Cybercrime is here, and it’s real – and most small business owners are not adequately prepared or aware of the threat.

  In the 2016/2017 financial year 47,000 reports of Cybercrime were made. It is conservatively estimated that the financial cost to Australians is more than $1 Billion each year. In response to the threat that Cybercrime poses for business owners the Australian Federal Government has recently implemented a plan to reduce the impact of Cybercrime. A new National Plan to Combat Cybercrime, sees collaboration between government and industry to boost the security of “Internet of Things” devices, and work on reducing supply chain risks to government IT systems. Prime Minister Malcolm Turnbull recently announced the release of the government’s first annual update to its cyber security strategy.   The document states; “Since the launch of the Cyber Security Strategy we have seen a rapid growth in interest, energy and focus across the cyber security sector”. Turnbull launched the strategy in April 2016, outlining 33 cyber security initiatives worth $231.1 million. The update states the government will accelerate the rollout of the Joint Cyber Security Centre program. The first centre was launched in Brisbane earlier this year. Later this year additional centres will launch in Melbourne, Sydney and Perth. An Adelaide centre will launch in the first half of next year. “The #Censusfail of 2016 afforded Government an opportunity to look introspectively at how cyber security is implemented,” the update states.   Our government knows first-hand of the damage that cyber criminals can inflict, but small business owners have been slow to appreciate the danger and reluctant to respond to the threat. Did you know that there is a cyber crime reporting process available to all Australians? Go to www.acorn.gov.au to see more. ACORN stands for Australian Cybercrime Online Reporting Network. Most of us probably think that we need to spend more money on security, and the thought of spending more (for no extra revenue) isn’t very pleasant – so we tend to leave it until something happens. Don’t leave it until it’s too late. The necessary protection may not cost much at all, and the damage inflicted by a cyber attack could be catastrophic.   What can small business owners do? There are four things that we can do: 1.    Don’t ignore the threat 2.    Go to www.staysmartonline.gov.au and www.acorn.gov.au 3.    Investigate taking out Cybercrime insurance 4.    Have an IT specialist conduct an audit on your systems and your protection   Don’t leave it until it’s too late. Many business owner will – don’t be one of them. Useful Link: Offensive Cyber Capability to Fight Cyber Criminals https://www.pm.gov.au/media/2017-06-30/offensive-cyber-capability-fight-cyber-criminals/   Bruce Coudrey. Principal of Benchmark Business Sales & Valuations.

There are many versions and definitions of profit. Business buyers need to be aware of the subtle differences in terminology used to describe profit, so that they can understand the impact and implications of these differences. Some of the different methods used in reporting profit are:

• Owner Operator. The pre-tax return earned by a working owner – includes the owner’s wages.
• EBIT. Earnings Before Interest & Tax. Does not include owner’s wages.
• PEBIT. Proprietors Earnings Before Interest & Tax. Includes owner’s wages.
• EBITDA. Earnings Before Interest, Tax & Depreciation Allowance. Does not include owner’s wages.
• PEBITDA. Proprietors Earnings Before Interest, Tax & Depreciation Allowance. Includes owner’s wages.
• After Tax Profit. The profit after adjustment, and after paying company tax. Used by publicly listed companies.
• Adjusted Nett. The Profit after adjusting for abnormal or personal expenses and income.
• Annualised Nett. The profit calculated by taking a part-year’s profit, and dividing by the number of months, then multiplying by twelve to estimate a year’s result.

Every business is run differently to suit the individual needs and requirements of the owners and shareholders. So what is nett profit? In order to accurately compare one business with another it is necessary to make adjustments to the income and expenses. These adjustments are often referred to as “add-backs” or the adjustments are sometimes known as “recasting”. On the income side, the type of adjustments that are made are; exclusion of interest received, exclusion of profit on sale of assets, and sometimes the correction of opening or closing stocks. On the expense side there can be many expense items shown in the financial accounts simply to minimise tax. Such items often adjusted are; accountancy, interest, depreciation (debatable), personal phone, motor vehicle, owners wages, or owner’s family member wages, some taxes, and some rebates. It is essential (when looking at a set of accounts), that all adjustments are shown and itemised. Often these add-backs are not itemised, and it is important to look carefully at these numbers to ensure their source, and to confirm their relevance to how a buyer would operate the business. A buyer should be starting to calculate what would they believe the real profit is. The expression of profit can be a subjective matter, rather than fact. A buyer’s ability to understand the accounts presented to them, and to determine what they believe the profitability is, will form the basis of their plans for the business, its growth, and their management of the business. Banks lend on the past profits, or historic accounts of the business, yet it’s the future profits that are going to repay the bank that loan. It needs to be recognised that the historic figures are the proven results of the business’s trading, and the future is unproven. It is therefore wise to prepare both historic accounts and forecasts, and to use both of these tools to analyse and assess the business. Both the past and the future trading needs to be assessed when considering a business acquisition. It’s also wise to remember that any business is more than just numbers, and profits. Obviously profit is essential, but small business owners must have a passion for the business and really enjoy what they’re doing. Business buyers should look for a business that they will be proud of – one that rewards them in more ways than simply the financial returns.

What is the effect on retail businesses moving to owned brands?

  One of the first questions I get asked by acquirers of Food Supply businesses is what % of the business is into Retail? The effect of the movement by retail from Branded to Owned Labels has seen a shift in valuation increase towards businesses with a focus on foodservice vs. retail over the last 24 months. The risk associated with retail supply is increasingly making acquirers nervous, whereas food service typically allows for a much greater & safer spread of customers. Over the last couple of years, I have seen a number of Small to Medium Food Manufacturers with a heavy reliance on retail customers in Australia, within a very short space of time, drop in value dramatically. As SKU's are removed, discount rebates removed etc… This provides huge capacity availability in production leading to competition on price via contract manufacturing of private labels.  

The reduction of brands becomes a race to the bottom on price.

  For opportunistic manufacturers, they view the increase in capacity & resources as an opportunity to develop new products for higher margin alternative markets to retail as well as focus on establishing presence outside of Australia. What are you doing to combat this issue? Contact Specialist broker Emil Parthenides for more information. Specialist – M&A Benchmarkcorporate.com.au Mob: 0412 817 059 E: Emil@benchmarkbusiness.com.au http://au.linkedin.com/pub/emil-parthenides/55/988/912

Did you know that electricity has gone up approximately 15%, year on year for the past 5 years, and there seems to be no end in sight?

We could sit around and wait for the government to do something (highly unlikely) or we can do something for ourselves. Electricity is a necessity in our everyday lives and is something that we cannot live without. The costs for electricity can be quite high when running a business (depending on the industry). So what can we do to reduce the costs in the long run? Some items that could help in reducing business costs are:

• Solar Panels – discuss with your landlord and see if there is an opportunity to use mother nature.
• Change equipment – moving from a Electric to Gas may have some savings available or downsizing larger items for smaller….
• Updating equipment – using new energy efficient refrigeration compared to 20 year old equipment will use up to 30% less energy.
• Sourcing suppliers who provide products which a less labour intensive or require little or no power to use/prepare/cook etc..
• Turning off lights and equipment especially after hours or when not in use.

Whilst there is no Magic wand, and any of these on their own, may not make a lot of difference. However, when combined there may be substantial savings to be made.   Feel free to contact me for more information. David Zampech Supermarket Specialist Mobile: 0422 671 375 Email – davidz@benchmarkbusiness.com.au View David's Listings here

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 in Exit planning? All that is required is to:

1. Decide when you want to exit, and how much you will want to sell it 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

    If you are interested and want to know more about exit planning or selling your business. Call us today on 1300 366 521 (FREE CALL) and one of our specialist business brokers will be in contact with you. Or register as a seller here. Bruce Coudrey Principal Benchmark Business Sales & Valuations

Emil Parthenides advises on the sale of Festival City Food & Liquor to Bidfood.

Benchmark Corporate & Sales Director Emil Parthenides are pleased to announce that Festival City Food & Liquor Pty Ltd (“Festival City or the Company’) has been sold to Bidfood for an undisclosed amount. Bidfood is a leading food service company and is ranked inside Australia’s top 200 companies.

  Festival City is one of Australia’s largest specialised distributors of local & imported European food & liquor products, operating from 3 states and distributing to leading hospitality & retail outlets across Australia. Advisor to the Festival City board Emil Parthenides commented: “There was considerable interest in the Festival City business from private equity and trade buyers and the board determined that Bidfood offered a compelling proposition for the continuation of a legacy built by the vendors of over 35 years.” The core values of Festival City – identifying, sourcing and distributing the highest quality food & liquor products, remains the key focus of the company.   About Festival City: Festival City is a family owned company with over 35 years’ experience as wholesale merchants. Festival represents Australian and International food and beverage brands across South Australia, Victoria and the Northern Territory (Oz North Distributors).. Carrying a portfolio in excess of 9,000 products, Festival City services the hospitality and retail industries and their flexibility means they can tailor packages for individual customers which they believe is critical to good service. The colourful history of Festival City began in 1978 when Don Totino purchased Sarti Liqueurs, located in Norwood. The premises soon became too small, so they shifted operations to Beverley, though these premises were also outgrown, and a property at Woodville West was purchased. Since taking over the business, Don diversified and imported a range of good quality Italian wines and liqueurs, while still maintaining production of their own vodka, sambuca, ouzo, liqueurs and, his favourite, Marsala. By 1986, Don decided that the business was becoming too big to handle alone, so he welcomed the Rugari and Condo families as business partners, and the business name was changed to Festival City Wines & Spirits. In 1989, the business began to outgrow the Woodville West premises too, and so the company moved to its much larger current location on Port Road at Albert Park. Festival City has since opened a store filled with local and international products, located adjacent to its head office and warehouse. The establishment of Banquet Foods meant that the general public could now benefit from the incredible range of products on offer. Festival City broadened its portfolio even further by acquiring the Vine Valley Vinegar label, a company with a 100 year history, with the manufacturing plant being relocated to the Albert Park site. In 2008, Festival City expanded with the purchase of Gollars Wines & Spirits in Deer Park, Melbourne. This private company had been operated by the same owners for 30 years who dedicated themselves to providing great products and services. These values aligned with that of Festival City, and so this established a Victorian base for Festival and opened the door for further expansion in years to come. A year later, they acquired Oz North Food Wholesalers in Darwin, another family owned company with similar values. In 2010, the business was moved to a new freehold premises and with strong growth, expanded their services by introducing liquor wholesaling early in 2011. This has fuelled strong growth within the company and by replicating the one-stop destination model established by Festival City Food & Liquor, Oz North can offer a full range of food and liquor products to the hospitality and retail trade in Darwin.   Food Service Interest: Emil Parthenides was responsible for the roll-up concept & proposal behind the proposed asx public listing of Hudson Food Group in 2016 which consisted of 15 businesses including Food Distribution, Coffee Roasting & Food Manufacturing. The $260M IPO mandated by Wraith Capital, Royal Bank of Canada & Bell Potter received a large amount of media attention prior to listing, bringing a huge amount of attention to the Food Distribution industry. The IPO was side tracked when RFG made a successful bid for Hudson Food Group, settling September 2016. Post IPO, Emil received a lot of enquiries for businesses not included in the trade sale to RFG. Emil has successfully sold a number of these in the last 12 months at record valuations. Emil comments “Prior to the proposed IPO of Hudson Food Group there were two main food distribution acquirers being Bidvest & PFD, as of today there is not only PFD, Bidvest (now Bidfood) but also Blue Sky Funds, Retail Food Group, Quadrant Capital and some new entrants hoping to enter including a listed agricultural based business. Emil feels competition is heating up and with Amazon eyeing off a Food Distribution acquisition in the USA, Emil confirms he continues to be approached by acquirers and believes there has never been a better time for privately held Food Distribution businesses to exit. http://dev.benchmarkbusiness.com.au/brokers/emil-parthenides/    

My Story About Selling Hospitality Businesses

I didn’t really know what I wanted to do when I left school, and as I finished year 10 and enrolled for the secondary and final term of year 11 and 12 as it was known back then, I questioned what I was doing. I didn’t even really enjoy school and here I was signing up for 2 more years. My mother (in all her wisdom and with her strong European working ethic) steered me towards the blue collar future, and of course what was a Sydney wog suburban boy to do? I was 16 when I found myself in Surry Hills working for a crazy French chef peeling bags of potatoes, cleaning toilets and constantly being reprimanded for not getting it right. Although I appreciated my 3 weeks there, I next found myself working in a City French Crepes restaurant and my first job was lighting up the 16 burner stove and slamming out 100,s of crepes for the lunchtime service, rhythm and timing was everything. Whilst both humbling positions, I was on the move to excel, and soon I landed a position as 2^nd year apprentice at Sydney’s Premier Fine dining restaurant in Potts Point. On $83 a week doing 60 hours, I learnt to appreciate quality, craftsmanship, comradery, stamina, and attention to detail. It was here where I learnt to make real food the French way, Hollandaise in a bottle hadn’t been invented yet, and chopping parsley was the task that head chefs tested your ability on. We made everything on site, nothing was bought in apart from the best raw ingredients, and whilst I loved the freedom of creating a dish without a recipe, free balling it was not an option when it came time to making soufflés and Ice-cream. I stayed here until I became 2^nd chef several years later and with reference in hand, I embarked upon a myriad of what can only be described as colourful 2^nd chef and head chef positions in some of Sydney’s more notable establishments. Dining out was obviously the measure to your own ability, and whilst I immensely enjoyed eating other chefs food, I strangely enough always had an issue with the quality of Ice-cream that accompanied my dessert. It might sound petty, but it bugged me, so I set out to see if I could make my own Ice-cream for Chefs to buy. Starting in a small kitchen we leased a 1.5 litre Robot coupe Ice-cream churner. The “Food God” of the time was Leo Schoeffield, and I delivered a parcel of sample product to his Bronte residence. The next week, the SMH Short Black article had borne a sweet baby and we promptly moved “Nicecream” to our first 14 sq. metre production shop in Obrien Street Bondi. 18 months later we were off to Charing Cross, to an ex bakery site that we converted to an Ice-cream wholesale and retail, and 2 years after that to the old “Serendipity” factory on Glenmore road Paddington. This 300 sq. metre site allowed us to cater for Qantas first class, the Opera house theatre, The Capitol theatre and about 300 retail and wholesale customers. We were bursting at the seams and contemplating another move when a business broker approached us and offered her wares. Taking this option after 7 years of hard slog wasn’t a hard decision. We didn’t know what was around the corner, but we didn’t need to. When you make space for an opening, it will present itself and the subsequent around Australia trip of a lifetime in style for 18 months is one thing I will hold close to me always. Escaping Sydney and Landing in Noosa was a godsend. A Sausage roll manufacturing business experience and then another restaurant here in Noosa, 3 kids, a divorce and time to reassess. When we are on the treadmill, it’s difficult to sometimes look from the outside. At 50 I was still working in a kitchen questioning my path. That lightbulb moment when you say “What am I doing here?” and snap. Selling Hospitality businesses became my next career move – one that I am passionate about. And this passion has seen me  expand that umbrella and specialise in the sale of ice cream manufacturing businesses. I would love to hear your story about how you have created, your brand, your way. Not everybody is ready to sell right now as we are all on different paths, but through the relationships we build now, I would like to be the man you come to see when you are ready to sell. An appraisal of your business would be my pleasure and comes at no expense to you so if you’d like to have a chat about your story, I would love to sit down with you and discuss the possibilities. Wolfgang Groh 0413 118 718 Wolfgang@benchmarkbusiness.com.au Hospitality Specialist Broker

Business Tips – Selling Your Cafe or Restaurant

Websites are populated with food businesses these days, that owners want to sell for a myriad of reasons.  Some of them are being sold at a price that barely covers the fit out cost or replacement value of the plant and equipment. If you plan for the sale of your café or restaurant, it is possible to make a profit for the investment you have made both in cash and time. An important part of running a business is knowing when the time is right for a sale and what you need to have in place when that time is upon you.

Have A Plan To Exit

If you are thinking of selling your café or restaurant in six months, then you need to have that plan in place prior to now.  The biggest mistake people make is with timing. You have to have an exit strategy in place prior to signing the lease.  If you think you can decide to sell and get it done quickly, you will not be maximising your price. The lease is critical in the process, the security of tenure will have a huge impact on your price and the sale-ability of your café or restaurant. For a start-up, the owner makes an investment through fit out and establishment costs.  This must be followed by a period of growth during which the owner can earn an income. Owners also need to remember that the incoming purchasers will want to earn a return on their investment.  If the lease does not allow time for them to earn a return, the purchase will be unattractive to the potential purchaser. It’s a numbers game. Finding the right balance between the purchase price, the length of lease and the multiple of annual profit is vital. If you need help with selling your café or restaurant, contact me today and let’s have a chat.   Jo-Anne Wilson 0403 542 213 jo-anne@benchmarkbusiness.com.au Hospitality Business Sales

Costs – We Cannot Operate Without Them, But We Can Manage Them!

This is the first of a series of blogs where we will look at some of the major costs associated in operating a business and how you might be better able to understand these costs and if there is anything you can do to reduce them.

Rent – How much is too much?

I am always asked how much should I be paying for rent or how much is too much? This can vary between businesses, but in retail, especially supermarkets/convenience stores, this can range between 3-7%. If your Gross Profit is 30% or more you could possibly afford 7% rent more so than someone whose Gross Profit is at 24%. The most important thing you can do is to ensure that you have a good lease with some flexibility but also some security as well and always think ahead. When you are signing up a lease, do a business plan showing where you might be in 3, 5 and 7 years time. This is a way for managing costs and seeing the benefits of each lease term. You can then decide if a 3, 5 or 7 lease is for you. Increases are generally CPI or sometimes it is a fixed rate or both. Some will say CPI or a maximum of 4% increase this can be better than straight CPI which is low at the moment but if it increases to 6-7% then you could be in trouble. It is important that you have in your lease options and market reviews at these points in time in the lease. This gives you the option to ensure that you are paying a fair amount for rent. The link below is the retail shop act and a very important managing costs tool for signing a lease. You should before signing a lease ensure you understand your rights and obligations also including the landlords responsibilities. https://www.legislation.qld.gov.au/LEGISLTN/CURRENT/R/RetailShopLA94.pdf There are numerous things that can be included in a lease and it is very important that before you do commit yourself that you have someone with experience in this type of business and/ or accountant/solicitor to look over the document to ensure you understand if this is right for you. If you would like more information on managing costs or have any general enquires. Feel free to contact me for more information. David Zampech Supermarket Specialist Mobile: 0422 671 375 E: Davidz@benchmarkbusiness.com.au   Businesses for sale quick links Businesses for sale Gold Coast | Businesses for sale Brisbane | Businesses for sale Melbourne | Businesses for sale Adelaide | Businesses for sale Sydney

Taking the first steps towards buying your own business is a big step by itself, but then comes various questions Which? What? When? Where? Relating to the business you want to start. Let’s see about Franchise Business model for your new business in this blog. When you start a business you have to learn new laws and ways of doing business depending on the sector, it may be difficult and some give up even doing business because of many obstacles which come in their way. Boon?

• The franchisor will provide you with a system to follow with clear instructions. In my view, if you follow the system and policies “it’s easy doing business”.
• The franchisor will provide not only a lot of support to help you learn the business, but also manage many elements of the business like Suppliers, Products, Marketing, Pricing, Promotions, Training, Maintenance, Staff Training & Pay Structure, Store Layout, etc. Most Franchise stores are turnkey operation.
• The franchisor will provide you with ongoing support and guidance to operate the business. You don’t need business experience in most franchise business as the franchisor will train you and set up the business for you. You can also benefit from the brand image the franchisor have already established.
• Franchises have a higher rate of success than start-up businesses. It may be easier to secure finance for a franchise.
• They do this mainly because their Success depends on your Success.

Bane?

• Franchisor’s dictate how you should run the business, what to do in the business, what to sell and what not to sell, who to buy supplies from, what promotions can be run, etc.
• Location availability is solely dependent on the Franchise availability and if you are buying an established Franchise good locations comes with a higher costs.
• Franchise Business means ongoing profit sharing with the franchisor & even if you are good operator it is up to them whether to renew your term at the end of the agreement.
• Franchise can be easy to get into model, but the major part of success of it depends on the Franchisor’s Brand Image, so you’re dependent constantly on outside factors no matter how well you operate your business.

Franchise Business in no guarantee for success but definitely an easy model for any novice in business, all the principles required to be successful in business applies to franchise business as well. When buying a franchise do your research of the brand and the business you are buying, make sure your investment will generate good returns and a capital gain when you sell. Always have an Exit Plan Ready!   Karthik Arasu -Service Station Specialist 0422 3140 325   Businesses for sale quick links Businesses for sale Gold Coast | Businesses for sale Brisbane | Businesses for sale Melbourne | Businesses for sale Adelaide | Businesses for sale Sydney