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

For the FIFTH YEAR IN A ROW Benchmark Business Sales have had one of it’s business brokers recognised and awarded as the REIQ Business Broker of the Year. Benchmark have again shown they mean business, by having two of the four finalists for Business Broker of the Year award at the 2017 Real Estate Institute of Queensland's Awards for Excellence. For the last five years the REIQ Business Broker of the Year has been awarded to: 2017 – Mathew Hartley                     BENCHMARK BUSINESS SALES 2016 – Ian Salter                                 BENCHMARK BUSINESS SALES 2015 – Ian Salter                                 BENCHMARK BUSINESS SALES 2014 – Iain Horne                               BENCHMARK BUSINESS SALES 2013 – Iain Horne                               BENCHMARK BUSINESS SALES No other category in the REIQ awards has been dominated by one company like this. Congratulations to our Award Winning Business Brokers. Not only has BENCHMARK BUSINESS SALES won the award for an unprecedented five consecutive years, but Benchmark brokers have been finalists in the awards every year for the last ten years, and have been winners of the award in previous years. 2017 Business Broker of the Year Mathew Hartley told the audience that he felt very honoured to be amongst all the other worthy finalists. "I am very proud to be a member of the REIQ and excited and grateful to accept the award.” "We have a great team in sales and administration … made up of really great people.” "I am proud of all of them, the way they work together as a team to make great things happen.'' "Our business growth has been huge,'' he said. The awards recognise outstanding achievement and commitment to integrity in the business sales profession. The awards also aim to encourage, recognise and promote excellence and best practice in the industry. "Winning this award is an incredible honour and a fantastic achievement,- particularly winning for a fifth time in succession.” Said Benchmark Principal, Bruce Coudrey. “This award is a testament to the hard work our team puts in every day and to the exceptional growth we have achieved over the past 20 years” Mr Coudrey said.   Award Winning Business Brokers Profiles Mathew Hartley | Ian Salter | Iain Horne

HOW LONG TO SELL MY BUSINESS? This question is a Sellers burning question and is commonly asked. The question is right up there with my top three…

1. How long will it take to sell my business?
2. Why are they selling?
3. How long has the business been trading? all good buyer questions.

I’m going to talk about question #1 only in this blog. Experience has taught me that to sell a business is a structured process from start to finish – it’s a science, not a wish and hope process, let me explain. From the minute I lay eyes on my new potential client – the sales process has begun.

Pitch #1:

In meeting with my potential new clients, I am now selling myself first and our company (Benchmark Business Sales & Valuations) second in a meet and greet process to establish the starting point of a working relationship. I’m not there to sign anyone up today – that’s for sure. It’s too early and I may not like the business or feel I cannot work with these people. Imagine this; if it feels off or awkward from the get-go and the Seller’s not really showing any interest, how is it going to feel during the entire sales or contractual process?

Pitch #2:

After the initial meeting is completed and I feel I like the business and have made a connection with the Sellers, I will then explain the next steps in moving forward and the Benchmark process for success, as well as the actions required by them and me to start the process of understanding the business and the mired of information required to allow me to appraise and sell the business.

Pitch #3:

Everything mentioned above all sounds good – up till now and should have taken at least 10 business days to complete. What does the heading say – HOW LONG TO SELL MY BUSINESS? this burning question doesn’t just rely on me, it equally relies on my clients as well. I can only work at the speed my clients allow me to. So, you would be surprised to learn that 1 out of 4 Sellers are absolutely ready to sell their business today and have everything ready to go – without delay. Waiting for information delays the sale on so many levels, and simply adds to the timing to selling a business. It’s a fine line for a buyer to ready to purchase and then go cold on the idea, having everything ready at your finger tips means there is no waiting, no delays and no chance for a buyer to lose interest. The broker and seller should always be in communication (at least weekly) and working together. If a Seller shuts down communication, or is hard to contact, this is only going to hinder the sale of their business. How will the seller answer this question? How long to sell my business? Summary: Given that the business has been appraised correctly, it’s priced right, all the information is made available. In short (and excluding franchise sales) a business offered for sale using the conventional methods should sell around the 45 day mark from becoming active to the open market.     Ian Salter REIQ Business Broker of the Year 2016 & 2015 AIBB member   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

Supermarket Sales Australia is the division of Benchmark Business Sales specialising in the sale of Supermarkets and Convenience Stores across Australia. Benchmark Business Sales & Valuations was founded in 1999. Today, Benchmark Business Sales & Valuations is one of Australia’s largest and most progressive specialist business brokerages, with offices in Brisbane, Gold Coast, Sydney, Melbourne and Adelaide. “If it has anything to do with the supermarket and convenience store industry, we are here to help you find exactly what you are looking for – regardless of whether you are a buyer or a seller,” Benchmark Supermarket Specialist Mathew Hartley said. “Our supermarket sales division boasts a team of specialists with an extensive sales record. Our experience not only covers established businesses but also the acquisition and development of potential supermarket sites". “We believe that our record of sales in this sector is outstanding due to the short ‘list to sale’ time that we can demonstrate.” Buying or selling a business is a specialised and complex process, that requires considerable experience in a number of areas. Just as you rely upon a qualified lawyer for legal advice and an accountant for financial advice, you should seek professional advice and assistance when it comes to buying or selling an asset as important as a business. “Our team of specialists have many years of experience in Supermarket sales, management, ownership and consultancy. After many years in selling businesses, there aren’t many challenges that we haven’t seen or overcome before". “One of the strengths of the Benchmark group is the fact that all of the brokers have either been involved in business or have operated their own small business. So, in speaking to a Benchmark Supermarket sales agent, you are speaking to someone who really knows what it’s like to be in the business. “Whether you’re a business owner, investor, buyer, Benchmark Supermarket Sales Specialist will assist you, showing you ways to save time, money and effort – and how to reduce heartache and complication.” Mathew Hartley Supermarket Sales Specialist Broker REIQ Business Broker of the Year 2017   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

NO AGENT-NO FEE VERSUS “YOU GET WHAT YOU PAY FOR”

Time and time again I see (or hear) of business owners that are trying to sell their business – to save on fees. A business is not like a house or car sale, there is so much more to understand, not just about the business but the market, possibly legislation changes, the methodology to prepare the sale price. What disturbs me is the impact on the business that directly effects the business owner whilst they're dealing with buyer enquiries. I have seen it many times where the revenue has dropped because the owner has been pre-occupied with selling their business (something they have no expertise in) to the point that they were exhausted with the process by the time I got to them. This has cost the business owner time and money in the long run.

You get what you pay for…

1. An agent/professional business broker should be licenced. This takes time, money and continued study.
2. Most agents (depending on their licence) are required to work under a principal.
3. If an agent holds a full licence, then they are required to maintain 100 CPD points per annum – further training.
4. Most brokers attend around 3 to 4 seminars, conferences or industry specific training per year – to stay abreast of everything.

Why engage a broker in the first place? A professional business broker…

1. knows that a business sale is not by chance (gambling) – selling businesses is a science.
2. can identify buying signals and respond appropriately.
3. qualifies buyers before doing anything.
4. know how to close out a sale.
5. understand that there are many types of buyers, and just as many reasons why buyers buy – it will shock you to learn that it’s not always about money.
6. Is the professional within the industry of selling businesses.
7. Is not emotionally attached to a business.
8. negotiates using experience, logic, training and a proven sales methodology.
9. networks within the industry and like minded professionals and most have a data base of buyers.
10. can properly prepare and present information and data – in a timely and logical sequence.

  If an agent says to a seller “If I was to get you the money you want, you would be happy to pay my commission wouldn’t you?” – the seller is going to say yes. I think you can agree, that hiring a professional business broker, to work together with the Seller will save time and maximise the sales experience for the Seller.  

Ian Salter REIQ Business Broker of the Year 2016 & 2015 AIBB member

What are your "Resolutions" for the new financial year?

HAPPY NEW YEAR! New Year's is the time for resolutions, and as this is the start of a new calendar year, it may be a good idea to make some New Years Resolutions for your business. Take a few minutes to think about your business. What should you do now, that you've been putting off? What are you determined to fix? Let's do it now!

GST and Tax Planning

We see the financial accounts for many businesses each year, and one thing that we see as an area of growing concern is the amount of tax owed to the ATO by small business owners. When we look at the Balance Sheet for many small businesses, we often see that the business has liability to the ATO for either Income Tax, or GST. We know that some accountants, and bookkeepers advise their clients to treat it as a "low interest loan" from the government, but that is really not good advice. Business owners should plan ahead, and make provision for GST, and tax, and employee entitlements. It is not good business to 'put off' the payment of any account or liability – it will only compound over time, and will inevitably lead to disappointment. If you don't have a separate account for tax provision, you should make "New Years Resolutions" to fix that today, and manage your accounts in a way which will help you to stay up to date with your payments to the ATO. Don't put off 'til tomorrow, what you can do today!

More Marketing

Many business owners made a (wise) decision during the GFC to cut back on marketing and advertising costs, and whilst that didn't impact too greatly on sales at the time, over the longer term your sales will slide downwards unless you 'bite the bullet' and invest in your business with a proper strategic marketing campaign. Most of the really successful businesses that we see are those which are prepared to invest (and re-invest) in their business through marketing and advertising. It is too easy to cut out advertising, and to rely on 'word of mouth' and 'passing trade', but in this busy and competitive world your business will be quickly forgotten if a competitor manages to take a higher profile than yours in the marketplace. Consider 're-investing' in your own business.

Prepare for sale

Unless you plan on keeping your business forever, or handing down to your family – you really should have a plan to sell in place. … even if you don't plan on exiting for many years, failure to plan is planning to fail! A planned business exit is ALWAYS going to give better results than an unplanned one. There are many professionals that can assist you to produce an Exit Plan. Contact a Benchmark Business Broker for advice and guidance as to how you can start your Exit Planning.

Business Planning

More than any other step you can take a thorough business plan is a certain method for helping to grow and control your business. Writing a business plan forces you to think logically and methodically about your business model and assess its chances of survival. A Business Plan also helps clarify where the business is headed. A business plan should address the following areas:

• Mission Statement/Goals/Objectives/Targets
• The Market, Competitors, Opportunities
• Potential Areas for Growth/recruitment plans
• Your Unique Selling Proposition (USP) of Point of Difference
• Principles/Standards/Values
• Strategies
• Business Structure
• Management and Administration
• SWOT
• Marketing plan – Targets, Customer Values and habits, Value Proposition, Pricing Strategy
• How to meet objectives and targets
• Financing
• Budgets & Cashflows
• Risk Identification and Minimisation
• Key Personnel

You can find some examples of business plans at: http://www.anz.com.au/resources/6/2//622c38804d9afea99100b38f56244c23/Small+Business-Business-plan.pdf?MOD=AJPERES OR https://thesbhub.com.au/tools-and-templates/business-plan-template.html#.VAy6o_mqpBc OR http://www.business.gov.au/business-topics/business-planning/writing-a-business-plan/how-to-write-a-business-plan/Pages/default.aspx Create your own future success by planning to succeed.

Re-Assess

Sometimes it's a good idea to take stock, and see exactly where your business is going. Time to reassess what you are doing, and why you are doing it. Are you heading in the right direction? Is your effort misguided?… or futile? Where is the best area to focus your attention? Now is a great time to have a look at the results of the past financial year, and re-assess what you have done, and where you are going. Don't just talk to your accountant, consider having other professionals help you to think about what you've been doing, and how to manage your future. Make a New Years Resolution to take time to look at the "helicopter view" of your business. Step back, look at your business with an objective eye, and consider how you can improve your business. What are your goals? What do you want to achieve? Growth? Debt reduction? Simplicity? Make a list of what is important, and what isn't. This small exercise can really help you to focus, and enjoy owning a business.

Clean out

It's not springtime, but now is a great time for a "Spring Clean". Every business accumulates assets which are unnecessary, or no longer required. Every business needs a "clean-out". This is the time to resolve that you will clean out all of the unrequired items that you have. Surplus stock, staff, customers, vehicles, – all can be rationalised. You will be amazed at what a difference a 'clean-out' can have. It's good for you, good for the business, and can have a positive impact on staff, clients and your bank. What have you got that you can get rid of? What's stopping you? Create your New Years Resolutions for your business today, make a fresh start and make it a year to achieve your business goals.   Bruce Coudrey Principal Benchmark Business Sales & Valuations  

First Impressions Count – Always!

We've all heard that expression – “First Impressions Count” well it’s no different when selling your business. As a professional business broker I cannot stress enough to my clients the importance about – you can only sell your business once. To optimise the opportunity of selling your business and achieving the best possible outcome, there are certain things that need to happen and are the responsibility of the business owner, seller/vendor. Besides all the other information supplied to a broker prior to going to the market, for example; financials, tax returns, BAS statements, lease agreements, plant & equipment and so on; there are other important issues to attend to that will help achieve that maximum outcome.

What else can I do? Below are a few Business Tips:

• Present a clean & tidy workplace.
• Have all equipment working properly and service history (if applicable).
• All staff uniforms in good order – and worn correctly.
• Freshly painted walls and doors.
• Making sure that private and confidential information is hidden from the buyers view.
• Allowing the Buyer to feel that you are not hiding anything from them. Let them look at everything. Especially the areas that cannot be seen from the customers or client’s point-of-view.
• Clean all windows in the premises (as if you were selling a house)  – it’s no different.
• Mow all the lawns, remove weeds and clean gardens and garden beds (if applicable)
• Welcome the Buyer as you would welcome a friend.
• What will a buyer see as they walk in and through the business? See it from their point-of-view – see it through buyers eyes.
• Don’t apologies for something not being right. Fix it!, and then you don’t need to make any excuses.
• If you have a website, make sure that is up and running.
• Having a business plan that can be shown to a new owner and their accountant – remember, it’s not just the buyer that needs to be sold, it’s their advisors as well.
• Providing Standard Operating Policies and Procedures to the new owner.
• Providing an Operating Manual to the new owner.
• Present Business plans, cash flow’s and projections.
• There should be no ums! or ahs as answers! Just straight forward honest answers.

By adopting these helpful business tips, engaging a pro-active broker and presenting all the information correctly, then you will not only realise a premium for your business but you can sell knowing you have handed over a business to a new owner that you were proud of. Ian Salter REIQ Business Broker of the Year 2016 & 2015 AIBB member   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

  Kiss …. And Just Do It !!!!   Our business plan for 2017 is… "Kiss… and just do it!" Ours is a simple problem-solving business matching owners wanting to sell their business and buyers who want sound investments. And keeping it simple (Stupid) is our plan for 2017.

What Business Sellers should be aware of:

70% of business buyers are first-time business owners and for most it is a major investment decision. Only a small percentage are truly entrepreneurial. For the remainder security and employment will be important ownership motivations. Business owners need to be aware that most prospective buyers are risk-averse and should prepare and present their company for sale in a manner that given the maximum comfort and security to the buyer. Below are some time-tested tips we have shared with business owners seeking to maximise the price they receive when they exit their company: –

1. Price the business right – businesses do not have a precise value and the price achieved will depend upon the motivations and negotiating skills of the parties. However, an experienced business broker can appraise a reasonable range and allow for the premium buyer
2. Provide up-to-date financial records – the buyer (and his accountant) will want proof of profits and trends. This includes BAS + PTL’s.
3. Have a good reason for selling – the cautious buyer will want to know why you are selling such a 'goldmine'
4. Offer assistance and security – offering full training and on-going support post-sale plus an extensive non-compete (or restraint of trade) clause comforts the buyer
5. Have a complete list of assets – be prepared with a list of plant and equipment that will pass in the sale plus a clear list of leased, loaned, or private plant
6. Prepare operating manuals – document all systems and processes, contacts for suppliers and service providers, and answers to FAQs. One of the main reasons franchises appeal to certain careful buyers is their 'turn-key' operation
7. Identify intangible assets – these days intangibles comprise the bulk of value in many businesses. The buyer needs to be aware of these. They may include branding, software, websites, supply contracts, customer relationships, trained workforce, licences, and a multitude of other valuable assets that do not appear on the balance sheet
8. Presentation counts – clean sparkling premises, a pleasant ambience, and enthusiasm impresses prospects
9. List with an experienced broker – an experienced specialist can appraise, market, and negotiate the sale of the business to achieve maximum price while allowing the owner to do what he or she does best – get on with running the business and maintaining it in tip-top condition.

Every business owner should have an exit strategy alongside their business plan and have their company in saleable shape at all times in case the unexpected happens. Bruce Rylance Exclusive Broker. 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

Calm before the Storm in Business Sales in Adelaide

Business sellers should “brace themselves for a traditional flurry of activity, immediately following the Xmas break” says Brian Sander, Manager of Benchmark Business Brokers Adelaide Office. Drawing on his 30+ years of experience, Brian says that if you are thinking of selling a business in Adelaide, there will traditionally be a strong upturn in buyer activity in the January/February period. As the largest Business Broking Company in Australia, with five offices across the country, Brian says: "Our records indicate that many people use the holiday break to make some long-term decisions regarding the future direction of their lives". Many decide that owning their own business and taking personal control of their future is the way to go. We find enquiry levels in all areas of business sales rise, from Cafes and Coffee shops to Salons and Spas through all levels of Manufacturing and Distribution to Supermarkets and Child Care Centre’s. My staff are out right now talking to many business owners about coming on to the market in the early part of 2017, says Brian. So, if you are thinking of selling a business in Adelaide or would just like a free appraisal to know what your business might be worth, call Benchmark Head Office today on 1300 366 521 or call the Adelaide Office direct on (08) 8274 3792.   Brian Sander www.benchmarkbusiness.com.au