greenhouse listing

I'll throw in my chits here as at least one greenhouse is on my future list as well. Feel free to throw them back at me...

Current heating is propane. There is the possibility that you could change the heating over to a geothermal system which would completely eliminate your fuel cost. The only costs, as far as I know, would be initial purchase of equipment and the electricity to run the blowers. Heat itself would come from the ground. Another possibility might be solar water heating in conjunction with the geothermal OR converted into a radiant heating system. If you know others in yoru area with animals (horses, cows, etc) that have quantities of manure available for the taking biomass might be another option for methane fuel for heating. Radical, expensive initial thoughts but bear with me....

Someone correct me if I'm wrong, but I believe the '02 Farm Bill provides funding for "alternative energy" sources. I may be totally out of the ballpark but a figure of up to $500,000 per applicant was potentially available. All depends on your particular situation. Likewise, my state Farm Services Association would consider a loan of up to $175k for purchase price of an existing business. Something else you may want to look into. Now that I think of it, I may be confusing the Farm Bill and FSA figures but I do know that they exist in one program or another....

If you think that this may be "the one" look good and hard at it. If you have the cash to hire the accountant to look at the books and have the operation appraised then by all means do it. BUT, every day that the business is on the market is one more day that you run the risk of losing it to another buyer. Having said that, you CAN formulate some sort of offer and make it an honest to god binding offer PENDING your examination of the business books and appraisal, etc. and offer to put down all of $100.00 in ernest money with a larger figure to be exchanged within X number of days if/when you find the books, appraisal acceptable. If everything looks good to you you can then go ahead with shopping for financing, etc. That way, you won't run the risk of potentially losing the business to another offer, you get to examine the business to determine if it's worth your effort, AND you don't rack up that additional "ding" on yoru credit report as was mentioned. Once you've got all THAT info you'll be able to determine whether your initial offer is in the right ballpark. If you find anything that doesn't sit well with you in the numbers you can use that as the deal breaker thereby getting you out of the contract OR use it to make a counter offer lower than your initial one. In any cas, I would HIGHLY recommend hiring a buyer's agent to protect your interests and legal rights in this or any real estate transaction. And once you're done with that, have an attorney handy to go over the fine print....

Each and every time you have your credit pulled by ANYONE it potentially drops your credit score by a few points. Rack up enough dings and you could be talking a drop in score significant enough that it would effect your financing application. That goes for ANY application for credit that requires a credit check so until and unless you decide which way you're going on this business venture you and your partner hold off on making any kind of financing applications until AFTER you either walk away from this or close on the deal where it is yours (and the bank's) lock, stock and barrel.

If no one has mentioned the Small Business Association (SBA) I'd also contact your local office for assistance with business plan development, etc...

Hope I scattered all of that appropriately. Anyone feel free to tell me I'm full of it...

Good Luck!!

HI,

No one has mentioned the "partner, friend' relationship...uhm, how do you intend to handle that? Is your friend going to work for you or are you going to draw up a partnership agreement? You said your friend did not have good credit. So is it just you that will arrange financing? What is your friend going to put into the business and how will you figure what that is worth compared to your investment?

I've been in similiar situations and sorry to say, unless everything is spelled out on paper, all i's dotted and t's crossed, many times the friendship goes south when it comes to work and money...

I would get all this established up front as you say you will have to work at your job to provide income to live on. My other question is: if you are working another job, and say, your friend meets someone and moves or gets tired of the whole deal, how will you manage the business? After all, borrowing money is a long term investment and someone needs to be watching the store, so to speak.

If you know nothing much about the greenhouse business, it may be worthwhile to take the seller up on his offer to stick around and assist, but I would also get that in writing, (length of term, compensation, etc.). His time and knowledge is worth something so you may want to consider payment of some sort as consultation fees (which can be deducted on your business tax return) and would be another incentive for him to stick around. I have found that many times someone will make an offer such as that and once the deal closes and the money is handed over, all of a sudden the seller "has other things to do" and can't be as available as he promised. This may or may not be the case with your seller, but a written contract, and a non-compete clause in your sales agreement would be in your favor. Non-compete may include limitations on his opening another greenhouse within so many miles of yours, and may also limit the time frame (within 5 years) - you would hate to buy him out only to have him go down the street and open another greenhouse business, especially if he has contracts in place and knows the market...

Things to think about - especially the "friend is going to help" part...

Sidepasser

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Be yourself - no one can tell you that you're doing it wrong!

sidepasser, and everyone else, those are all good points to consider. i'm still taking notes!


we've talked about this a little, but clearly need to talk more. she has nothing to contribute as far as money goes, but she does have the knowledge and the experience. she doesn't want to be in the position of being unable to contribute, or feel like she is indebted.. we talked about how we could work around that, and one tentative idea was for her to take a salary for the first few years, instead of a cut of the profits.

i'm wondering now if i should have a realtor as well.

if this idea doesn't work out, we will still probably start on a much smaller scale, and see if we can develop a market. it's less frightening that way, takes a much smaller investment. this came up out of the blue, so we decided to look into it. all part of the learning curve.:-)

Good points from Side.... And if your "friend" isn't taking on any of the financial burden of this project i.e. shouldering a portion of the financing, you may want to make her "management" or some type of "employee" as opposed to a "partner". If she's not legally and financially tied to the business then she can skate whenever she feels the urge leaving you holding the bag. Maybe the best thing would be to bring her on board to "run things" for a year, take the current owner up on his offer to stick around, that way you have TWO people to learn from, see how they work out, and if all is going well THEN make your friend a partner.

good point, mike. we are going to meet the realtor in the morning, (if it quits snowing) and i'm taking a copy of this thread with me.:-)