Quick Facts and Links at-a-glance:

• School Location: Hamamatsu, Japan
• Number of Students: ~65 with Business Contracts
• Asking Price: ¥1,980,000 down + a portion of sales for 6 months
• Desired Sale-by Date: April 1, 2010 (If not sold by then, I will hire a full-time teacher and promote my current assistant to manager)
• Question and Answer
• Financial Details
• Transition Options (i.e. "What do I do if I want to buy it?")

Currently, Zoe Cafe is experiencing tremendous growth, with new students registering each week. Sadly, however, it is time for us to move on to a new stage: in January of 2011, I'll be starting graduate school in Europe, and in preparation for our departure, we've decided to sell the school.

However, before we talk about the details of this school, let's briefly look at the process of buying an English school in general. On any given day, you'll find a dozen or more English schools for sale across Japan. In some cases, you're simply purchasing a list of students; while in other cases you'll be assuming an adjacent bar or restaurant. What makes a good deal from a bad deal? What are some of the things to look out for? Here are a few questions any serious buyer should be asking:

• Why is the owner selling? (Is business bad? Poor location? Intense competition?)
• Is it in a good location? (i.e. high traffic, a place where I'd want to live, etc.)
• Will any of the students likely stay for a new owner?
• Is this business structure one I'd really want to inherit? Would I be better off starting my own school?
• How will I finance the purchase?
• How is the economy affecting your area/industry?
• What about a visa?
• Can you give me demographic details on the school?

Let's look at a few of those answers in relation to this school:

Why is the school for sale? I've decided to move to Europe and pursue my MBA, so I'm sadly having to sell this school, even though it's in the middle of a huge growth stage. My wife is Japanese, so we wanted to spend 3 or 4 years in Japan, and I knew that I would one day sell the school when I started it. As a result, I've kept meticulous records (even creating an operations manual) and made every decision in light of the fact that the school would one day change hands. I've sold previous businesses in the US, and it's always a headache when you can't find important records, or you have to go through tedious legal work to transition ownership. In this case, everything is ready to transfer.

Is it in a good location? The school is located on a medium-sized road, yet one that acts as a major artery of Hamamatsu, a city of 800,000 people. It is less than 4km from the downtown train station and along half a dozen major bus routes that separate after passing the school. Therefore, a city bus passes the school approximately every 3-5 minutes (and thanks to our marketing efforts, plays an audio ad for our school when passing by). A typical one bedroom apartment in the area will cost ¥35,000 - 40,000/month. Area competition is minimal, especially compared to the downtown area. There are very few schools north of Zoe Cafe, and as a result, it is the first school many people will pass when driving south towards the heart of the city.

Will the students stay? Any transition of ownership is likely to see a loss of customers. Sometimes it's due to different teaching styles. Other times, it may simply be a case of a student seeing the transition as an ideal time to take a break from studies. With this in mind, the most successful transitions are where the owner is willing to stay and continue teaching for an extended period of time. In order to facilitate a smooth transition, I am willing to continue teaching for 3-6 months, and the sale price is only based on 3 months of student revenues (elsewhere this fee will be anywhere from 10 to 24 months). As a result, your purchase price will include very little risk based on student decisions. In addition, this part of the fee is adjustable, so if customers leave during the transition, the purchase price will also.

Is the business structure one I'd want to inherit? Zoe Cafe has been designed by the highest business standards. All finances have been kept in minute detail, with every receipt filed and completed financial reports from day one. While some English teachers randomly select lessons or base their classes entirely on conversation, our classes are based on established curriculum with placement tests, teacher's guides, games, flash cards, CDs, and progress tests. To make things even easier, I've created an operations manual and DVD with design templates, business ideas, and basic operational observations. If you are interested in teaching English, but you don't feel comfortable starting the "administrative" side of things from scratch, then this business is ideal for you. The school has been designed so that anyone, with any level of business experience (or lack thereof) can take over and run it efficiently. Current finances are sufficient for the new owner to immediately make a generous monthly salary (far exceeding what could be made alone in a start-up or working for another school).

How will I finance the purchase? When buying a new business, there are multiple financing opportunities to consider. Most people will evaluate their financing options in this general order: personal savings, friends or family members as investors, investors as partners, venture capitalists, angel investors, commercial lines-of-credit, home equity lines, retirement savings, government grants, and owner financing. If you are unsure of how you will finance the purchase, feel free to contact me for advice. If you wish to propose this business purpose to investors, I will be happy to provide a professional business plan for you to use (for a minor consulting fee). I am willing to consider up to a 50% partnership proposal, but I will place higher priority on 100% purchase offers. This school is growing very rapidly - we sometimes register 2-3 students in a week. It's a great deal, so you need to act fast. I've priced it at a very attractive offer in order to free myself up to plan for business school.

How is the economy affecting your area? In October 2008, many area factories announced massive layoffs, and more than half of our students lost their jobs, with almost all of them losing any overtime opportunities. The next few months were very difficult, and our school struggled to survive. However, by May, things began to turn around, and many factories began to re-hire. One of the major changes in our school demographic is that we shifted from a large amount of blue-collar workers to more white-collar students. Many students are in import/export, sales, or some type of customer service. Others are studying to go abroad for a homestay or international posting with their company. In addition, our financial statements show strong, sustained growth over the last six months. So, while the recession was a major challenge, the future is very bright.

What about a visa? Our school has successfully sponsored employment visas in the past, and with a year of growth and success since our last one, another company-sponsored visa should be easily attainable. Depending on the school purchase scenario, we will either sponsor your visa as an employee of the company, or we will work with immigration to find a more relevant visa. In short, we will help you get your visa.

Can you give me demographic details on the school? Sure, just e-mail me.

If you need more information, or you're ready to take the next step, contact us at 090-6640-1258 or info@zoecafe.net

Cost Breakdown

Below is an overview of how I have arrived at the asking price. The owner of the building is my aunt, and has pledged her support in aiding a smooth transition. The building lease expires in Sep '10, at which point a new lease can be signed, or a month-to-month rental situation can be continued. MOST school sales situations are based primarily on a "student list" that you're paying for. NOT SO with our school. The majority of your payment is for physical equipment, business structure, and branding. The client list is simply icing on the cake. This purchase is ideal for someone looking to start a new school, with a BIG head-start.

Facility

These are the estimated amounts you might spend otherwise to obtain a similar situation. Facility costs include things like new floors and furniture, signage, etc. Anywhere in Japan you'll need to calculate about 6 months rent in your new building lease; those figures are included in our sale price, since you are taking over the remainder of our lease.

• Construction / facility design investments - ¥1,000,000
• Key money, deposits, etc. - ¥480,000
• Furniture and office equipment - ¥200,000

Operations

Operations expenses are the things you typically would have to pay for in your first year of business. Typical items like textbooks, brochures, etc. All marketing materials will be provided on a DVD in template form. Change what you like! We're also including a company car that is used to teach at our client companies.

• Professionally designed marketing program including web site, brochures, postal flyers, business cards, and a billboard - ¥400,000
• New textbook inventory - ¥80,000
• Teacher's guides and reference materials - ¥70,000
• Company car with 2 years remaining inspection papers - ¥200,000

Students and Contracts

This number is VERY small compared to other schools for sale. To make things even better, I will only collect as they pay, meaning you don't pay a dime for students until they pay first. What if a student gets upset and leaves? Not a dime out of your pocket. In addition, these fees will not be due at purchase, but rather as they are collected in the months following the purchase.

Transition Services (Optional)

These fees are negotiable and these services are provided as a way to smooth the transition. Upon purchase of the school, you will simply be introduced as a new teacher, and official announcement will not be made until three months after the sale date.

• Current owner continuing as a teacher during the transition for 100 hours @ ¥3,000/hr - ¥300,000
• Current owner providing business management consulting services for 50 hours @ ¥5,000/hr - ¥250,000

Totals and Payment

• Total estimated school value ~ ¥2,030,000*
• Less Discount - ¥50,000
• Total asking price up front - ¥1,980,000
• In addition to the down payment, we are asking for 50% of revenues for six months after the sale is completed. By splitting the purchase price in this manner, it will show that I am committed to seeing the school transition successfully while allowing the new owner to get established.

To discuss the financials in more detail, please e-mail us.

*Not including optional consulting/teaching services

Transition Details

If you feel that this school is the right opportunity for you, below I'll list the steps we can take:

• Contact me via e-mail or phone (+1-205-383-4835) and give me some background on your situation.
• We can arrange a video call with Skype or iChat and I can give you a virtual tour of the school.
• Work out the basic details of the transition. Feel free to discuss transition dates, ask for further details, make an offer, etc.
• If at all possible, I recommend planning a trip to see the school in person. If you are overseas, citizens of most English speaking countries can enter Japan on a 90-day tourist visa. I can help you arrange airfare, travel, and lodging during your stay. If you visit the school, you can sit in on a variety of our classes, visit the businesses we teach at, and even teach a few classes yourself. During this time, I'll be happy to go through the minute details of the operations of the school, finances, etc.
• If you decide you want to purchase the school, you will need to make a down payment of $5,000 USD and I will hold the school for you for 60 days to complete your financing options.
• Once you have completed the necessary down payments, I will help you move to Hamamatsu and get settled. I will continue teaching for up to six months while you settle. During that time, you will teach all new students who register, and you will slowly begin taking over classes. I can continue to stay and do paperwork at the school so that I am visible until everyone is comfortable with the transition, and then I will exit.

Final Notes

This school was designed as a transferable business that someone could eventually take over. If you have a desire to live in Japan and teach English, but you don't know where to start, this is a great opportunity. We'll take care of your visa and your salary, you just need to provide a down payment. As the current owner, I am committed to stay in the area for a time and help after the transition - I want to see this school successful for many years to come!