Market Overview – October 2014 It’s that time a year again where we have so many salons under contract, lots of settlements happening as everyone wants to cash in for Christmas. You only have around 4 weeks left of buying time to get yourself into a business this side of Christmas so do not delay. At the moment we are out on the street and the phones trying to find stock to sell as we cannot keep up with the enquiries. We anticipate that we will have a lot of new salons coming on in the New Year so if you missed out in 2014 then keep looking and get your money ready so that you can act quickly in 2015. Tested Business Strategy Idea It is now time to prepare for after Christmas. The best strategy we have run in our salons over the years has been a post Christmas rebooking promotion. For the 8 weeks leading up to Christmas you should definitely run some version of this promotion. We guarantee it works! Strategy – Start this in Early November – get ready now!!!! In the next two weeks develop up some cards/Christmas Cards that have a few different promotions that you can give away to your clients which will encourage them to come back into your salon in January and February. Have at least 8 weeks x average number of clients you would see in a week – eg 8 x 50 clients per week = 400 cards. Put these cards into a gift box at the reception desk and when the client is leaving rebook them and give them a “Christmas Gift Card” which they can use in January and February. (give them one even if they don’t rebook as it will bring them back in) All clients love to get something free and this is a little something to say thanks for being a great client for the year. Ideas for giveaways can include … Free eyebrow wax, eyelash tint, treatment, blowdry, 5 foils, eye treatment, hand massage, product pack, etc … The free stuff is to be of a decent perceived value but low cost to do … eg it can be done by an apprentice etc … Make sure you book the client in for their appointment and their free gift when you give them the gift card so that you know you have time to do it on their next visit. See a mock up of the complete promotion below which includes salon poster and table tents and gift cards … Have a team meeting once you have done up your version of this promotion and start rebooking all your clients for after Christmas … You must start this promotion by the 15th November to have it work effectively. Finally don’t let the client see the appointment book so that you can control the day and time of the appointment.   John Kasapi Salon Sales Specialist  

Salon Buying Season is definitely here and now everyone is picking up great businesses right now and they will be in their new salon before Christmas. There are 2 months left of buying time before the Christmas boost! Get your finances in order and put in an offer now … Don’t miss out!   Here is a Business Idea Now is the time to get your clients back into rebooking … they may have been stretching out appointments for too long! … a great way to do this is count down the number of visits they should make till Christmas … For Example it is 1^st Day of September so there are around 12 weeks to Christmas = 2 six week visits … so start booking your clients in for 2 appointments in advance … Let them know that things are getting busy and you want them to get into the salon at a time that suits them and see their favourite team member – Book them in now… … The secret to this is get the entire team involved and then everyone is saying the same message and of course keeps this spiel consistent right up until Christmas.  I guarantee you will have a bumper Festive season and make more money – and add real value to your business.   Kind Regards, John Kasapi Salon Specialist

Service stations businesses are currently in high demand.  Why is this? Because they sell ‘a commodity’, and can be very profitable.  I get phone calls every day from people wanting to get into the fuel industry because they think it will be easy, or they have friends who operate a service station and say they should get one too.  To operate a service station successfully takes dedication, commitment, and customer service. Some people have poorly stocked shelves and lack cleanliness. A service station is like a baby as it needs constant attention and love.   Today I will focus on buying the business and what do you need from a financial point of view.  The best way to help you understand is to create a fictional service station and build from there giving figures to illustrate the process.   This service station is in a metropolitan area and is selling for $300,000 goodwill plus SAV (stock at value).  Can you afford this?  Well let’s look at what you will need to get started (Capital Required to Operate).   Besides the goodwill, you will need to know what the value of the stock (wet/dry), monthly rental in advance, licences, insurances, stamp duty, legal costs, wages, uniforms, other set up costs and lastly you need to know if you have to pay a bank guarantee or bond? With a service station selling for $300,000 it is reasonable to estimate for the CRTO would be $550,000.  Yes, it does add up very quickly.   What will the bank lend to me?   Generally banks will lend only 50% of the goodwill and will not lend on stock or the other capital required.  So with the example above you will need $550,000 to purchase this business and if the bank lends to you 50% goodwill this will be $150,00 you still need $400,000 cash.  Many buyers don’t realise that it is not just the goodwill needed to purchase a business, there are a lot of other hidden costs.   Do you own a property and have assets?  Without this it is an unsecured loan and banks will want some form of security to lend to you like a ‘Right of Entry’.  This means they will want to take over operation if you fail to meet your financial commitments to them. So will the landlord grant a ‘Right of Entry’?.   This is only one aspect of owning a service station and I hope this have given you some insight on what it needed before you take that next step.   Kind Regards Patty Taylor Service Station Specialist

As a business broker I have the privilege of assessing hundreds of different businesses from a variety of different industries. One of the most common things that I come across is a situation where the business is often NOT ready for sale.  Sure, the business owner is doing well, and in their mind they are thinking “why shouldn’t my business sell?” – There are several reasons why a business needs to be “prepared” for sale.   Let’s look at what the most common issues are that halt or stall a sale

1. The lease… if a lease has minimal tenure left, or there is no option period on the lease it can be a problem. In the mind of most Sellers this seems perfectly ok, and in some instances I have witnessed well-established businesses operating on a month to month basis where the relationship between Seller and Landlord seems to be ok.  That’s all very well for the Seller, but in the mind of the Buyer this can throw up a host of issues. Such as, the Buyer’s financiers not lending money on a short term lease with minimal tenure, or on a month to month basis as there is no security. Buyers wonder “will the landlord extend the lease?”, will the landlord throw me out?, at who’s cost?, will there be any changes and increases to the lease agreement if it is extended, what will the terms be?, will the landlord require a bank guarantee?  And on it goes….These ‘unknowns’ must be eliminated to give the buyer confidence.
2. The Stock… in many cases I come across businesses that do not complete an official stock take, so the stock value is a “guesstimate”.  As the Seller has been trading over the years the stock has slowly increased and so when the time comes to assess the stock for a business sale, we find that the business is either over stocked, there’s old stock, out of date stock, devalued stock etc. The stock value is a big consideration to a Buyer as this can affect their working capital needs, and in some states of Australia there is a Government Stamp Duty to be paid on stock when purchasing a business.
3. The Financials…more than ever since the GFC days Buyers, their Accountants and Financiers are requesting or insisting upon viewing the full “up-todate” completed financials. I have come across Sellers who are reluctant to have their current end-of-year financials completed as they are not required to complete them until the following year, and this will save them spending money now. Again, this is going to slow down the sale.

  A great way to resolve issues quickly that could potentially stall a sale is to engage a professional Business Broker to conduct what we call “A Health Check” on the business. At Benchmark we have a great tool available to Sellers called “12 Tips to Selling your Business”. This document has been developed by professional Business Brokers to assist Sellers to work as a “team” with their appointed Business Broker, to present the business for sale at its optimum level of performance, and presentation.   BROKERS TIP: Prior to a Seller engaging the services of a Business Broker (and the Brokerage Company) check these points out first. Meet with your Broker (face to face), and if possible go to their place of business (Head Office), why? Ask yourself, do you feel comfortable with the company? Do you feel you can work with your Broker you’ve engaged to do the job?  We encourage Sellers to “interview us” first, as the Business Broker and Seller must get on together to achieve the best possible outcome. – and to properly prepare for a sale.    Kind Regards Ian Salter  Licenced Business Broker

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.

• 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.
• 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.
• 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.
• 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.
• 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.
• 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.
• (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.
• 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.

Thank to Cash Resources Australia www.cashresources.com.au/            

SPAR and SPAR Express stores are locally owned, family businesses committed to meeting the needs of their local communities. This truly unique brand combines the buying power of a family run wholesale business with the expertise and support provided by a world renowned retail brand. SPAR works on the principle of wholesalers and retailers coming together under one name, working collectively to bring the best value to their customers. SPAR and SPAR Express stores proudly pass on the savings resulting from this philosophy to their customers every day. The SPAR brand is built on a strong history of original ideas and mutually beneficial partnerships and the strong operational, marketing and distribution systems play an important part in the success of the brand. Most of all however, the success of SPAR has been built on the quality of the Retailers who own and run SPAR and SPAR Express stores. SPAR has achieved obvious benefits for both communities and the family businesses involved in areas such as buying power and the valuable lessons learned in each market across the world. In Australia, the key difference between SPAR and the major competitors in the grocery industry is that every store is independently owned. This allows each store owner the freedom and independence to make local decisions that benefit their customers and their broader community. Of course, every store across the group’s vast global network must meet world-class standards for service and presentation quality. But at the same time, they can tailor their products and services to suit the unique requirements of their local area. Store owners can support the local economy by buying the freshest local produce and other locally made products. At the same time they can support local sports teams, schools or community groups. It’s a wonderful and mutually beneficial way to play an important role in the affairs of their districts. Combining this with good food, great service and highly competitive prices, SPAR and SPAR Express stores will always be truly world-class on a local level. For details of SPAR Supermarkets currently available for sale, contact Mathew Hartley at Benchmark on 1300 366 521.

  With only 3 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 have finalised their financials for the 2014 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 businesses that you like. Settlements for salons bought in the next few weeks will be in mid to late September – in time for Christmas and the “high season”. 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 management. For example paying wages and bills. – These salons are good for investors who want a “Business” not a job.  This is a business – and usually carries a premium price as a result. A Partly Managed salon usually has an owner that comes in less than 20 hours per week. The owner could work in reception, or “on the floor” looking after clients, and sometimes produces income for the business. Often these sites can be turned into a Fully Managed salon by promoting the part time salon manager into a full time position. An 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. 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 implementing the right strategy. Cheers John Kasapi – Victorian Specialist 0422930549 Australian Business Brokers Of The Year  Australia’s Leading Salon & Spa Sales Specialist

We hear talk of the two speed economy all the time in the media – but it can just as well apply to pizza businesses in Australia. Emil Parthenides, the founder of the 131 PIZZA network for independent pizzerias as well as operator of the Better Box Company, whose work means he gets to deal with a wide range of pizza operators around Australia, says there are pizza businesses who are doing phenomenal trade while others have found the last year incredibly tough and are struggling to turn their operations around. “Things have really changed [in the industry], it’s so much more competitive now,” Parthenides says. “And I think what you have in the industry is pizzeria operators and you have business operators and they approach things very differently. “The pizzeria owners who were successful in the 1980s and the early 1990s are the ones who are finding it tough – the whole game has changed. These days it’s very hard to own a pizzeria and also still working in there making the pizza. “You really need to work on the outside of it and grow it from the outside – otherwise if you are there every day and making pizza you don’t have the time to be thinking about ways to grow the business, and to be across all the reportings that you need to be across.” Parthenides, who’s been advising pizzerias as part of the development of the 131 PIZZA network (which hands independents the advantage of one easily recognisable phone number), decided last year to, as he says, put his advice to the test, and purchased his own pizzeria business. Parthenides bought Gallery 324 in Melbourne’s South Yarra last March and set about turning around what was a declining business – with impressive results. Implementing strategies and ideas he’s learned from seeing both successful and failing businesses, he’s been able to stop the haemorrhaging and achieved 30 per cent growth at the business within the first six months. He’s now in the process of renovating the restaurant side of the business with plans to extend trading hours into breakfast, and install a coffee “window” to cash in on the booming demand for quality coffee. In January business was 40 per cent up on the previous year with Gallery 324’s home delivery market having grown from doing around 490 deliveries a week to the current 750. “We’re actually at a point where we can’t grow any more so I’m just about to renovate and expand the cafe side of the business more and make the most of that space,” Pathenides says. Parthenides said he bought the restaurant because he “loves a challenge” but also because he wanted to show how a failing store could be turned into a successful one by implementing some simple strategies, and being pro-active. “I know of nine stores that have closed down in the last year and even just recently my major competitor just ten metres from me has closed down,” says Parthenides. “Now the thing is we’re not the best – there’s no such thing as the best – but we have a good product and we are very happy with what we are doing. And we are very consistent. But what we’ve done is put a lot of work into our marketing and thinking of ways to build and streamline the business.” Parthenides says when he took over the business it had experienced a 30 per cent decline in sales in the previous two years, and needed a major injection of passion and business nous.  One of the first things he did was to get family and friends to experience the business, to go in and dine, order home delivery and pick up. He then constructed a list of the negative feedback. One issue was the cleanliness of the store so a thorough cleaning was top of the agenda. And with waiting times for delivery and the temperature the pizza arrived at both issues, Parthenides put strong focus on improving the delivery service – with a strategy that also increased his marketing muscle. He boosted the number of delivery scooters on the road from six to nine (he now has ten) and had them all boldly sign written with the 131 PIZZA number prominently displayed along with the succinct offer – “Beer, wine, RTDs & Pizza”.  The store frontage also got a new paint job clearly promoting the number and Gallery’s website address to the passing traffic. “I added the 131 PIZZA number and I advertised it all over my shop and on my bikes – if you have one of them sitting in front of you in traffic for two seconds it’s a number you will remember,” Parthenides says. “But our old number – 9827 6066 – who would remember that? “We have really built the brand. People know us for deliveries now – everyone in the area knows the Gallery 324 scooters. If you drive around our area you can’t miss them. For me that’s been one of our great marketing tools. When you’ve got ten scooters out all night from 4pm people see them and they think that must be a busy place.” The growth in home delivery has had its challenges as well with Parthenides having to implement systems to ensure customers weren’t turned off on very busy nights because of a potential blow out in delivery times.  Staff now closely monitor the number of home delivery orders and if they begin to reach unmanageable levels begin telling customers it’s pick up only. “New Years Day for example and AFL grand final – you learn there are certain days when things get out of control  and,  even though we have ten riders, deliveries can blow out to two hours,” Parthenides says.  “I tell my staff when you start to see a full book, about 100 orders, that’s when you start telling customers no more delivery orders for half an hour. And if delivery time starts to go over an hour then no more orders at all. “It’s the same if you go to a restaurant and it’s fully booked and you can’t get in. You might be disappointed but you will think that must be a fantastic restaurant to be so busy. But if the restaurant just squeezes you in but is very full and then you don’t get served for an hour you’re  going to be upset and maybe angry – the same applies for deliveries. If you keep taking and taking deliveries when you are busy you are only going to disappoint people and I hate that.” But even when things do go wrong Parthenides has turned the situation into a positive. “Valentine’s Day was a perfect example – we had 140 orders come through within half an hour and the staff didn’t get around to switching it off fast enough,” he says. “Tuesday nights aren’t usually busy for us and I didn’t think Valentine’s Day would be big. But I could see on my phone staff were still taking orders so I called and we stopped delivery. “The next day, because I know a lot of the customers were online customers and might place a negative review on Menulog I got my staff to ring all the customers who got late deliveries –  we were talking two, two and a half, hours. We offered them a free large pizza. The manager said every person was so happy.” But even on days when business might not be pumping Parthenides doesn’t sit and wait for customers to pick up the phone, tap an order into their computer or walk in the door. He takes advantage of the 17000 customer database he has built up using his POS technology and if business is quiet he’ll have up to 5000 text messages sent directly to their phones. “We text at about 5pm each night just to remind people that Gallery is open and that we deliver – things like reminding them that we can deliver a bottle of wine if they like and not to forget that they’ll get a free garlic foccacia along with it,” he says. “It’s such a valuable tool – if you’re having a quiet night you can text 2000, 5000 if you want to and all of a sudden you can turn a quiet night into a busy night. We try to maximise every night so we’re never quiet. You can’t sit in your shop just waiting for people.” Parthenides put a major focus too on Gallery’s website and its online and mobile phone  ordering options, joining forces with web experts Zwift to help optimise it. And his latest new feature, a smart phone app launched in October, has quickly become the leading tool people are using to place orders. “We get thousands of dollars through online orders a week,” says Parthenides. “And I would say about 65 per cent now come from our iPhone app.  We’re  now getting more orders through that than the website, it’s amazing. “And we really promote it – you have to make sure you promote the hell out of it. It’s a waste of money if you aren’t letting customers know that you offer these things. They are not just going to stumble across it.”

1.Thou Shalt Not be Greedy – Buyers look at many businesses before buying. Offering reasonable price and terms will get a prudent buyer's attention. 2.Thou Shalt Have a Good Reason for Selling  – After the buyer asks "How much?" the next question is "Why is the seller, selling?". The reason must be logical . . . to the buyer. 3.Thou Shalt Provide Proof of Profits – All books and records should be clear and readily available. 4.Thou Shalt be Willing to Train – Most of those purchasing a business are first-time buyers and will need a minimum of two weeks training. 5.Thou Shalt Provide a Covenant Not to Compete – Buyers want to make certain they will not be competing with you for the same customers. 6.Thou Shalt Provide a Complete List of Assets -Buyers want to know what they are buying before making an offer. 7.Thou Shalt Keep thy Business in Good Repair – Clean, neat appealing businesses sell. 8.Thou Shalt Prepare the Landlord for the Sale – Landlords can be real 'deal killers' and buyers need to know if the lease will be assigned or a new lease will need to be negotiated. 9.Thou Shalt Avoid Surprises – Surprises tend to destroy the buyer's trust and will send them running, not walking, to another opportunity. 10.Thou Shalt List with an Experienced Business Broker – Specialist business brokers add value to the process because of their appraisal and negotiating skills and their multi-pronged marketing strategies. Brokers can also "recast" financial statements, qualify buyers, maintain confidentiality and identify hidden 'intangibles'. Bruce Rylance Business Broker

Reports in various publications (Newspapers, Magazines, Business and Banking Reports) give a confusing picture of what is actually occurring in the small to medium enterprise sector. Recent reports from both banks and independent publishers would tend to indicate that this sector is travelling reasonably well and I am sure that many business sectors are. But a walk around major shopping strips and industrial areas paints a very different picture. The high level of for lease signs in areas that 2/3 years ago were impossible to obtain a tenancy are now common. Restaurants and cafes are struggling with the high loadings for non-standard hours and many are closing. Retailers are suffering from rentals that were supportable 3 years ago but are now as much as 30+% of gross income. Banks project an image of funds being available at the lowest rate levels in history, but are these rates available to small enterprises. Yes if Real estate is used as security, but for goodwill, most unlikely. When looking to sell & or purchase a business the above comments need to be taken into consideration along with the many other factors associated with the small to medium enterprise sector so decisions are based on cold hard facts, in doing so, it should reduce the likely hood of the business declining or collapsing.   Owen Mitchell Business Broker