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  

A small business is an exceptional investment that will not only increase in value with improved performance but it will also provide the owner employment, an above average return, a sense of achievement and, in some cases, non cash benefits. But every business owner needs to look at the future, and ways to grow the business. A few years ago (2012) the Harvard Business Review published an article (below) which offers some interesting thoughts on how to grow and innovate in business.   The article talks about a "tool" they have named the "Innovation Ambition Matrix" which (essentially) suggests that businesses should invest;  

• 70 per cent of energy and effort into serving your existing markets and customers,
• 20 percent of energy and effort into branching into “new to the company” business activities
• 10 per cent of energy and effort into developing “breakthrough” products or services.

  This concept is particularly relevant in 2015 where disruptive technologies and methods are challenging traditional business models. The image below illustrates how this thinking works. The idea is to;

1. Look after your core business,
2. Look for strategic opportunities
3. Develop a “breakthrough” for markets that don't yet exist.

Your business is in one of three possible states. It is either – GROWING, – STAGNATING or it is – DYING YOU HAVE THE POWER TO CHOOSE WHICH STATE YOUR BUSINESS IS IN… AND WHERE IT GOES FROM HERE A business owner has the ability to decide which of these states it sits in, and where the business goes in the future. Why would you choose to stagnate, or for your business to die? Surely we all want to grow our business. So how do you grow a business?   From our point-of – view you have these options: – grow through expansion of your existing business – grow through "head-hunting" – either staff, clients, or suppliers – grow through marketing and advertising campaigns – grow through acquisition   It can be argued that the best way to grow is through acquisition. Strategic acquisition. This is where you identify the opportunities in the marketplace, and go out and acquire a business which not only delivers a proven level of profitability, and cashflow, but also gives other benefits. These may include: – critical mass, and economies of scale – higher profile – the ability to lower overheads by consolidating operating costs – the acquisition of talent – the acquisition of IP which can be employed elsewhere in the business – an uplift in overall value which exceeds the 'sum of the parts"   This last point is interesting. An example of this scenario is a case where a transport company acquires another transport company. The acquiring company may be valued at $20 million, and the company acquired may be worth $5 million, but the combined value may be more than $25 million, as the acquiring company can reduce admin staff, run more efficient routes, and enjoy better buying power, providing better profits, and a better market capitalisation rate (multiple of earnings).   The choice is yours. You can grow, you can stagnate, or your business can die. Which do you choose?  

If you’re thinking of selling your business in the near future, it’s important to devote preparation time to the sale. Proper preparation plays a major role in influencing the final sale price, and also helps to achieve a smooth transition from you to the purchaser. At Benchmark, we have the expertise and experience to be able to you with the guidance and preparation of your business for sale. With an indication of a likely selling price – provided by a company with a proven record of business sales across the country, you will be in an ideal position to take your business to the market. Call to speak with one of our team today on 1300 366 521.

Many business owners are not sure of the issues and factors that cause CGT to be paid (or not paid), when a business is sold. The CGT legislation is structured so that the owner of a small business (who is well advised and uses an appropriate business structure) should never have to pay Capital Gains Tax on the sale of their business. Here are some points that help to simplify this area. Most income generating assets will attract Capital Gains Tax when sold, however a small business may be free of Capital Gains Tax (CGT) when it is sold- if certain conditions apply. Many business owners are unaware that if an operating business is sold for less than five million dollars, and it is owned by an individual, partnership, or a company, where an individual owns at least 50% of the business, or shares in the business, – the Capital Gains Tax liability will be halved. If the owner qualifies for this 50% reduction and has owned the business for more than 15 years, the sale will be free of Capital Gain Tax. If a business is owned by individuals (not a company) for longer than twelve months, but less than 15 years, the Capital Gains Tax liability will be reduced by a further 50%. After the concession and discount is applied and the liability is established, a CGT liability can still be eliminated – if the operator is over 55 years of age, – as long as the gain is transferred to a (complying) superannuation fund, or if the operator reinvests the gain in another (similar) business within two years of the sale. Another way in which CGT may be exempt is in an "involuntary sale". For example, if the business is to be sold as a result of a compulsory acquisition, or a marriage breakdown, as a result of an insurance payout – it is likely that no CGT will be applied. We often find that business owners (mistakenly) believe that they will have to pay CGT, when they have no Capital Gains liability. We always suggest that business owners seek advice from a competent accountant. A CGT liability is usually quite rare, and if there is such a liability it can be planned for in advance – so good advice is really valuable.

Market Overview – August With only 4 weeks left to the end of winter, now is a perfect time to wrap yourself up, and enjoy a warm cup of coco and start looking at all the bargains on our books. Many sellers are finalising their financials for the tax year, so you will be able to make up to date decisions on the best investment for your budget. September is a key time for people buying salons as it marks the start of spring and the run up to Christmas. Best thing to do this time of year is start looking at quite a few possible salons and then make offers on the sites you like. Settlements for salons bought in the next few weeks will be in mid to late September. Business Strategy Idea We often get asked what the difference is between a Fully Managed, Partly Managed and Owner Operator salons. A Fully Managed salon is the best you can get, the owner is often not from the industry and runs the salon like a business doing all the back end. For example Paying Wages and Bills. – These sites are good for investors who want a “Business” not a job. A Partly Managed salon usually has an owner that comes in less than 20 hours per week. The owner could work on reception or on the floor looking after clients and sometimes produces income for the business. Often these sites can be turned into Fully Managed salon by promoting the part time salon manager into a full time position. A Owner Operator salon has a hairdresser or beauty therapist working in the business on a full time basis and this type of salon is not suited to an investor unless the net profit including the owners wage is over $100K. Owner Operator sites can be turned into managed sites over a period of time however the owner needs to work their way out of the business which often can be difficult without the right strategy.  

Childcare Centres Childcare centres have been in high demand for many years now. Current demand is being stimulated by listed entities seeking to acquire centres, and the consolidation of ownership amongst some of the bigger operators. Demand is very high in NSW and Victoria. Supermarkets We have unprecedented demand from buyers looking for supermarkets. Especially those which demonstrate sales in excess of $130,000 a week. Buyers really know what they want, and when they find it, they are quick to secure the business. Food Service Recent activity by private equity and listed companies has seen interest in this area grow significantly. There is very high demand for large food service companies with either exclusive customer supply agreements, or exclusive distribution rights. Transport This sector has changed significantly over the last five years. Interest in this sector was extremely low, and is now high. This may be driven by the increase in online product sales, or improving efficiencies – either way, this is a sector which has seen very high interest this year.  

Click here to view our latest State Of The Market – Infographic online.

I often get people asking me questions around how to utilise digital technology within their business. While it's always best to provide advice after reviewing each business on it's own, I find the best way to guide business owners on the topic of digital technology is by providing some examples of what has worked in other businesses and industries. So, here are a handful of real life examples where we successfully merged digital solutions with a pre-existing, offline business, sometimes in industries where you may not have even thought anything was possible! The Dry Cleaner: As a very successful dry cleaning agency, our client wanted to explore the possibility of incorporating e-commerce within their business. After many discussions we developed an online business model for their Wedding Dress dry cleaning and preservation service, rolling out www.theweddingdressspecialists.com.au as a specialist brand specialising in a niche service offering. We have used digital technology in the form of an e-commerce website, CRM and email marketing tool, to handle the front end transaction processing and back end order management. As a result we have enabled our client to grow from a local, Brisbane only dry cleaner to one that can service customers anywhere in Australia. Dry cleaning and e-commerce: who would have thought? The Rural Motel: Located in rural Australia, this motel is owned by a middle aged couple who are typical of the many other business owners in Australia: they knew they had to 'get online' but were stuck with the question of 'how to get online?'. Our sister brand, Accommodation Website Solutions, was engaged to assist with their digital transformation. After a few months of work we transformed their accommodation facility from one that was completely offline, to one that has now become 'connected' and 'global'. Their new (and first ever) website features an accommodation booking engine; they now have no need to scribble bookings on pieces of paper as their new property management system handles it all; they now have a presence on several international booking websites, and we connected their systems so they talk collectively to each other.  Now they are gearing up for a digital marketing campaign which I am sure will deliver terrific results over the coming months. The Trades Company: Wanting to break from the mould and become a business for the 21st century, this long established home repairs company has decided to embrace digital technology in some really innovative ways. Without giving away too many of their secrets, I can tell you that this business, which primarily employs tradies and sales reps (including door to door sales people), has rolled out a new system which uses Ipads for sales, a smart website with a private section for company employees, email marketing to build customer relationships and manage bookings, and are now looking at using drones as part of an effort to not only provide a service unique in their industry, but to reduce workplace injuries by eliminating the need for their tradies to undertake certain activities which to date have involved some element of risk. Oh, and I should add: the owners are far from computer savvy, but have been willing to learn and explore new technology. The above three examples provide an insight into what is possible and what others have done in order to bring technology into their business. Not only has technology helped the above businesses expand, grow and in some cases generate efficiencies, but they have also enabled the businesses to evolve into a modern digital business. This is important, for when the time comes to sell their business, these modern, tech savvy businesses will be the ones that stand out from the crowd and will get the most attention from buyers! Interested in knowing more about digital solutions for business? Give me a call, drop me an email, I am always happy to help. Interested in selling your business? Talk to Benchmark Business Sales & Valuations today – we have the right knowledge and the right team to help you achieve sales success! 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.