I understand we are all treading in uncertain times right now. One thing I do know is that the GFC affected the globe in a similar way to Covid-19. They were terrible times for business, finances, property etc. I remember working through those days, we still sold businesses and buyers managed to borrow money back then. I’m sure we will come through this challenge soon and bounce back to businesses trading, Buyers buying and Sellers Selling, and me working with buyers and sellers to achieve the best outcome.

Hey it’s Ian Salter here…

I joined Benchmark Business Sales & Valuations in 2005 I have been actively involved in the industry as an agent, broker and adviser (collectively) and have literally sold hundreds of businesses over the years – as well as commercial property and even a private island!

About me…

• I’ve been a professional broker for almost 16 years
• I’m fully licensed in Queensland.
• An individual member of the REIQ
• An REIQ committee member for the business brokers chapter
• I mentor and occasionally speak at industry engagements
• I’m fortunate to be recognised in this industry and have won multiple industry awards

You can only sell your business once, so why not speak with me now about how to maximise the amount that you can get for your business when you finally decide to cash out.

We can work together now to have your business ready for sale when the market changes again. So, let’s connect and arrange to speak so you can learn more about a planned “exit strategy” that will get you to where you need to be – on your terms.

Ian Salter (Senior Broker)

https://www.linkedin.com/in/iansalter/

https://benchmarkbusiness.com.au/consultant/15/ian-salter

This is what many prospective business purchasers are asking right now.

It makes sense to wait and see what happens right now, doesn't it? Caution is wise. When things are uncertain, the easiest thing to do is to do nothing. And that is often the wisest decision.

Many prospective business purchasers are asking themselves "Should I hold-off and wait?" Is that you?

Think about these points when considering what to do:

• What are your reasons for wanting to buy a business? Have they changed?
• What will I do while I wait?
• Opportunities are here now, but will they still be here when things change?
• Are you buying as a long-term investment, or for short term gain?
• If we are heading into the unknown.. how can we add some "certainty" to the future trading of the business?

Obviously some businesses will grow through the Coronavirus isolation period, and some will be adversely affected. What types of businesses will be positively impacted? .. and which businesses will be hit hard?

Are you happier buying a business which is going to benefit from the Corona Virus impact? .. or are you attracted to the idea of picking up a business which has been de-valued, and which is likely to become more valuable when normality returns?

Thinking about these options is really an assessment of your appetite for risk and reward, Are you an entrepreneur?.. or are you an investor?

Right now, interest rates are low – and they are likely to stay that way for the foreseeable future.

Some tips for searching and buying a business in today's climate: 

1. Even in poor economic times, plenty of businesses stay ahead of the game – and some even do better. By choosing a business in a field whose products or services are in demand no matter what the housing or job markets are doing, you will be making a smart decision. Here are just a few areas worth considering:

• Food – Everyone needs to eat, and this industry has wide-ranging opportunities that include everything from wholesale or retail groceries to fast food restaurants. Restaurants may not be operating right now, but people are still eating.
• Home maintenance – This sector keeps trading no matter what. If your toilet is broken, or the fence is falling down – it needs to be fixed
• Debt collection or legal services – Whenever times get tough for consumers, it's usually a boom time for anyone looking to chase down past-due bills and help prepare for evictions and bankruptcies. The right opportunity can be very lucrative.
• Healthcare – This is a wide-ranging sector that encompasses everything from selling first-aid kits to providing emergency care.

2. One of the truths of the Great Depression was the saying, "Cash is king." In a deflationary environment, the money you hold today will inevitably be worth more tomorrow. The ability to do a deal without having to rely on financing gives you tremendous leverage. Even if you don't have the entire purchase price in cash, the advantage of financing only a small percentage of the transaction is highly beneficial.

3. Assuming you come up with only a portion of the asking price, having the seller finance the balance allows you to enjoy a major benefit. Uncertain times usually cause credit markets to freeze up. Business sellers will usually offer lower interest rates and for a longer payback period.

4. When looking for a business to buy, you will often discover that the selling price is based on both tangible and intangible elements. Tangibles include such things as real estate, a long-term building lease with advantageous terms, equipment, inventory, and supplies. Intangibles include the customer base, brand names, trademarks, patents, and something called "goodwill." The savvy buyer will ask the business owner to provide a breakdown that assigns a specific price to every asset. 

5. The successful entrepreneur will do a great deal of research before sitting down at the negotiating table with someone anxious to sell a small business. Look at the overall health of the industry, find similar businesses that changed hands recently, analyse why they sold at the price they did, and pore over the business's books with a fine-toothed comb. Better yet, have the experts do it – an accountant to review the profit-and-loss statements, a business broker to seek out comparable sales, and an attorney to examine the various existing lease agreements as well as the bill of sale. A well-prepared buyer is a successful buyer.

Eventually normality will return.

Be ready for the day when things return to normal.

One of the most common concerns prospective vendors have is confidentiality.

“I don’t want anybody to know I’m selling, it would be very unsettling for the staff.   I wouldn’t want my customers to know either.” 

This is by far the most common concern for sellers.

Professional business brokers are very aware of the confidentiality issues around the sale of any business and they take them very seriously.

Unless otherwise instructed, when the business is marketed, only generic photos are used in the advertising.

And when potential buyers inquire about a business, they’ll only be given very basic information until such time as the broker receives their completed confidentiality agreement. In most instances prospective buyers will only be given very vague details on the locality of the business until their bona fides are confirmed.

How is confidentiality maintained when buyers start visiting a business? Brokers have a number of strategies they can employ when purchasers start looking at businesses and want to conduct inspections.

All buyers are reminded of their obligations under the confidentiality agreement they have signed.

Often, the broker will encourage buyers to go to the business and have a coffee or bite to eat. They’ll remind them not to speak to the staff about the business being for sale. It’s beneficial for potential buyers to visit independently and get a real feel for a hospitality business. Adopting a customer’s perspective will give them ideas on what they could do with the business and assess the competence of the staff. Buyers are often able to formulate some ideas on how they could improve the business.

Often, inspections can occur after hours when staff are not around. If purchasers have viewed the business when it’s busy from the perspective of a customer, they can then view the business in detail, right through the kitchen and storage areas, without distractions. This way, they experience the best of both worlds:  the customer “feel”, as well as the detail behind the scenes.

After hours meetings can also be useful because buyers can ask detailed questions of the owner who can dedicate time to them. They’ll not be worried about what is happening in the kitchen, or why table 10 has still not been served.

Rest assured confidentiality is paramount.  It’s in the interests of all concerned that confidentiality be maintained.

As a prospective vendor, you may still have a few things that you’re not quite sure of, or have other concerns. Speak to one of our experienced hospitality specialist brokers; they’re there to assist you.

Jo-Anne Wilson

Hospitality Specialist Business Broker

Benchmark Business Sales and Valuations

Owning a business can be hard. Business ownership can provide great rewards, but it can be stressful and challenging. The thing is that it can be unrelenting, and eventually business owners will run out of …….. zest, passion, excitement, and drive… or “mojo” – unless something is done. Proactive action is the key. Don’t lose your Mojo.

Here are a few examples of some pro-active things that business owners can do to retain their mojo:

• Take regular breaks and holidays
• Have good advisors who will consult and advise
• Celebrate small victories
• Work on the business – not in the business
• Attend conferences, seminars and functions
• Read positive books
• Create and implement a long term exit strategy

An Exit Strategy is an important tool for business owners. Not only for the obvious benefits of having a plan, but because having a plan does so much psychologically to provide motivation and direction for business owners.

At Benchmark Business Sales we meet hundreds of business owners each year, and often when we meet with business owners they are “burnt out” and ready to sell. Most business owners reach “burn out” after about five years – not very long really….

We find that the business owners who have developed an exit strategy, and who are following that plan, are much more motivated and excited. This is because they have direction, and they know why they are putting in the effort, and what the ultimate reward will be when the plan is implemented.

The incredible thing is that the business owners who have a plan and have direction, are the ones who will sell their businesses for the best price, in the least amount of time.

It doesn’t matter if you are a long term business owner, a new owner, have just started a business, or looking to buy a business…. Having an exit plan in place is the best way that you can avoid losing your “mojo”.

Benchmark Business Sales and Valuations

We all run small businesses. Here is a summary of the Federal Government’s small business stimulus package announced so far, including support measures from the ATO.

COVID-19 economic stimulus package announced

The Government’s plan provides direct support for business including payments for business, wage subsidies for apprentices and trainees and enhancing the instant asset write-off:

• Tax-free cashflow boost for employers. Up to $25,000 is available to help pay wages or for investment to protect against a downturn in activity. The payment is open to businesses with a turnover of less than $50 million. Eligible businesses that withhold tax on employee salary and wages will automatically receive a payment equal to 150% of the monthly amount withheld for the month of March 2020 (for monthly lodgers), and 50% for future months and quarterly lodgers. The minimum payment is $2,000 and maximum is $25,000 and will be available for businesses who lodge business activity statements for the March, April, May and June 2020 months/quarters.
• Apprentice wage subsidy. Small businesses with fewer than 20 full-time workers will receive 50% of an apprentice or trainee’s wage (Covering the period 1 January 2020 to 30 September 2020 9 months). For each apprentice or trainee, the Government will provide up to $7,000 in wage assistance per quarter. The wage subsidy will be open to businesses with fewer than 20 full-time workers and employers of any size that re-employ someone who loses their position as a result of the coronavirus downturn. Employers are to apply for this from April 2020.
• Boosted instant asset write-off. Businesses with turnover of less than $500 million are eligible for an expanded instant asset write-off for asset investments of up to $150,000. The threshold applies on per asset basis, so businesses can immediately write-off multiple assets (until 30/6/2020).
• Accelerated depreciation. Businesses with turnover less than $500 million will be able to access a 15 month investment incentive by accelerating depreciation deductions (ie 50% of the asset cost written off, and the balance per depreciation rules until 30/6/2021).
• Help from the ATO. The ATO will provide administrative relief for certain tax obligations (similar to relief provided following the bushfires) for taxpayers affected by the Coronavirus outbreak, on a case-by-case basis. Contact the ATO on 1800 806 218 or visit the ATO website at ato.gov.au for more information.
• Income support. People who are unable to attend work because they have been diagnosed with the Coronavirus or who are in isolation, may qualify for income support if they do not have any employer leave entitlements

Specific ATO support measures to assist those affected by COVID-19.

The ATO has announced it will implement a series of administrative measures to assist Australians experiencing financial difficulty as a result of the COVID-19 outbreak. See further: https://www.ato.gov.au/Individuals/Dealing-with-disasters/In-detail/Specific-disasters/COVID-19/

Options available to assist businesses impacted by COVID-19 include:

• Deferring by up to four months the payment date of amounts due through the business activity statement (including PAYG instalments), income tax assessments, fringe benefits tax assessments and excise
• Allow businesses on a quarterly reporting cycle to opt into monthly GST reporting in order to get quicker access to GST refunds they may be entitled to
• Allowing businesses to vary Pay As You Go (PAYG) instalment amounts to zero for the March 2020 quarter. Businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters
• Remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities
• Working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low interest payment plans.

Note that these will not be automatically applied You will need to contact the ATO for assistance. Anyone impacted by COVID-19 is advised to contact the ATO to request assistance on the Emergency Support Infoline 1800 806 218, when they are ready, to discuss their situation.

Banking Relations

Where you may be suffering financial hardships in your business, your bank may have practical ways to help. We’ve also included a link to a fact sheet from Australian Banking Association: How your bank can help.  

https://s3.amazonaws.com/dbm.thewebconsole.com/S3DB1206/images/20200316-ABA-Financial-Difficulty-Fact-Sheet.pdf

Benchmark Business Sales and Valuations

When independent advice isn't totally independent

The two most common reasons people seek independent advice are to gain an understanding over something they don’t understand, or, to clarify a situation.

Whichever it is, it’s fair to say that when seeking independent advice, it’s assumed that the advice is given in the proper manner – independently and without bias.

Sadly, this is not always the case.

It’s not uncommon for relationships to exist between different service providers. Typically, financial benefits accrue through referral fees and commissions. As a result, what appears to be independent advice may not be so neutral. That’s because, built into the advice may be a referral to another party from whom the advisor gains a direct benefit should the referral be followed through.

When seeking advice, one of the key questions to ask is whether there are any benefits of any kind the advisor receives from a third party. Two warning signs that the advice may not be as independent as it should are:

• The advisor is insistent in their recommendation of using a third party’s services or products, and
• The fee they’re charging is too competitive, even much lower than you may have been quoted by another advisor.

The adage of 'you get what you pay for' rings true when it comes to dealing with advisors.

It’s important to note that good advisors are usually not cheap. Good advisors who provide independent advice do so without any form of kick-back or benefit derived from their advice. Be they lawyers, bankers or business brokers, trusted advisors work in their client’s best interest, providing information which is truly unbiased and reliable.

Ultimately the best advice comes from a source which has your best interests in mind – and not their own interests.

Benchmark Business Sales and Valuations

If you’re thinking of selling your business, it’s important to devote preparation time to the sale.

Proper preparation plays a major role in influencing the final sale price. It also helps to achieve a smooth transition from you to the purchaser.

Having a Business Valuation conducted is the right way to establish where you are now, and then plan to achieve maximum value when you decide to sell.  

You may require a valuation of your business for succession planning or stamp duty purposes. We are qualified to provide you with a formal, written valuation.

Very few qualified Business Valuers operate in the small Business market.

At Benchmark, we have both the expertise and the experience to assist you. If you’re thinking of selling, we’ll guide you through the process of preparing your business for sale.

Including an indication of a likely selling price. Provided by a brokerage with a proven record of business sales across the country, you will be in an ideal position to take your business to market.

Call 1300 366 521 to speak with one of our team today.

Benchmark Business Sales and Valuations

… and get a great Sale Price! 

Good times come, and good times go. Tough times come, and tough times go. Selling an SME business in tough times can be tricky, but there are a few things that you can do to get the business sold, and to achieve the maximum value for the business.

Here are a few ideas and tips for selling in tough times.

1. Always be “Sale Ready”. Make sure that your business is always ready to sell. Just in case. In case you are forced to sell through illness, or other uncontrollable event, you need to be ready to sell – now. What if a company sought to acquire your business today? Would you be ready?

    What do you need to be “Sale Ready”? You will need;

• Up to date accounts
• Staff who can run the business for you
• Forward orders
• Manageable stock levels
• Employee entitlements (and other liabilities) under control
• Secure tenure, and secure supply arrangements
• A broadly spread customer base

     Its also important to discuss the possibility of selling with your accountant and lawyer, so that they are also ready to go when you “push the button”.

2. Get your finances in order. Make sure that you don’t have uncontrolled debts. Get any loans under control and ensure that all creditors are paid up to date

3. Check the KPI’s in your business and adjust if necessary. For example, are your GP% margins right? Do you carry too many debtors?

4. Don’t stop marketing, just find better ways to market your business. Many business owners shut down their marketing spend when things get tight, but quite often, that is the first step towards failure

5. Remember that every business is either Growing., Stagnating, or Dying. Keep growing! Keep expanding! Maintain big goals! Don’t make the mistake of giving up on your dreams and goals. Keep pushing … right to the finish.

6. Stand out. You need to stand out in the market place. The best way to stand out from the crowed is to invest in an advertising and marketing campaign.

Benchmark Business Sales and Valuations

How do some small businesses manage to grow and thrive while others seem to struggle and miss opportunities that come their way?

It appears the most successful business owners display some clear patterns and habits. Here are 8 secrets for achieving growth regardless of the economy.

1. Grow to survive - Many small businesses assume it's best to reduce offerings to survive tough times.  While this seems logical, sometimes the best move is to do just the opposite – to grow.  Before cutting back and shrinking your business, consider first whether additional funding might help.
2. Check your ego - You know your business inside and out, but that doesn't make you an expert at running it.  Smart business owners only know what they know.  Don't be afraid to ask for advice and then, take it.  All successful people have a 'coach' or mentor.
3. Remember your first fans - Many entrepreneurs seem to forget who helped them get started.  If you have investors, keep them apprised of what's going on.  Good communication is the key.  A good investor group can provide mentoring and other resources, so keep them involved.
4. Share your knowledge - In today's business world, success and influence are in the hands of those who share their ideas and information.  Yes, you might lose a little competitive edge by sharing your secrets, but you will gain influence, and possibly success. So when you found a great tool or solution, or gained insight, tweet it, blog about it, author an article, post it to Facebook.
5. Hire someone to watch your money - Lack of strong accounting and finance can be the only thing keeping you from reaching your financial goals.  Find well qualified people who share your vision and then step back and take their advice.
6. Know when to persevere - Stick to your mission.  Many 'would be' success stories end prematurely because they give up when challenges mount.  Don't let hurdles stop you.  Arm yourself with market knowledge and an expert team and push through.
7. (But) Recognize when to change direction - There are times you may need to change direction or call it a day.  Having the courage to do so can be liberating.  You may end up with a clearer picture of what will or won't work.
8. Keep cash on hand - One of the biggest mistakes growing businesses make is to run out of cash.  While the sun is still shining on your business or before your financial picture has a chance to turn sour, meet with leaders and/or landlords proactively to see if there are opportunities to restructure debt, payment terms etc.  Having cash on hand is critical for staying afloat and continuing to grow.

Benchmark Business Sales and Valuations

Get Staff working

There are some basics that business owners often forget…

Has this ever happened to you?  You walk into an empty shop, and you find the attendant focussed on their phone or computer … and not working?

With everyone carrying their phone in their pocket these days, it’s easy for retail staff to check their messages and browse through social media as people come and go through their store. The above scenario is very common and does nothing for brand image. The unproductive staff are a complete waste of a shop owner’s money.

So, what should your staff be doing when there are no customers in your store?

First of all, image is everything. Despite being told not to “judge a book by its cover”, most people do just that: they judge based on first impressions.

With this in mind, your staff should ensure that when the store is empty they take the opportunity to organise the stock and keep the space clean. Floors should be swept or vacuumed, counters made tidy and kept uncluttered and products on shelves and displays neatly arranged. A tidy shop is always an inviting shop!

With the shop looking neat and tidy staff should turn to tasks such as stock replenishment or stock quality and price checks and inventory counts. The key is to instil in staff an attitude which focuses on the detail in the “look and feel” of the store. Then they will independently and without prompting, ensure that the store is kept tidy and in order at all times.

Building incentive schemes around this and recruiting staff with the right attitude are two ways of achieving this. Remember: staff are there to help you always provide the best customer experience possible in your store. This includes not just serving customers in the right manner, but also ensuring that your store has the right atmosphere to entice customers to come in and buy products from you.

Pay attention to the details, and watch your business grow.

Benchmark Business Sales and Valuations