Scenario: Jay’s Gourmet Cookery started out as a home based business which rented a commercial kitchen for its food preparation. The owner, Jay, was looking to expand so he can have his own private kitchen and expand his operations to a full time operation.
Business Location: New Orleans, LA
Sales: $45,000 per year
Customer Base: Commercial, Business to Business Sales (80%), Residential, Business to Consumer (20%)
Terms of Sale:
Commercial – Net 30 days
Residential – 50% deposit, balance at conclusion of event
Business Structure: Limited Liability Company (LLC) with both Jay and his spouse as the sole shareholders.
Additional information: Jay has been working full time and operating the Cookery on the weekends and holidays. He intends to leave his full time job to pursue the full time operation of his catering business. Jay’s spouse works with him and will be helping as much as possible but will not be leaving her full time job where she works at a Professional Services Company as a CPA and is making $105,000 per year. They have a small mortgage and very little personal debt. Both Jay and his spouse have credit scores of 721 and 732 respectively.
Jay plans to rent a private professional kitchen and leverage the Commercial Client base he currently has to carter events during the week. He has already confirmed that his Commercial Customers are willing to provide more business to him when he can fulfil the need. Jay also wants to acquire a specialized panel truck for transporting the food, replacing the family vehicle that has been used up to now.
He will need financing for the vehicle purchase and will need to finance new equipment that will be installed in the new place of business. Plus Jay wants to do some advertising and promotions to increase awareness of his business.