14/06/2010 by info.

Willy Wonka & the Chocolate Factory is a film that is loosely based on the 1964 Roald Dahl novel Charlie and the Chocolate Factory.

The world, learns that the chocolate maker Willy Wonka has hidden five Golden Tickets amongst his Wonka Bars. The finders of these special tickets will be given a full tour of his tightly-guarded sweet factory, as well as a lifetime supply of chocolate.

In fact when Charlie win the prize, Wonka discloses that his actual prize is the factory itself, as the Golden Ticket search was conceived to help Wonka search for an honest and worthy successor to be the heir to his business.

Now I would not suggest if you wanted to sell your business that you should conduct a prize draw for a golden ticket, some have tried it without success!

But this story highlights two aspects in selling your business:

Firstly, that often your customer is a likely buyer. A customer may prefer to take control of their supply chain and grow their business vertically so that they can have more control over that supply. A shop customer also already knows how good your business is, and they do not make bad choices, they may already be sold on your business and could habitually recommend it to other people. Although many business owners are worried about approaching these potential buyers due to confidentiality.

Secondly that Wonka goes through a process of removing unsuitable successors from the process, this is exactly what happens when you sell your business. A number of prospects are either identified or indentify themseleves as buyers, now this process of identifying the one buyer takes time, you can do it yourself or your can instruct an agent to do it for you.

A seller of a business may have their own criteria, Wonda wanted honesty. Buyers can require that a buyer is competent or already have experience.

So when you think about selling your business you need to think about who is likely to buy it and what is your criteria for this buyer? Are you only interested in the money, or would you want more?

Posted in Selling Your Business, Buyers, General | No Comments »

01/06/2010 by info.

What buyers, making a decision to buy a business, do in their mind, is to carry out a SWOT analysis (an analysis of a businesses Strengths, Weaknesses, Opportunities, Threats), and you should be aware that strengths to you might not be so for a buyer. They do not do this on paper however it is done in their mind.

A shop owner for example could quite easily increase his turnover and profits by opening longer hours and working 6.00am to 11.00pm but this can be seen as a weakness to a buyer, especially if they want a life/work balance.

The seller may regard the additional profits as an opportunity, but it may undermine the demand for that business if buyers are not interested in working those long hours.

A very profitable business may indicate a strength to you however if you have made your business too complicated not many people will consider it an opportunity.

You would think that if a business makes greater profits then its value must increase, however it depends on how that profit is achieved.

When you want to sell your business it is important that you understand whether certain decisions and features will increase or decrease its value.

Carry out a SWOT analysis from a buyer’s point of view otherwise you may end up with a profitable business that is not worth the money it should be.

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30/04/2010 by info.

The biggest competitor to a business transfer agent is the client. The seller of a business often incorrectly thinks that they can save money by selling a business privately without the aid of an agent, however the seller of that business 99% of the time is worse off. Why?

Well let us assume that an agent would have charged £4,750 to sell a business worth £95,000. This fee covers the cost of writing the sales memorandum, advertising the business, answering enquiries, qualifying the buyer, arranging meetings, answering queries, negotiating the selling price and writing head terms. In addition the agent is there to act as a go between the parties solicitors and accountants, have I missed anything out? Probably.

So let us break down the costs involved in selling a business and undertaking these duties.

Advertising a business on Daltons.com and businessesforsale.com for a 2 months period is c. £200, and an advert in Daltons Weekly would cost £50 a week. Often businesses do not sell immediately so up to a years advertising is necessary. Advertising costs of c £1,000 are not unusual.

A seller of a business should also include within his “costs”, his hourly rate. This could quite easily be £100 an hour, the seller’s effective earning rate.

However, a seller of a business often does not appreciate that work is happening behind the scenes and believes that nothing is happening, as he is not informed of every aspect of the work undertaken. It is not unreasonable for the seller without the aid of an agent to spend 30/40 hours time dealing with these enquires. This “cost” represents some £4,000 in lost earning time.

So the true cost of not employing an agent can be much more than the agent’s fee, and we have not touched upon the value of the agents expertise and negotiating skills meaning that often they can obtain a higher price for the business than the owner. Nor in fact the loss of confidentiality as a seller may have to disclose the name of the business at a much earlier stage of his process.

So if a seller thinks that he can save money by selling his business personally perhaps he should look at the true cost of doing so and recognise the true benefit of employing a good business transfer agent.

Posted in Selling Your Business, Business transfer agents, General | 5 Comments »

19/04/2010 by info.

Uncertainty is often a reason given for people not making long term plans, they delay making investment decisions, don’t start businesses and wait to see the outcome of world events.

Some people may be awaiting the outcome of the Election and perhaps may delay making a decision if there is a hung parliament, as they don’t know what that might mean to their plans. Although evidence has shown that businesses still make profits and grow regardless of the government and their politics.

The volcano eruption of Eyjafjallajokull in April 2010 is creating uncertainly within the tourist and business community however life still needs to go on and the airlines loss is the trains, taxis and ferries companies’ gains. Supermarkets may not be able to fly exotic fruit in but it does not affect local suppliers.

The recession was an excuse for people not buying businesses however I have spoken to numerous business people in the last couple of weeks who have shown me that their businesses turnover during the recession has demonstrated linear and or exponential growth, during the whole of the period of the recession. Recession, what recession they say!

Their businesses are doing so well, they need to slow them down so they can grow at a reasonable rate and manage the growth!

It just goes to show that the best businesses will always do well, and if a business has survived the recession and has done well during the recession then there is absolutely no reason to worry about buying it due to lower demand nor worry about short term uncertainty in the world such as a change in government.

Posted in The Economy, General | 2 Comments »

06/04/2010 by info.

Why are certain people successful in business and others are not?

The different is their risk taking and decision making abilities; it is this that separates an entrepreneur from common people. Successful business people ignore the fear and trust their ability to make the right decision. It is important therefore that when faced with fear in your business, that you make a decision quickly.

Procrastinators lose in business not because they delay making decision but because they end up not making a decision at all.

The primary reason for not making any decision is that they are fearful of the outcome and they would rather continue on the current path - even if the current path were losing them money.

I see this all the time when people are looking at buying and selling a business; I am called in to value a business and am told by the owner that they want to think about it. In other words they are scared of making that decision to sell.

The same thing happens with buyers, even though they are presented with a great opportunity they will delay that decision to go ahead.

Of course no decision at all is a decision because the answer ultimately is NO. If you are in that situation remember you will not be successful in business if you say NO all the time.

Posted in Selling Your Business, Buyers, General | No Comments »

24/03/2010 by info.

I was talking to an entrepreneur yesterday who told me that his goal for starting a business was to simply sell it. Which is a little bit different from the goals of the vast majority of the people who start a business, most people simply want to establish an income.

This entrepreneurs strategy is to start is business chipping away at a market leaders market share in a niche market and to act as an irritant to his competitor so that sooner or later they will pay him to get him out of the market. They will buy his business, and they will pay handsomely. The strategy seemed to work as he had sold a few businesses and was a millionaire.

What perhaps most people do not realise is that often it is a larger business and competitor that is the prime candidate for buying your business.

If selling to a competitor is the strategy you think is best for your business, it’s preferable to engage the services of a professional business transfer agent, who has experience in assessing the interest and motives of these competitors.

They may obtain client lists, be able to gauge your financial strength, or your motives for selling, you could be giving them information that may harm your business.

So you might want to start thinking about which company may wish to buy your business or in thinking about your business strategy is there any way that you could become an irritant to your competitor so that they pay you effectively to disappear?

Posted in Selling Your Business, General | No Comments »