The Business Lifecycle has these parts:

·     Start Up

·     Operation and Improvement

·     Wealth Management

·     Exit

  Business Purchase or Start Up Whether starting a new (or buying an existing business) the following should be considered to ensure you make an educated decision on your going into the business, including: ·         Pro's and Con's of the industry ·         Business Planning ·         Marketing strategy ·         Registration and licence requirements ·         Name registrations (including ASIC and Domain's) ·         Tax Structures and Asset Protection ·         Workplace Health and Safety (WHS) ·         Tax Office Compliance – TFN, ABN, GST, PAYG, FBT ·         Intellectual Property / Trade Marks ·         Insurances – Prof Indemnity, Contents/Building, Public Liab, Workcover, Life, Income protection, Key Man ·         Finance & cash flow requirements ·         Staff and employment requirements and obligations (HR) ·         Fixed and Variable expenses, break even analysis ·         Management and reporting systems ·         Roles and Responsibilities of staff   Operations and Improvement Sound business operation requires the right foundations. This means access to accurate numbers and key measurements in a timely manner so you know what is happening in the business at any point in time. Business owners must be able to regularly review and monitor performance, and make changes quickly. Three main areas for business improvement include: 1.     Increasing Gross Profit margins, 2.     Reducing overheads, 3.     Growing sales. Regular meetings, monitoring and implementation of your strategies enable you to quickly see improvements to your profits. Many businesses fail because of a lack of planning.  It is imperative that business owners manage, monitor and measure business performance to know where changes can be made, and to see that business plans are working.   Wealth Management What is wealth? To be wealthy simply means you can afford your lifestyle…… now, and into the future. Business owners should manage their affairs to grow and build wealth – and look towards reducing input into the business, and ultimately retiring. There are many ways that this can be achieved.   Succession Planning (or exit strategy) A succession plan will help your business transition smoothly to the new owner – and derive more value. It clearly outlines your timeframe, expected sales value and who is your targeted purchaser. It is highly recommended to plan your exit early, the sooner the better. That way you have time on your side to maximise the value of your business for sale. Once your timeline is set you can then clearly set measurable targets to reach your businesses full market potential for sale. It is important to know who your targeted purchaser is, being your family, an investor, a new working owner or your business team. There are many different strategies and planning solutions depending on your ideal purchaser.. So get planning your exit strategy – right now.!

REMEMBER…. STRATEGIC ACQUIRERS PAY MORE FOR BUSINESSES.

If you are thinking about selling your business. Send an enquiry to admin@benchmarkbusiness.com.au. One of our brokers will be happy to assist with your enquiry.

Business Plans

  Business owners must have three separate business plans; ·      A Business Plan ·      A Marketing Plan ·      An Exit Plan  

Do you have all three?

  The first plan to prepare should be the Exit Plan. Remember to start with the end in mind, and work back from there. BUSINESS PLAN A Business Plan allows the owners and shareholders of the business to plan for the daily operation of the business, and to set targets, budgets and operating systems in place. It is like the “Instruction Manual” for the running of the business, and every business should have one. Good business managers refer constantly to the Business Plan and use it as a constant reference point when making business decisions. The Business Plan should be reviewed (at least) annually, and updated and adjusted regularly. A good business plan includes: -         A mission statement -         Plans for growth and expansion -         Budgets (including P & L and Balance Sheet) -         Asset replacement plans -         Operational plans and systems -         Key Performance Indicators to be measured -         An Action Plan which summarises the actions to be implemented with dates and responsibilities A MARKETING PLAN A Marketing Plan refers to the business plan, and the mission statement to outline the targets and outcomes to be achieved through marketing and advertising, and the plan for achieving those aims. It includes a budget, and a mechanism for measuring spending and results achieved. The Marketing Plan also includes KPIs that are to be measured and monitored. EXIT PLAN All that is required to produce an Exit Plan, is to: 1.       Decide when you want to exit, and how much you will want to sell for 2.       Plan on how much profit the business will need to show to sell for the price that you want to achieve 3.       Set a program with targets and KPI (Key Performance Indicators) that need to be achieved to realise the price sought. 4.       Decide who is the most suitable acquirer of your business 5.       Plan to prepare the business for sale 6.       Seek advice from credible advisors to keep you accountable and “on-track”. 7.       Measure your performance and adjust where necessary to hit targets 8.       Make it happen by engaging an effective business broker who will - a)       Help set an appropriate pricing plan b)       Help set the sale plan (including how the sale is to be executed) c)       Prepare the data and information that buyers will need d)       Understand the most suitable marketing techniques and produce a bespoke marketing plan e)       Pro-actively follow up on buyers and engage them f)        Remove emotion from discussions and help to negotiate the best outcome g)       Follow the process through due diligence and co-ordinate activity to finalise the transaction  

Succession and Exit Planning

  When? Most business owners find it hard to believe that they should start thinking about the sale of their business from the first day of acquiring the business – but they should. Even experienced business owners get swept up with the daily operation of their business, and other distractions of everyday living – and forget that one of the most important parts of owning a business is to PLAN THE EXIT IN ADVANCE. How? It’s actually pretty simple. Like any journey, we need to plan our final destination at the start of the journey, and then we can set a course, and plan the path to the end. So, what’s involved? All that is required is to: 1.      Decide when you want to exit, and how much you will want to sell for 2.      Plan on how much profit the business will need to show to sell for the price that you want to achieve 3.      Set a program with targets and KPI (Key Performance Indicators) that need to be achieved to realise the price sought. 4.      Plan to prepare the business for sale 5.      Seek advice from credible advisors to keep you accountable and “on-track”. 6.      Measure your performance and adjust where necessary to hit targets 7.      Make it happen Who? Put together a team of advisors who can assist to achieve the outcome. The best team is one which is supports your exit strategy. Why? The need to have an Exit Strategy is clear… “Failing to plan – is planning to fail” Business owners must have three separate plans. ·      A Business Plan ·      A Marketing Plan ·      An Exit Plan

Do you have all three?

The first plan to prepare should be the Exit Plan. Remember to start with the end in mind, and work back from there. If you would like to know more about exit planning. Send an email to admin@benchmarkbusiness.com.au or give us a call on 1300 366 521

Major Victorian Meat & Poultry Processor Sold!

Benchmark Corporate’s Emil Parthenides is pleased to have brokered the sale of Paul’s Poultry Group which has been sold to B&E Foods for an undisclosed amount.

  Paul’s Poultry Group has been a leading Victorian meat & poultry processor, value adder & wholesale business for over 30 years. Paul’s Poultry products are distributed to Private & Public sector, leading hospitality, hotels, nursing homes, childcare & independent retail outlets across Victoria.   Advisor to the Paul’s Poultry Group – Emil Parthenides commented: “There was considerable interest in the Paul’s Poultry Group from private equity and other local & international trade buyers however, B&E Foods was the vendors preferred option."   The acquirer B&E Foods is a boning specialist and a respected wholesaler of quality poultry products.Their humble beginnings date back to 1991 when Bill and Lucy Dong opened up a small retail chicken shop and butcher in Canley Vale NSW, named it as B&E Poultry. In 2003, B&E moved into a factory complex in Smithfield and commenced their wholesale distribution business. 2010 saw B&E expand interstate and launch another processing factory in Ormeau, Queensland, and in 2014 B&E moved their NSW operation to its current location in Blacktown. Today, B&E continues to be privately owned and operated, and has grown to one of the largest poultry processors in Australia offering jobs to many local families. The acquisition provides B&E with an extension into Victoria from their operations in NSW & QLD. The acquisition includes all staff & current management.   Emil Parthenides recently advised on the sale of Festival City Food & Wine which settled in July of 2017 & Select Food Group which settled in October of 2017. Emil confirms activity is high for Food Distribution / Food Manufacturing & Food Processing assets with a number of current clients under due diligence & awaiting completion.

Thinking of an exit and unsure of next steps? Call the authority on Food Service Sales!

Emil Parthenides

Sales Director – $5M to $50M

Email: emil@benchmarkcorporate.com.au

Mobile: 0412 817 059

www.benchmarkcorporate.com.au

Click here to view Emil's profile and listings.

Why Does It Take So Long to Sell a Business?

“THE LAG EFFECT”

  I first heard the phrase ‘the lag effect’ from a colleague that I work closely with (Ian Haggerty). I will get to what it means soon, but for now, I would just like to mention how I feel the market is going in terms of business sales. Speaking for myself personally it has been very busy – a good thing right? I’m realising there is a very good opportunity for professionals such as; Accountants, Solicitors, Business Brokers, Financiers and business Buyers as the last of the “Baby Boomer Generation” start planning their exit strategy from their business now and over the next 5 years.   I’ve been a broker for over twelve years now and I’ve never seen the timeline for business settlements take so long, Banks seem to be requesting more information than ever and their decision to approve a buyer is also taking longer. In some instances the Due Diligence process with Accountants is slowly creeping out from 21 days to (some instances) 90 days, with an exclusivity request attached to it. Finance Brokers and Business Brokers are stuck in the middle of the process and as communicators / (“the pivot”) for both parties (Buyer & Seller) it is our role to keep all parties informed, focused and moving forward to the settlement date.   There is an abundance of businesses for sale within Australia right now – approximately 42,000. Many Sellers believe their business is going to be bought by some rich migrant. The truth is that less than 3% of all businesses sold in Australia are sold to migrants. You have to understand that a migrant has so many hoops to get through.  

So, what is “the lag effect”

1. Lawyers
2. Accountants
3. Greed

  We can’t be certain why Lawyers, Accountants, Banks etc. are sooooooo slow these days with their decision making, it may be they are just busy, or short staffed. What about “greed” I hear you say? This is interesting, recently I’ve been experiencing Seller’s (and I say it straight) who are just greedy! They have this “blue sky” figure in their head with no supporting evidence of similar businesses selling for the price that they want to achieve.   Recently my colleague and I had a client who wanted $8 million for their business, we analysed the numbers, applied a methodology on the profit, and agreed with our clients we could achieve the number $8m. Cutting to the chase, we brokered a deal worth $12.6 million for our clients, you can imagine, everyone was happy until our clients decided they didn’t want to sell the business!   The absolute best time that you can sell your business, is when you’re up their “flying high” and making plenty of money, why?  

1. Your selling on your own terms
2. There is no pressure on you
3. You achieve a premium price for your business sale
4. Satisfaction knowing you handed over a quality business

So now that I have identified the “lag effect” causes. I will address the remedy for this phenomenon.

Next time… stay tuned!

  If you would like a business appraisal or would like to know how much your business is worth, contact Award Winning Broker, Ian Salter on 0433 563 585 or ian@benchmarkbusiness.com.au.

What to Consider in an Asset Sale

Employees: When selling the assets, the employment relationship cannot be ‘transferred’ from the vendor to the purchaser as employment contracts are personal in nature. It will therefore be necessary for the vendor to terminate the employment contract with the employee, and for the purchaser to decide if they wish to enter into a new employment contract with each individual employee. The vendor must ensure that employees receive the benefit of any accrued entitlements. No Assignment: Any third party contracts may require third party consent to be assigned, or may not be assignable at all, thereby reducing the value of the business to the purchaser. For example, the consent of landlords or finance companies may be required for transfer of any property or plant & equipment leases. Apportionment: The purchase price must be apportioned between various classes of assets, including plant and equipment, land and buildings, stock, and goodwill if applicable. This can cause a conflict between a seller’s preference to adopt their book value and a purchaser’s preference to adopt a higher value to maximise tax benefits. Goods and Services Tax (GST):  Depending upon the details and nature of the transaction, the sale may be deemed as the sale of a ‘going concern’ – or not. This will result in no GST being payable on the transaction. Alternatively, where the asset sale cannot be categorised as a going concern, a GST liability may arise. Duties:  Stamp duty or land tax may be payable on the transfer of land and other real property, depending upon the state in which the assets are located. Stamp duty is generally higher on transfer of assets than shares.   A share sale because with the shares comes a range of potential liabilities, many of which will vary in value from day to day, and which may not be identified on the balance sheet of the entity. Share sales involve the sale of the shares in a trading entity, related entities and occasionally units of a unit trust. Where a purchaser acquires 100% of the shares in an entity, the purchaser takes control of the entity and all of the assets and liabilities and past history of that company. Generally this is done with the Sellers guarantees and warranties, which may include some security from the Seller. When conducting a Share Sale the sale agreement must be produced by an experienced legal team, and these documents can be complicated. Share sale agreements must contemplate many variables including adjustment at settlement for profit, liabilities, and asset changes. More questions about what to consider in an asset sale? Contact us by sending an enquiry to admin@benchmarkbusiness.com.au Read the previous blog on What An Asset Sale Involves by clicking here

Keeping Confidentiality – It Works Both Ways

When someone decides to sell their business, they are making one of the most important decisions they will ever make, – usually after having done a lot of planning, worrying and thinking. Selling can be a very unsettling and disturbing process for the owner, as they don’t want to upset staff, suppliers or clients who may leave, and go elsewhere if they find out the business is for sale. Business owners have put a great deal of time and effort into building their business, and they (rightly) need to protect their business from competitors and from potential sabotage. Accordingly, it is essential that we respect the business owner’s right to privacy, and confidentiality. In meeting this requirement there will be certain restrictions and processes that will be adhered to. A genuine and sincere buyer should have no reservations about meeting those requirements. It is probable that any buyer will also require that their enquiry remains confidential as well, and the confidentiality process is designed to work both ways, with both parties obliged to maintain confidentiality throughout the transaction. The challenge with maintaining confidentiality is that often a buyer doesn’t get to meet (or talk to) the staff, suppliers and clients of the business until after the purchase of the business is “unconditional”. If this represents a significant challenge for a buyer then it will be necessary for them to have either a business broker, or a solicitor, arrange for them to meet these parties prior to the contract becoming “unconditional” in an “off premises” situation. Through the proper maintenance of confidentiality each party benefits. Throughout our processes, Benchmark promises to maintain the highest confidentiality when it comes to selling your business. Contact us today to sell your business.