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5 Mistakes to Avoid When Selling a Business

Selling Businesses September 10, 2016

mistakes-to-avoid-when-selling-a-business

Connecting with the wrong buyer is the most critical failure of successful businesses owners when they come to selling. The market is highly competitive, volatile, and to the punter, completely unpredictable.

The key to selling a business is making sure the right team is working with you and that you realise your value as the team leader. The mistakes we see consistently as business brokers fall into five broad categories. All are easily avoided by assembling a lawyer, accountant and experienced business broker.

Failure to Call in the Experts

Sellers that take all the work of preparing a business for sale on their own almost always overlook critical information. Too often, working within a business means it’s impossible to value intangible assets with any objectivity. Details are missed and errors appear in accounting ledgers. The back and forth required to qualify details becomes onerous and eventually potential buyers are put off by the lack of professionalism.

As a business owner, you’re an expert within the business and not at marketing or preparing a business for sale. Leveraging the expertise of planners, marketers, accountants, lawyers and brokers will present your business as a trustworthy and professionally run enterprise.

No Plans for Transition

As the owner of your business, you are an expert in how it operates. The relationship you have with your customer is dynamic and knowable only over time. The buyer will want to know what you have in mind to transition the business and why.

Businesses that fail to meet market expectations often neglect a transition plan in their sales prospectus. A potential buyer with no experience in the field will always be put off by a lack of communication as to why and how long you plan to transition the business.

Removal from the Sales Process

As the leader of the team selling a business, the owner should be guided by the team and always aware of the process. Business owners who remove themselves from the sale fail to build trust and rapport with a potential buyer that ultimately leads to a sale.

Neglecting an opportunity to continually refine the pitch with a business broker and present a polished product to potential buyers leads to missed opportunities. You will pay for not being involved in the sale with both your time and money, with your business remaining on the market for longer and longer.

No Steak Behind the Sizzle

While the marketing of your business is all about the sizzle, if there’s nothing behind the promise to back it up, you’ll quickly alienate buyers and damage your personal and professional reputation, not to mention your business.

Sellers that make the mistake of exaggerating or overstating the value of their business, or minimising issues and problems, are often the target of nasty lawsuits after a sale.

Discretion at All Times

Sellers who underestimate the need for discretion can also inflict limitations on the value of their business. Employees, customers and even competitors can feel threatened by a sale and limit the prospect of a successful sale. Confidentiality in sensitive industries, long-standing businesses and mergers are often essential for a successful sale.

Sellers who don’t discuss this finer point with their team often risk devaluing their business.

Ready to Sell?

As Australia’s leading business, LJ Hooker Business Broking has more than 16,000 buyers on its bespoke database. Designed specifically to manage business acquisitions and mergers, the LJ Hooker Business Broking database is the only one of its kind, linking buyers and sellers throughout Australia. For more on how to sell your business successfully, explore our website or call 02 9552 1111.

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What to Look for in a Business Broker

Buying Businesses, Selling Businesses August 19, 2016

what-to-look-for-in-a-business-broker

Selling or buying a business is a long and arduous process. There are teams of experts involved from accountants and lawyers to banks and brokers. For most people buying or selling a business for the first time, the only expert in the team they may not have experience with is a business broker.

Identifying a broker that meets your needs takes some time and a little investigation. By putting together some simple interview criteria around the kind of business you’re buying or selling, you’ll be able to identify the business broker that’s the perfect fit.

Background and Credentials

Any broker you interview should be able to provide credentials either on their website or immediately upon request. A website with multiple listings and a solid team that’s been in business for a significant number of years will tell you something about their success.

Proprietary systems and processes that support the sale, as well as any further education and experience in small business, will indicate a commitment and knowledge about business ownership.

Size and Substance

If you’re looking to purchase a $500,000 business but most of the businesses the broker works on are in the $5m range, chances are you won’t be serviced with the same level of support offered to larger clients.

The broker you select should also be selling businesses like the one you’re selling or buying. Do they market properties in the same area you’re in? Do they understand franchises for sale if you have one to sell?

Trust and Respect

The most important quality you should look for in a business broker is honesty and integrity. Without trust, you’ll never be confident in your decision to list or purchase. A trustworthy and respectful broker will be transparent with the process. A broker that values a business relationship with you will also be open to negotiating fees. They will also work with you to execute the most favourable terms for all parties involved.

Ready to Call a Business Broker?

LJ Hooker Business Broking is Australian’s leading business broker. Gautam Jain and his wife Vanita have the experience and technical expertise to give you the best advice on owning and operating a franchise. In addition to owning 11 Pizza Hut franchises and 4 Gloria Jeans outlets, Gautam is a qualified Business Valuer by the Australian Institute of Business Brokers.

LJ Hooker Business Broking matches buyers with trusted brands in franchising for a mutually successful outcome. With follow-up sales support built into the only database designed for business broking in Australia, our tailored sales and after service process enable buyers, sellers, brokers and third parties to be fully compliant. For more on how to buy a franchise, visit us online or call 02 9552 1111.

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Selling a Business? What You Need to Know

Selling Businesses August 14, 2016

selling-a-business-what-you-need-to-know

Most businesses today last about five years. That’s a short time frame in which you have to build capital in your business before you sell, merge or exit in less fortunate circumstances.

Your marketing strategy may be the best vehicle you have in selling your business for the price you want when you’re ready. Creating value through a consistent approach to your value proposition that ripples through your product, service, people and customers will deliver in the end.

Preparing your business for sale starts from the day you purchase or start your business. With a well-considered business plan and an executable marketing strategy, your business has an excellent foundation from which to grow and flourish.

In the absence of a clear vision and pathway, taking some steps in hindsight can make a huge difference. Assume you’re selling to the most fastidious buyer and prepare a transparent presentation of your business.

Assemble a Team

Your accountant and solicitor are essential to the sales process. A business broker on your team can provide an appraisal, similar to a broker for your home, as well as an objective analysis of the market. Business brokers who know your category and the market you operate within are also the best method for identifying qualified buyers.

Your team will help you to ensure all documentation related to the business is properly recorded and accounted for. With fewer questions from buyers, you and the broker can focus on identifying better-qualified buyers.

Quantify Your Assets

The buyer of your business isn’t buying what you’ve built today. They’re buying what they can make of your business tomorrow. You’re selling potential and promise. Unlike a home, a business needs to deliver solid income and earnings.

If you’ve been in business for many years, the good will you’ve built in the community – local, state, international – is worth something. You’ll have tangible and intangible assets within your business. The intangible are not as easy to value or liquidate but they give your business permission to exist, expand and innovate.

Tangible Intangible
Real estate Brand
Computers, vehicles Goodwill
Plant machinery, equipment Community involvement
Employees Location
Trading partners Intellectual property, patents

Be Transparent

Integrity goes a long way in establishing mutual trust and respect. Precision and honesty with any liabilities, limitations, etc. will net you a better outcome in selling your business.

Detailed records of your systems, plans, organisational structure, job descriptions, marketing initiatives and improvements will give the buyer peace of mind. A legible and highly detailed financial ledger will also show that you have built a business with vision and care.

Call in the Experts

As Australia’s leading business broker and only broker operating within a real estate group, LJ Hooker Business Broking has more than 16,000 buyers. Our bespoke database is designed specifically to manage business acquisitions and mergers. For more on how to sell your business, visit us online or call 02 9552 1111.

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Why business brokers can help you make more money when selling your business.

Selling Businesses August 7, 2016

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Every entrepreneur at some point considers their exit plan – selling their business so they can reap the fruits of their labour.

With multiple options available to at least start the selling process (print ads, online ads, auction sites, directories, brokers) – where do you start?

Whilst there are plenty of directories listing businesses for sale, most are not specialists in particular segments or locations. If you’re new to an area, an insider’s knowledge of a suburb can be the difference between hitting the ground running and spending way too much time getting to know your market.

A good Sydney business broker will not only help you understand the market through their local knowledge and sector expertise, they will also make sure that your business is valued correctly and that any mitigating circumstances are addressed with clarity and full disclosure.

What Should I Look for in a Sydney Business Broker?

Fundamental questions to ask yourself before choosing a business broker to work with:

  1. How well does the business broker know you market?
  2. What experience does your business broker have selling businesses in your location and segment?
  3. Did you learn anything from meeting with the business broker about selling your business?

When you’re trying to understand the market and grasp how much your business is worth, your business broker will bridge the knowledge gap and bring clarity on any questions you may have.

Its this willingness to share that can reveal whether a relationship with a broker will be successful or not.

Contacts

If you’re in the early stages of a sale, a business broker will have contacts in valuations, accounting and the legal profession that will be able to provide the expertise you need to ready your business for a successful sale & leverage a database of potential buyers who are interested in businesses for sale just like yours.

Empathy

If you’ve been running your business for most of your life, chances are you have put a great deal of yourself and your emotions into the business. Understanding your position on aspects of the sale is critical in ensuring that the handover is as straightforward as the sale.

A good business broker will respect your expectations and manage those of the buyer, bringing together a successful scenario for both parties.

Credentials

Not all business brokers are created equal, so what can you look for when deciding on who you should partner with?

Below you can find key elements you should always look for:

  • Referees – ask past clients to get an understanding of how successful their experience was.
  • Sales – ask the broker how many successful sales they have managed; a great indication of their experience and ability to move businesses through the sales process effectively and efficiently.
  • Understanding of your market – finding a broker that knows your business vertical inside and out benefits you immensely by having insider knowledge on both buyers and sellers in that specific market, the more information you have at your disposal the better you can prepare yourself to get the best price possible.

Experience That Counts When You Need It Most

LJ Hooker Business Broking is Sydney’s trusted brokerage for businesses, providing innovative solutions to the readying and sale of businesses large and small. Our team of nimble specialists are able to address the needs of a sale from valuation though to the complexities of mergers and acquisitions.

Click here or call 02 9552 1111 (9am – 5:30pm Monday to Friday AEST) to speak to an expert business broker at LJ Hooker.

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How to prepare your business for sale

Selling Businesses August 1, 2016

how-to-prepare-your-business-for-sale

When you’ve made the decision to sell your business, the real work begins. Buyers will scrutinise your practices, financials, human and capital assets and the good will that you’ve generated over the life of your investment.

Taking the time to properly assess and value your business may involve a restructure and for some businesses this can take years to finalise, so determining why you’re selling is critical in determining the factors that will affect the sale of your business.

Reasons for Selling

There are many reasons for business owners to sell up, just as there are many reasons for prospective buyers to express their interest. Typically, your buyer may be looking to expand on an existing footprint in the market or, in the case of a trade, leverage existing business opportunities to increase visibility and market share.

Your reasons for selling may be related to your age, your changing interests, health, or maybe just stagnation in a small business that you recognise could grow under a change in ownership. Ask yourself the most important question of all when you’re looking to sell your business: why sell the business?

Once you’re clear about why your business is for sale, you’ll be able to be clearer and more honest about what you’re trying to achieve and the real value of your business. Honestly and integrity go a long way in getting the best price for your business and more importantly, insures against any surprise litigation after the sale.

While retirement is one of the most popular reasons for selling, business owners are increasingly looking at businesses not only as an income stream but tradeable asset that is part of a complex financial plan. Consider your long-term goal as you ready your business for sale.

Setting Yourself up for after the Sale

Once you’ve sold your business your career doesn’t necessarily need to finish, having an idea on what you’re going to do after the sale is important to bring clarity on your next steps post sale.

When the Time is Right

The best time to sell a business is during a growth phase or increased stability. Selling is also a very time-consuming process, sometimes taking up to 2 years to assess the financials, assets, succession planning and even your own long-term goals. By keeping an accurate account of your revenue, overheads, assets and evaluating your business plan regularly you’ll put yourself in a position to capitalise on the sale of your business at a moment’s notice.

Failing health can be one of the most emotionally and financially devastating situations for a business owner to put themselves into. By planning for the worst-case scenario, your business will be in an excellent position to take advantage of market and personal dynamics.

Invest in a Business Broking Relationship

A good business broker can be the difference between a sale and a windfall. Investing early in a relationship with a business brokerage will ensure you have the details you need to make the most of the sale of your Sydney business.

Click here or call 02 9552 1111 (9am – 5:30pm Monday to Friday AEST) to speak to an expert business broker at LJ Hooker.

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How to get a higher valuation for your business.

Selling Businesses July 26, 2016

how-to-get-a-higher-valuation-for-your-business

There’s a little known secret to getting a higher valuation for your business: experience. It’s as simple as you knowing your business and having a business broker who knows your market.

You journey towards putting up your business for sale begins with a partner who is your consultant in the selling process. By engaging a business broker early in the process, you’ll not only have access to expertise in the sales process, but experience in readying a business for sale and maximising the value of the business opportunities on offer.

Engaging the Experts

Buyers will put more scrutiny into the purchase off a business than almost anything else they’ll buy in their lives. A small business is an extremely personal, emotionally exhaustive and time-consuming career that requires passion and conviction.

However, when you’re looking to value your business, you need to take out a great deal of emotion and look at the tangibles.

Assets

Your assets can be extensive if there’s real estate and multiple employees involved. Staff members who have been with your company for a long time bring with them experience and knowledge that is as valuable as machinery or the real estate where your business is located. A reputable business brokerage can determine whether the true value of this experience can increase the value of your business.

Income

The income generated over the life of your business can be as important as recording the revenue of the past three years. An increase over time can demonstrate a long-term growth trend, which isn’t always apparent in an evaluation of the last three years of your business. Taking this into consideration can increase the valuation of your business by forecasting revenue increases over time.

Goodwill

The goodwill you have with your existing customers has a high value, but just as important is the goodwill you build within the community. Sponsorship of local sporting teams or ongoing involvement in charitable causes or schools is working to build long-term relationships and goodwill with future customers. When you’re looking at valuing your goodwill, consider evaluating the long-term benefit of supporting your community.

Getting More out of Your Business Brokerage

A good business broker is your partner in the sale of your asset and will not only get you the best price for your business, but will make sure that all the details are addressed in the sale of your business.

From advising on the valuation of your business through to the sale and your next move, a business broker can be critical in not only getting you the best sales result, but helping you to move on into your next career or retirement.

For a business broker you can trust, contact LJ Hooker Business Broking or call 02 9552 1111 (9am – 5:30pm Monday to Friday AEST) to speak to an expert business broker.

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Why You Need a Business Broker to Sell Your Business

Selling Businesses July 20, 2016

why-online-sites-dont-work-and-why-you-need-a-broker-to-sell-your-business

The service economy has had a great boost from the internet and more specifically, mobile devices and apps. But can an online service really replace the expertise, the nuances and experience that can increase the sale price of your business?

Business opportunities in Sydney are as vast as the suburbs in which they operate. An online directory/site might be a great place to start, but chances are, it won’t be able to provide the in-market expertise that can provide the difference when selling.

What Does a Business Broker Bring to the Sale?

An understanding of the market and its dynamics is the most critical factor in getting a good price for your business. A reputable business broker can also be the difference between a well-planned and managed sale that’s satisfying to all parties involved and expensive litigation due to negligence.

A good business broker will have a wealth of experience in valuing businesses like your own and performing the necessary steps to ensure that the most accurate and realistic price is attached to the sale.

The Complete Package

Presenting and marketing your business is as important as the state of the business when it’s on the market. The professionalism of a sale, or addressing any and all questions a buyer may have before the business is on the market, can expedite the process by creating an environment of trust and complete transparency.

Expertise

While you know your customer and market intimately, they’re not the same as the buyer of your business. A business broker is the expert in the market for your business. While your customer may be prepared to spend $50 at your shopfront, they’re not the same customer as the one you’re looking for to spend hundreds of thousands of dollars on the assets, revenue and goodwill you’ve built up over years of servicing your customer base and community.

Window shoppers vs. Serious Buyers

A reputable business broker will know the marketplace and be able to separate the tyre-kickers from those with a real interest in purchasing your business. Focussing on the interest of potential buyers creates a more competitive environment and ultimately, a higher price for your business.

Closing the Deal

Although having prospects interested in purchasing your business venture it really doesn’t matter if you don’t get the sale.

A business brokers goal is exactly aligned with yours, they don’t make a commission if they can’t sell your business, and that motivation is what seperates a business broker and every other potential channel to sell your business – and that’s closing the deal.

To talk to the expert business brokers at LJ Hooker, either contact us online or call 02 9552 1111 (9am – 5:30pm Monday to Friday AEST).

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When you should sell your business (and when not to).

Selling Businesses July 13, 2016

the-right-time-to-sell-your-business

When it comes to selling a small business in Sydney, or even a franchise business, there are two questions to ask yourself:

  1. Why do I want to sell my business?
  2. Is the business experiencing a period of growth or stability?

Answering the first question is complicated and nuanced and will take you on a path of self-assessment, if you haven’t already done so. Reasons for selling may include one of many factors, but being clear on your motivation will give you the best chance of selling your business for the best possible price and moving on with your health and wellbeing intact or in better shape.

Here are some scenarios that can tell you it’s the right time to sell:

A new challenge – in some cases, the lure of another business challenge is the motivation for selling. With the time and effort required in selling a business, it’s worthwhile doing a thorough analysis of the business for sale and the businesses you’re looking to buy in order to understand the opportunity costs in buying and selling businesses in Sydney.

Part of the plan – your business may be a part of your long-term financial plan, an asset that you trade much as you would your home at different stages of your life. If this is the case, planning for the next asset in your portfolio is as important a part of the plan as selling your existing business.

Retirement – this is probably the most complex reason for selling a business and can be one taken under pressure to slow down, deteriorating health or even boredom. Being clear about the reasons for selling will underpin the value of your business asset as well as your plan once the business is sold.

More people fall ill within the first year of retirement than at any other time in their lives. The purposefulness of work, generating an income, and delivering a service or product are critical in devising a plan for the future.

Plan Ahead for Business Opportunities

It’s never too early to begin planning the sale of your business. Most people who purchase a business will discuss an exit strategy at the outset, but quickly lose sight as the daily routines of running a business takes over.

Take the time to write up a business plan and evaluate it quarterly, twice a year or annually. Make adjustments to your goals, projections and valuation that are in line with market dynamics as well as being a realistic account of your position. When you are ready to sell, most of the hard work in valuing your business will already have been undertaken and updated regularly.

Get the help you need to speed up the sale process

Expert advice for an experienced business broker is the first step in assessing your readiness for a sale. Taking the step to engage a business broker as early as possible will help you establish your goal and manage the sales process.

Click here or call 02 9552 1111 (9am – 5:30pm Monday to Friday AEST) to speak to an expert business broker at LJ Hooker.

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