationships and knows what’s what when it comes to vendors pricing and staffing as well as inventory shrinkage, cash on hand and what and who comes up short after a shift. – Sorry to say it employees will steal Jesus Christ from the cross and come back for the nails.

Being the owner is a lot different than just working there - you are responsible for EVERYTHING!!!
Insurance - Business, Professional, Sexual Harassment, Personal, Unemployment, Health Care Packages
Health inspections
Oh yeah did I not mention the performance of your employees and the drama that could unfold there?

As a never owned a business before and looking to buy a full-fledged restaurant - I’m not saying you can’t but it will take a minute for you to get your bearings.

I want you to succeed, and I love start ups too.

If you want to speak to my friend the CPA who can give you some advice email me.

You need to get a good look at the last 3 years of returns for the business, not just what the owner is reporting to you. We ended up with a much different beast than what we thought we were getting because we trusted the previous owner to much. Didn’t realize his “cash flow” was being supplemented by rental properties and personal income.

Our current place shows an amazing cash flow in our second month…that doesn’t account for unpaid vendors, deposits, etc. that we we’ve covered out of pocket or from other businesses. $81K seems like a lot, but depending on sales, that could really just be a business owner that’s “cash flowing” mortgage payments (something we don’t have), payroll, taxes, rent, vendors, etc. My little place could easily hit a $40K mark if I was talking to you about money I had, but hadn’t paid out yet.