29/01/2010 by info.

Ah, yes, the World Wide Web, the Internet, what fiendishly clever stuff. Everywhere, isn’t it? Still Growing and a fabulous business tool!

Yes, it is. But do you realise quite how fiendishly clever? Quite how much everywhere it is? And what a double-edged business tool it is?

A little bit of history to begin with. As a business transfer tool, the Internet’s been with us for about ten years now. In contrast to traditional newspapers such as Daltons Weekly, it is a hugely efficient medium for agents to find buyers and get businesses sold. Using business for sale websites, buyers now have at their fingertips a wealth of information about virtually any business on the market that interests them. A fabulous marketing tool indeed for the agent.

But just imagine (if you don’t find the idea too outrageous!) a seller trying to pull the wool over a buyer’s eyes.

Imagine that sales details of the Stalefish Arms, a Suffolk seaside restaurant, has charmed a prospective purchaser with glowing descriptions of the reputation the establishment enjoys for service, good food, quality wines and well-kept local beers.

And now imagine the prospective purchaser searching Google, just to impress friends with the Michelin Rated Restaurant he is going to buy, but finding instead independent reviews putting the Stalefish Arms top of a list of Restaurants Best Avoided If You Enjoy Eating. The customer comments are unprintable in a respectable newsletter.

That’s the snag with the Internet. Without your having the foggiest idea, it’s looking over your shoulder at everything you do, recording your secrets on so many billions of terabytes that a bailout of City bankers sounds like small change!

It’s no longer a case of buyer beware. In the Internet age, it’s the seller beware.

For buyers there is sufficient information out there to highlight pros and cons alike of a transaction and to speed up due diligence before any binding commitment is made.

Whereas sellers nowadays are well advised to go online to find out what people are really saying about their businesses. If they’re lucky, they might have time to change their reputation. Not by posting false reviews but by improving the way they run their business.

If they don’t, there’ll be no sale, or not at the price they want!

As the old, true saying has it, keep your friends close - but your enemies even closer!

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26/01/2010 by info.

Well firstly growth of 0.1% for the last quarter of 2009 is a preliminary estimate, based on 40% of the returns and experience has shown that the actual figure has been within 0.2% of the figure initially announced. So we could STILL be in recession. The growth figure is still extremely small so in essence the economy is broadly flat.

Interest rates also rise at the end of a recession, inflation is above the governments target and so interest rate rises is inevitable.

So if you do need to borrow the cost of doing so will increase, and of course we have not even started paying back the cost of this recession and government will want to increase the tax paid on your profits.

The possibility of a double dip cannot be discounted if the government squeezes the economy too soon.

In a war situation often the hand-to-hand combat may end but there are still plenty of explosives in the field ready to harm the unexpected passer-by.

The same is true in business today, when a recession ends it shows that demand is returning, and sales are likely to increase, profit is likely to increase and business values will recover and demand for buying businesses will return to traditional levels. But what does that mean in reality?

Imagine if your sales increased overnight by 50%, what would that mean to your business from a logistical point of view?

Perhaps you might need additional stock, new machinery, have to employ additional members of staff, need bigger premises, all of which needs money to fund it, your businesses resources have been depleted, and the banks are still risk averse, they are not interested in funding your speculative growth. What can happen is that your business may paradoxically run out of money and fail.

So planning and cash flow forecasting is increasingly important. Growth without access to funds is a dangerous thing.

You’ve probably heard the saying “cash is king.” Now you know what it means and why so many business owners take it to heart. If your demand in your business sector is increasing, don’t fall victim to your sales success by running out of cash.

Posted in The Economy, General | No Comments »

19/01/2010 by info.

Here’s a danger to avoid!

Retirement beckons. You’re off for ever to your idyllic alpine chalet in its idyllic alpine village in Europe’s idyllic number one avalanche zone… just as soon as the house is sold.

Ah, the house. The modest seaside semi you’ve lived in all these years while your retirement nest-egg grew: the place on which you’ve stamped your personality, and which has YOU written over every feature.

The lighthouse on the roof, the one the coastguards tried to ban.

Your model railway, 4,000 feet of track riveted to the floorboards and punching tunnels through the skirting boards.

The pagoda, modelled on the one at Kew but with your signature touch, a regiment of plastic terracotta soldiers.

Those busts of Karl Marx scattered among the osier-beds!

And the pièce de résistance in the front garden, the mausoleum: 28 tons of white Carrara marble housing the embalmed remains of great-grandpa Jabez.

The market value of this Shangri-La? Three words come to mind: not a lot! It’s so much YOU that NO ONE ELSE WANTS IT!

Ok so that it an extreme example however exactly this problem occurs with business owners and people who want to become business owners.

Many of them think only of moulding a business in their own image, inside their own comfort zone, with never a thought for an exit strategy. So when it’s time to sell, potential buyers just vanish into thin air.

Such people are very often fabulously talented individuals who run fabulously complex businesses. They do people’s accounts, cut their hair, give them marriage guidance, all in a day’s work as they run their leather goods and perfume factories, sell insurance and rent out rowing-boats. But most people want something a lot less complicated.

So it might suit you down to the ground to work 24/7: perhaps you don’t like going home. But it’s not everyone’s cup of tea, and if it takes that level of commitment to make your business function, most people will want to run a mile.

And it cuts no ice to say you work 24/7 because the landlord keeps on raising the rent. That is precisely the point! That’s your choice and your comfort zone: you can’t expect a buyer to pay a rent you’ve never dared question.

So before you rush in, think. Don’t tie yourself up!

Arrangements that suit you now could in the long run cost you thousands by a reduction in the value of your business.

Posted in Selling Your Business, General | No Comments »

15/01/2010 by info.

Well (in retrospect, I suppose) what was Sir Alf Ramsey thinking about when he substituted Bobby Charlton in the 1970 World Cup quarter-finals? He obviously thought the job had been done.

And precisely what can explain just about every shot decision made by Kevin Pietersen in the last year which led to his dismissals?

Decisions, decisions, decisions! Even the smallest ones can have the most devastating consequences, and nowhere is this more blatant than in sport. Supporters are passionate, bad decisions lead to bad results (don’t even mention Kevin Keegan’s perm!), and supporters get angry and exasperated.

But hang on a minute! Even in sport, you can’t moan if your team loses in the ninth minute of extra time after defending like a bunch of hibernating sloths. After all, if they’re professionals, they’re supposed to know what they’re doing. Aren’t they?

And it’s no different in business. I care passionately about people selling their businesses and making the right decisions when they do so.

So nothing is as sure to make me as sick as a parrot as people making the wrong decisions when it’s so easy to make the right ones!

So what’s the kind of decision that makes me want to shout ‘foul’? Here are four.

Using an estate agent to sell a business

Trying to sell your business yourself.

Ah, but the customer always knows his or her business best. Or that’s what people usually say.

Well, if the customer has been reading these blogs, it’s to be hoped that the customer does know his or her business best, because one of the main aims I’ve had in writing them is to help you all make the best decisions when selling your business.

So just in case they’d passed you by, I’ll take this chance to repeat these three gems of blunt advice.

Instruct the right business agent.

Give your agent the sufficient time to sell your business - at least 6 months.

If you don’t do these things, and you make the wrong decisions, then you really can’t yell ‘foul’ when your sale snarls up. And I’ll be there on the terraces beside you, telling you that in your case, sadly, you’ve scored an ‘own goal’!

So if you do know someone who is trying to sell a business please let them know about us.
You’ll be doing them a considerable favour.

Posted in Selling Your Business, Business transfer agents, General | No Comments »

12/01/2010 by info.

Business Transfer Agents have the same frustrations as Will Writers.

As a Will Writer will tell you…. you are not going to die in the near future so there is no need to plan for that death, you all have decades to live and to contact them to draw up a Will and put your affairs in order, so we can deal with it next year.

The fact is that a Will Writer will tell you exactly the opposite and unfortunately fate may have other things in store for you.

I am also sure that a good proportion of business owners reading this blog have no intention of exiting their business, they are not going to die, get ill, move, retire and have no intention of finding another business opportunity. So of course they do not need to plan for their exit.

However, the vast majority of people who approach me to sell their business are looking for a quick sale, why is this? It is because their circumstances have changed and they now need to sell or they have been trying to sell their business elsewhere and have been unsuccessful; however because they did not plan for a sale they will not be able to sell their business, or at least for the amount that it technically could be worth.

There are a few very easy steps you can take to increase the value and saleability of your business, too many to list here. The one question you need to ask yourself is “If I put my business on the market tomorrow will it sell for its market value?”

I can assure you that if you answer, “Yes” to that question you may be being over optimistic.

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