13/10/2008 by info.

All sellers want to get as much money as possible for their business. However, a marketing price too high can actually reduce the eventual selling price or mean that the business will not sell at all.

Businesses get the most buyer attention when they are first put up for sale. Once a business has been on the market for a while, it gets tired, even with price reductions and new marketing activity.

There are a limited number of qualified, ready buyers for any business. An overpriced offering will turn away these buyers.

Buyers who have looked at the business once, but have dismissed it because of the price, have moved on. Buyers have no interest in a business they have already turned down even if a different agent lists it.

Their initial look at the business may have turned up some problems with the business and the extended time on the market often confirms their suspicions. There’s something wrong with it isn’t there? and others on the market that are better.

When you get ready to sell your business, choose carefully which agent you instruct, and be realistic about your expectations of a selling price.

Don’t be the seller who offers a business at a high price to “see what happens,” or one that is fooled by an agent looking to “buy a listing” overvaluing a business.

Horizon Business Agents

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10/10/2008 by info.

The FTSE 100 has now fallen in value by 40% in the last year. This means that the value of the biggest 100 companies in the UK has fallen on average by 40%. But are these businesses really worth 40% less than they were a year ago?

These businesses would be worth less if firstly their profits reduced, but you still have some businesses such as Tesco’s whose profit has increased in the last year. Oil companies are still doing ok as well. But certainly for the vast majority of these 100 businesses their profits have not reduced by 40%.

What has reduced is the earnings per share or the factor applied to the business - their long term prospects.

But even then the long term prospects for those businesses have not worsened by that amount. The factor behind these falls is fear.

And this fear happens with smaller businesses as well, the owner of a small business thinking twice about whether he actually wants to sell because he might not be able to retire now due to his other investments not doing so well. Or the fear of the buyer not wanting to jump into the frying pan.

I can often see a trend when bad news is released by the media, the number of enquiries for businesses for sale reduces or even stops for a short period of time until they have forgotten about it and started to look again. Its illogical as Mr Spock might say.

You would not close a business on the basis of a few days trading so why react in the short term. Again the answer is fear. In both of these situations, the person in question created a seemingly unsurmountable obstacle that exists solely in their imagination.

People should however be looking at the longer term in these decisions. To get rid of the fear, simply work out what you will do in each of the possible scenarios.

This is called long term planning! This is the basis on which any business decision should be based not on the BBC or Sky News report for that lunchtime bulletin.

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09/10/2008 by info.

If you have ever been turned down for a loan or overdraft application by your bank don’t you think that there is a little poetic justice in banks refusing to lend to each other.

“Sorry HBOS you are too much of a credit risk” says Mr Lloyds Bank but I will buy your business for a knock down price!

Economic growth and wealth only happens when you give away money, and the fear that it will not get repaid will mean that the world economy will be affected.

Imagine the economy as a river and money as the flow of water. If the money does not flow then all that is in that river will die.

What’s in the economy river are businesses some have been eaten up by larger fish/businesses like Lloyds and others the weak that no one wants will die, Lehman Brothers.

Larger organisations like Lloyds know that it is still the right time to buy a business if you are healthy yourself, and if you have cash to spend you can get bargains which would make your empire stronger. That merger would never have been allowed during a time of boom.

The ones that make money from a recession are those that do not panic, whilst all those who are scared of buying a business stagnate in the river you are the one getting stronger because you are investing in buying all your competitors for a cheap price.

The same concept happens in the micro economy, the single hairdressing business in a town who is making profits because they know how to look after customers can end up with being the major hairdresser in the area if they invest in buying their competitors. The same businesses that everyone else is scared of buying now.

And when the river starts flowing again, which it will, they will be the one swimming the fastest and strongest and have the platform to really push ahead.

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25/09/2008 by info.

Businesses don’t always sell; here are the 5 main reasons why:

1. Poor Market Conditions

An economic slowdown will often have an effect of putting a lot of businesses for sale simultaneously. Credit is also less available and this generally will affect both buyers and sellers of businesses. If anything, it can represent opportunity for those buyers that have plenty of cash. For sellers, it presents a real challenge, as there is no easy remedy.

2. Lack of Exposure

Lack of exposure is usually the primary reason that businesses fail to sell. Many traditional business owners continue to rely on friends and business connections to sell their business. Whilst, this way does in some cases produce a successful outcome, the price obtained can be below the market price. It can take up to six months to sell a business and it is very expensive to place advertisements on a weekly or daily basis with costs potentially running into the thousands.

Most people would not sell their house this way so selling a business should also be about attracting the most potential buyers and that requires an increase in exposure.

Business agents are often most effective way of reaching your target market.

3. Failing to Provide Information to Potential Buyers

Withholding too much information on a business can also prevent a sale. Some sellers of business have a concern that competitors will find out information and will not provide much in the way to potential buyers to act upon. This can be quite counter-productive especially if it means that the seller loses nine out of ten of prospective buyers because there is inadequate information.

They may believe that in tandem with other reasons here that the reason why information has been withheld is because the seller is hiding something.

4. Lack of Preparation for a Sale

In many cases, buyers will not proceed with a sale generally because sellers were not actually prepared to sell their business. Systems, staffing, processes and financial records need to be in a state where a new owner can easily take over the running of the business. Lack of preparation can kill a deal.

Business owners simply decide they want to sell and either advertises the business or contact an agent to sell without thinking about the buyers needs.

5. Price is Incorrect

Businesses can be placed on the market at too high a price, and therefore will be unsold for years or be placed on the market at too low a price, so that buyers think that there must be something wrong with the business.

If you cannot sell your business, reducing price may actually be the wrong thing to do. The reason why you may not be able to sell your business may be due to the other reasons mentioned above.

So if you are looking to sell your business don’t think that it is only the market that is important. There are several key mistakes to avoid that will greatly enhance your chance of success.

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16/09/2008 by info.

On 1 October 2008, anyone wishing to sell a business in the UK will have to provide an Energy Performance Certificate (EPC) prior to an exchange of contracts.

Although this does not need to be provided until the exchange of contracts we recommend that the EPC should be commissioned as soon as the business is placed on the market.

The reason being that it reduces the possibility of the sale collapsing due to a poor rating, or the buyer wanting to renegotiate the deal.

If the premises is let on a leasehold basis either the freeholder or leasehold would have to provide this report dependant on who sold first.

This will add £500 plus on to the cost of selling a business in the short term but the good news is that the EPC will last for 10 years. What this will mean is that anyone selling that same business within that period will not have that cost.

The idea is that the buyer can see how efficient the premises is and what their likely energy bills will be. The idea is that the higher the rating the more the premises is worth.

In the UK residential property has been required to provide an EPC, and surveys have indicated that buyers would be willing to pay £3 - £4,000 more for a property with a good rating.

It may however be worthwhile, if your energy bills are high in getting an EPC assessment from an assessor as it would reduce your energy bills and increase your profits. For most small businesses a £1 deduction in their costs increases the value of the business by at least £2. So this investment should be recouped many times over.

Keep up to date at http://twitter.com/bizsale

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29/02/2008 by info.

Currently sellers of properties with mixed use (a shop with a house attached), Guest House etc do not need a Home Information Pack.

However this will change in October for all commercial properties when all commercial properties will need an Energy Performance Certificate.

If you are thinking about selling your business our advice is to put your business on the market now. Firstly because we are approaching the time when most businesses are sold, and secondly because if you wait you will need to spend hundred of pounds in a few months time.

Another reason to place your business on the market now is to get a lead on other business owners who might have the same idea in August and September 2008.

If you want to discuss putting your business on the market in the East Anglia, Essex or London area simply give us a call Horizon Business Agents

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15/01/2008 by info.

A number of years ago Building societies were sold to bank and with all intents and purposes they now operate as a bank. But not in all respects.

Nationwide Building Society for example do not seem to know what a bank reference/bank status report is, they simply do not provide one in the format required.

So what does this mean to buyers of businesses?

When you buy a leasehold business in the uk, you need to provide a bank reference to the landlord.

Basically if you have been banking with these building societies as your main bank you may have problems providing a bank reference suitable for submission to a prospective landlord. it may therefore affect your ability to buy a business.

Perhaps therefore if you want to buy a business you should be looking at your choice of bank to use.

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31/10/2007 by info.

Franchises are a middle ground for people who might be worried about taking the full risk of establishing their own businesses.

And if you choose the right franchise opportunity statistics show that you have a much greater chance of making money with only 7% failing according to a Nat West Franchise survey.

Compare this to a 50% failure rate in new businesses in the first few years of trading.

The franchise industry is worth in excess of £10 billion to the national economy and employs over 370,000 people.

Franchise re-sales because they are invariably part of an established brand with a track record are THE most risk free business opportunity a buyer can choose, not only do they have the support of a larger business but also the hard work has already been done in establishing the branch.

So perhaps buyers should look more favourably on franchise re-sales.

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10/10/2007 by info.

Yesterday the Chancellor announced changes to Capital Gains Tax rules, a tax increase under any other name.

Basically, if you are selling a business then all you are concerned with is the net proceeds you will receive after all fees and taxes. Solicitors fees, Agents fees etc.

If you sell a business and do so after 6 April 2008 you may pay more tax, meaning that your net proceeds will be lower due to the fact that taper relief is being abolished.

Our advice is, if you are thinking about selling your business in the next few months then put your business on the market now if you are expecting to sell it at a price higher than your purchase price. You could save 8% in tax.

Alternatively, your business could already be on the market perhaps with another agent or at a higher price. Maybe you should think about reducing the asking price this will improve your chances of selling without affecting the net proceeds from the sale.

Posted in The Economy | 1 Comment »

15/09/2007 by info.

Increasingly statistics are showing that house prices are starting to fall as demand falls due to increasing interest rates and credit tightening by mortgage companies. There is also a direct link to the earnings of the population as a whole and the value of residential property, a relationship which is currently imbalanced. www.Housepricecrash.co.uk

The value of residential property will fall in the short term however the value of businesses are not falling.

The value of a business is based upon the ongoing profits of that business and this value has not changed in the last decade at between 1 and 2.5 times profits.

True some businesses may have reduced profits during this time, but there are plenty that are doing very well.

Even if the business is located within commercial freehold premises the value of these premises will not fall if residential property prices fall. Why? Because the value of the premises in the area are often linked to long term rental agreements. So the return on investment for investors is set for the forseeable future.

So if you have spare money to invest, perhaps now is the time to invest in businesses and commercial property investments rather than residential property.

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