It doesn’t matter what industry you work in, there always seems to be that inside language, “the lingo” which is usually spoken in acronyms. I’m often asked (mainly by first time buyers or sellers) to clarify acronyms within our Business Broking industry, which in recent times has prompted me to be mindful not to use acronyms at all. So what are some of the most commonly used industry lingo acronyms Business Brokers consistently use in their day to day advertising? The acronyms…

1. WIWO – means the price advertised is ‘walk in-walk out’
2. SAV - means the price advertised, is the price plus ‘stock at valuation’
3. ROI – means the ‘return on investment’
4. EBIT – means ‘earnings before interest & tax’
5. PEBIT – means ‘proprietors earnings before interest & tax’
6. EBITDA or PEBITDA – is the same as points 4 & 5 above with ‘depreciation & amortisation’ added
7. P&E – often used, which means ‘plant & equipment’
8. WIP – means ‘work in progress’
9. CPI – means ‘consumer price index’
10. POA – means ‘price on appointment’
11. ABN – ‘Australian business number’
12. ACN – ‘Australian company number’
13. GST – ‘goods and services tax’
14. PA – ‘per annum’
15. PW – ‘per week’
16. PM – ‘per month’
17. ATO – ‘Australian tax office’
18. DD – is referred to as ‘due diligence’

The lingo…

1. Encumbered – means there maybe some plant & equipment that has a chattel mortgage or loan hold over it from a financial institute that needs to be dealt with prior to settlement.
2. Unencumbered – means the reverse of the above. The assets are completely owned outright without any encumbrance or hold over them.
3. Working Capital – the liquid funds available in the business owner’s bank account to operate a business, post settlement / purchase.
4. Plus Legal’s – means the additional cost of a solicitor or accountant’s fee.
5. Plus Stamps – means there is ‘Government Stamp Duty’ to consider (note: this varies from state to state)
6. Will Trial – the seller is willing for a buyer to come in and trail the business to access the financial performance of the business (conditions apply)

I hope these basics help you when searching for your next business venture.   Ian Salter www.iansalter.com.au

When looking for a service station to buy, there are many aspects of the business to consider. Location will likely be first on the list since the direction of traffic flow can “make or break” a service station. Service stations depend on various factors to be successful. No two service stations will be the same in profitability. Metro locations are highly sought after for the convenience and easy staffing aspects. Regional on the other hand has only just started to have its place in recent years which was long overdue. Metro: Metro stations can be based in any suburb and can travel to the location with ease & also have all the benefits of city dwelling. However, competitive market and customers are highly volatile to the market situation. Regular customers who have been a given, in the past are starting to become a thing of past in the metro locations, as shoppers look for discounts, value for money and great customer service. As an operator you have to be on the game all the time, “there is no off day in customer service”. Heavy discounting by supermarket giants on the other hand is a hard act to follow, the only reason other service stations are still surviving even after discount coupons from supermarkets is customer service independents. Staff manning the console in the supermarket based service stations, are simply there to do a job, they promote what’s in front of them with regular welcome & goodbyes. The independent service stations have more personal service, the staff and/or owners who work in the business know their customers, have a small chit chat and know their customers well so they promote only what they know their customers will go for. Service station customers are shoppers for necessity, they hate paying for fuel, and so great care should be taken to make them feel good. Regional: A major setback for owning a service station in a regional area is we have to move to that location and mostly change our life style to suit the business, but the benefits are plenty, we still have regular loyal customers who support the local business. The business is reasonably priced, and won’t break your bank to buy a decent service station in a regional area. Competition is not heavy but just healthy in a regional area, other service stations are known so they don’t tend to undercut. Profit margins are generally more when compared to metro. In recent years regional service stations are gaining more importance in the buyer’s market. Buyers who are looking to start their business in the service station industry are looking more towards regional areas, as they are priced reasonably and have low overheads. We can expect an increase in regional service station sales, since buyers are now keener to buy in regional areas rather than metro service stations. If you need any advice or appraisal for your service station, please contact me by email at karthik@benchmarkbusiness.com.au.

Market Overview – September OMG!!!! OMG!!! OMG!!! We are on our way to Christmas, it has warmed up and everyone seems like they are in a great mood … We have had lots of enquiries, and lots of sales! I’m confirming the positive business outlook right now is as high as I’ve seen it in years, as we have just put 6 salons under contract in 7 days! Buy a salon in September and be in by late October so you can gear up for the Christmas rush. Business Strategy Idea Franchise or Not to Franchise? Most successful businesses go through the expansion process with company owned stores to get their formula for success right, and then multiply by Franchising. This is an organic process and I have seen it happen many times over the last 20 years with mixed results. Is Franchising the best option? The answer is not that simple. A good franchise is only as strong as its franchisor’s business ability, and the applying correct concept in the current market. Many salons get a few things right and then get the “Entrepreneurial Spark” and start to expand but their concept may only work in a certain location or with a lot of “micro management” from the owners to make sure the business runs efficiently. So when they Franchise, things can (and often do) go wrong. It could be; taking the wrong sites, paying too much in rent, getting into a bad lease, putting in the wrong franchisees, or it’s the wrong business and marketing practices that eventually lead to the whole group melting down and disbanding. If you want to expand through Franchising … think 5-10 year plan, get your formula right, expand into at least 5 proven company owned sites, get your documentation correct, then sell the franchise to people that want to work the franchise. If you are wanting to buy a franchise then look for a reputable brand, one with a clear track record of success. Franchise, sites are often more expensive because you are buying a formula for success if you follow the systems. The returns are often lower than non franchise sites but if you value reliability and safety, then buying a good franchise can be rewarding. Talk with us about the large range of franchise sites we have access to and we can make sure you find the one that best fits your needs.   Iain Horne  

In one of our recently published articles, Ways to Grow Your Business (click to read this article), we looked at the 'Innovation Ambition Matrix' which suggests 3 key areas where businesses should invest in order to look to the future and grow the business. In my view, a key activity which underpins the future relevance, viability and growth of any current business is the activity which I refer to as 'Business Digitisation'. This term, for the purposes of our discussion here when referring to the SME business, simply refers to activities which help your business grow and evolve using digital solutions, thereby future proof that business. These solutions include things like developing new websites or apps, implementing new software which can drive automated processes, and so on. Looking back at our 'Innovation Ambition Matrix', Business Digitisation can be slotted into each of the three categories in order to achieve measurable outcomes:

• 70 per cent of energy and effort into serving your existing markets and customers: Using tools such as CRM's, Email Marketing platforms, Customer Portals on Websites, Members Areas on Websites, Communication Apps, 3D printer driven prototyping/product development and more, you can really boost the amount of interaction and service your current customers experience, thereby driving increased brand engagement and brand awareness.
• 20 percent of energy and effort into branching into “new to the company” business activities: It is amazing just how much impact Digital Solutions can have on your business and how simple creative thinking and the right advice can help you expand into service/product areas which were once closed to you. In addition to it's impact on your services/products, Digital Solutions can help break down locality based barriers, capable of transforming your local business into a national supplier. Have a look at what we did with our Dry Cleaning client: www.theweddingdressspecialists.com.au – in this case we used technology to transform a local dry cleaner into a national service provider using nothing more than an e-commerce website and creativity.
• 10 per cent of energy and effort into developing “breakthrough” products or services: Ok, now this one is far more challenging than the previous two, and will take a bit more planning and creativity to execute well. Bearing this in mind, again I point to the use of Digital Solutions in order to help you develop that 'breakthrough' (or dare I say it 'disruptive') product or service.

If you have read any of my previous articles you will know that I am a firm believer that the future of any business will be heavily reliant on the right use of Digital Solutions. And this is key: 'the right use of Digital Solutions'. Does a small mum and dad run corner store need their own dedicated app, with a full blown interactive website and the most powerful CRM in place? Probably not. But. They could make their presence felt on local listings apps, on Social Media targeting their local residents, running a simple email marketing tool in order to communicate with local residents and get them coming back time and again. Business Digitisation will vary from business to business – for some it will become a very complicated process and costly to implement. For others, like our corner store example, it won't cost more than a few dollars each month and some time from the business owners to implement. Want to learn more about implementing Digital Solutions? Keep an eye out for my future articles on the topic. Or, get in touch with me and let's have a chat. Written by Peter Spinda, CEO, Digital Duet – peter@digitalduet.com.au Peter is the founder of Digital Duet and Accommodation Website Solutions, a Brisbane based company specialising in the design and development of business websites, marketing strategies and online business models. Visit Digital Duet today.  

There is no doubt that a good business will sell if it is: 1. Properly priced, 2. Full financials are provided, 3. Business information and data is properly documented 4. Properly advertised and effectively marketed. A qualified, experienced, business broker will provide the following services: – Appraisal of business value. – Assistance with planning for the sale of the business. – Production of advertising & marketing plan. – Identification of business attributes & selling points. – Identify and eliminate potential problems and obstacles. – Production of comprehensive Business Information Package. – Communicate activity levels and seek Sellers instructions regularly. – Confidential qualification of buyers. – Use of buyer database, of local, interstate, and overseas buyers. – Create demand for the business – Find a buyer willing to pay the most for the business. – Assistance for buyers with finance, legal assistance, & more. – Negotiate a satisfactory price. – Preparation & assistance with Contract of Sale. – Assistance with transition process. – Satisfactory completion of transaction. It is common that business owners trying to sell their business will get buyers to look at the business, but find it difficult to progress past that point. This is where the skill and expertise of a professional broker will come to the fore. A broker will be able to identify the right way forward for both buyer and seller, and create a win-win outcome for all. Many times business owners have had buyers come to them looking to buy their business, and the buyer has lost interest and drifted away. This is often caused because the business owner has “dumped” a load of information onto the potential buyer, and the buyer has gone away and found a reason not to buy the business using that information.  Professional business brokers know how to consider the psychology of the situation, and how much – or how little – information to provide to a buyer. Remember a business broker does not get paid until the transaction is completed. In any profession there are good and bad practitioners, but it’s like anything – You get what you pay for. Do some homework, don’t try to save a few dollars by paying a slightly lower commission, find a qualified broker who understands your business, ask them about their experience and allow them to use their expertise to create the best possible outcome for you.

Use these 17 tips prior to engaging a business broker and you could save time, money and the possible disruption to your business.   I constantly come across business sellers who have been given the complete “run around” by the “shonky business broker” who really has no intention (or clue on how) to sell a business and they tarnish the industry for the rest. The stories I come across include; “I can’t get hold of the broker or the company”, “I paid them considerable amount of marketing money”, “I have received no feedback or communication”, “I have signed up exclusively, I think, but I didn’t receive a copy of the signed agreement”, I am paying $x per week or $x per month ongoing through my listing’… and so on……   Before you sign up your business for sale and engage a broker use this 17 tip questionnaire, and inform the broker you would like to treat your meeting like a “job interview”, whereby you are interviewing the broker for the position of acting as your broker to sell your business.   THE ESSENTIAL TIPS:- before engaging a business broker  

1. Check if the business broker is licensed in your state
2. Ask to view their personal license.
3. Cross check the license number with the office of fair trading in your state.
4. Where is the brokerage companies head office based?
5. Is the company an accredited Real Estate Agency?
6. How long has this brokerage company been in business?
7. What type of licenses does the company hold and which states?
8. Ask for the principals details and ask to speak or meet with them.
9. Ask if you can come to their head office to be shown around on how they operate.
10. Is the broker a specialist?, if so, what area do they specialise in and how long have they been doing that?
11. What have they sold that is similar to your business?
12. Ask them to explain their methodology to you (or preferably your accountant) on how they came up with the price.
13. What level of service is to be expected from the broker?
14. How often can I expect communication?
15. Will you be the same broker throughout the entire sales process?
16. Can you run through the entire process from start to finish?
17. I would like to discuss my options to list my business with my solicitor first, do you mind if I do this?

  Unfortunately there are many “so called” business brokers operating in the market who are not licensed , and who are only interested in making a living from taking “marketing” funds from business owners – and those business owners never see that “broker” again. Be careful to avoid these people. Please take time to check the “bona-fides” of your broker. In almost every single business sale the buyer will complete a “due diligence” to verify such things as the profit, sales, staffing, wages paid, rent, working capital, assets and so on. It is no different for a business Seller. Do your due diligence on a business broker and the company that will represent you. If you treat these tips as if you were conducting a “due diligence” by taking your time and asking questions and verifying information, you can save yourself time, money, minimal disruption to your business. – and avoid the disappointment that we encounter every day.   I was recently asked this question from the REIQ head office Brisbane… “Ian, What do you think makes a great Business Broker?”  this was my response… Besides a strong reputation. Knowledge within the industry, strong communication skills, “follow through” and attention to detail. I have been a professional business broker for over 10 years and I am still learning and don’t know everything. Things change constantly i.e. documentation, laws, licenses, contracts, legislation, acts, codes of conduct and much more. The whole “how to” approach to become a recognised specialist/ professional. The biggest compliment a broker can achieve is a “referral”. Also get educated within this industry and your specific sector of real estate, to become the professional the general public expect you to be.   I really hope this helps you with your next decision to list and sell your business.   Ian Salter