18/12/2008 by info.

Both retailers and restaurant owners know that people buy with their eyes; retailers spend thousands ensuring that their visual merchandising - such as window displays - are dressed to invite buyers into the shop. Good restaurateurs also spend time ensuring that a meal is plated properly so it looks appetizing. If it looks good, you know it tastes good.

The same principle applies when selling a business; first impressions count. Yet so many business sellers do nothing to ensure that their business is presented properly, spending time and money to groom business, ensuring that when a potential buyer first sees the business, it looks its best

As about 60% of people (and therefore potential buyers) are visual learners (they learn predominantly with their eyes), a seller of a business that hasn’t visually groomed their business is effectively alienating the majority of potential buyers before they even speak to them. These buyers prefer to SEE how to do things, rather than just talk about them. If they don’t see that a business is worth the asking price, any amount of talking later on won’t make any difference whatsoever. In fact, they probably won’t speak to them at all, because the buyer will be looking for something else.

So if you are struggling to sell your business at the moment, perhaps you might ask the following questions:

1. Are you showing enough visual information to a potential buyer? Can they see photographs, video or virtual tours of your premises?

2. If you are showing visual information to potential buyers, do these images help the sale of your business, or hinder it?

To get the best price for your business, or to sell at all, you might need to remember a basic rule - and invest in a little money to ensure that your business is appetising to the eye.

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27/11/2008 by info.

So Woolworths and MFI have called in the receivers, who are basically accountants who will run the business until they decide what is best for the creditors. It is similar to Chapter 11 in the US.

The media are reporting these events and suggesting the firstly these names will disappear from the high street and further that the reason for the administrators being called in is due to the recession.

Firstly, the names may not necessarily disappear, it depends on what the administrators decide is the best option, and they are taking to potential buyers at the moment if reports are to be believed.

Secondly, the reason why these businesses have failed is due to inadequate management who did not ensure that the business had a particular niche of placement in the market. So when times were not so good they were the first to fail.

Why would someone shop in Woolworths to buy a DVD? Amazon and HMV provide a much better option and there is now the option of downloads which Woolworths have totally ignored. And why do the shops close at 5.30 when this is exactly the time that other workers in the town shop and office workers are ready to buy that last minute item? What percentage then drive to Tesco to buy that last minute gift when Woolworths could have been more convenient if it were open?

The knock on effect is when potential buyers were looking at Woolworths as an investment they could not find a reason to buy. What were Woolworths good at?

The same applies to to the sale of small businesses. Why would someone buy your business? What is your businesses Unique Selling Proposition?

Have you entered a competition to be pronounced the “Best Fish and Chip shop” in the region. No doubt these award winning businesses if they are now are placed on the market will be easily sold. However there are probably better Fish and Chip shops in the area whose owners simply did not bother. So if these “better” Fish and Chip shops are marketed, buyers will not necessarily know the quality of the business that is being offered.

So regardless of whether you want to sell or simply increase your turnover awards are one of the ways of distinguishing you from the rest of the businesses in your area, as is creating a niche for your business.

It will help you increase your profits and it will help the sale of your business.

A question I always ask my clients is why would someone want to buy your business? Most of them cannot give a single reason, don’t let that be true of your business.

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06/11/2008 by info.

A recent report stated that:

“According to exclusive research carried out by Financial Mail recently a staggering 60% of small business owners are delaying retirement due to the UK’s economic downturn.

One third of small business owners considering selling their businesses agree that the state of the UK economy has severely affected interested parties; with 20% suggesting the selling price had fallen, leaving them with little option but to continue working for longer.”

At least that is the story that has been reported, but perhaps the truth is more likely to be this.

Business owners are quite happy if an agent informs them that their business is worth a lot of money. Recently there have been a number of agents who have valued business at up to twice the probable selling price. They then take a large up front fees from their new client and the client is happy to pay this if they can get the amount of money the agents suggests the business is worth.

The seller decides at the same time that if my business is worth this amount of money that they can afford to retire.

Now what has happened of course it that these businesses that have been placed on the market have never sold for one reason - they are overpriced!

So the seller then contacts the agent who trying to cover up their deceit suggests that if they want to sell they would need to reduce their asking price, and justifies this by blaming the economy.

Of course they cannot afford to reduce the price because the ONLY reason why they placed their business on the market in the first place was because IF they received that amount of money for their business they COULD afford to retire.

The truth is however that their business was NEVER worth that amount of money in the first place and they started to make plans to retire based on an assumption that was not true.

So sometimes a reporter not really understanding the background behind a story gets the wrong end of the stick.

Business values have remained static since the early 1990 recession and haven’t changed significantly since then.

I would suggest that the truth is that there simply isn’t any evidence that business values have fallen significantly rather reality has kicked in regarding the true value of businesses in the UK.

Sellers had fallen for the age old “buying a listing” trick used by business agents and estate agents to increase their portfolio of clients. In other words overvaluing.

If you want to sell your business don’t be conned into using a particular agent just because they suggest that they can get more than any other agent, you will find that you have fallen for this trick.

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31/10/2008 by info.

“There’s no point in trying to sell my business at the moment is there?” This is the message that I have had from more than one of my clients.

They think that as the economy is going into recession and credit is difficult to obtain that their are no business buyers ready to buy a business.

Recently I had interest in a Sandwich Bar I am instructed to sell, after the viewing the prospective buyer had told me that the seller was thinking twice about whether he actually wanted to sell as he may not be able to afford to retire as he might not be able to sell his house and relocate as he was planning to do. He is 70 years old by the way.

All business owners in the UK who are offering their business for sale have to obtain an Energy Performance Certificate by 4 January 2009.

What you will find is that a good proportion of the current businesses on the market will be withdrawn due to the fact that the business owner is not prepared to make this investment, or because they think that it will not sell in the current market.

What does this mean?

Well firstly it shows that some business owners perhaps were not really serious about selling their business in the first place, but were willing to list their business at a higher price with agents who didn’t ask for an investment from them, and if someone was interested then they will sell at above market price. My guess is that these businesses will be withdrawn from the market as they will actually have to put up a stake upfront in their gamble.

Others will reply that their is no point in trying to sell, trying to double guess whether a buyer will emerge in the next few months.

This will leave positive business owners committed to selling their business who because they were not negative and have been willing to make an investment will be one of a smaller amount of businesses for sale and will be more likely to sell.

Assume there is a buyer wanting to by a Sandwich Bar in London. (There are buyers out there, cash buyers), who currently has a choice of say 10 Sandwich Bar for sale in the area he is looking. After 4 January perhaps there will be only 5 Sandwich Bars for sale. Each seller rather than having a 10% chance of selling now has a 20% chance of selling.

So if you offer your business for sale now you perhaps are more likely to sell rather than less likely to sell.

If you are interested in selling your business contact us.

Horizon business Agents

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24/10/2008 by info.

For most businesses the answer is no for the following reasons:

1. You are not a professional, are too close to your business and you don’t know how to properly present your business to other people. The chances are that you might already know the likely buyer of your business. You however only get one chance to present that business to them and if you mess up then they will not give your business a second look, even if you subsequently instruct an agent to sell it.

2. Selling a business is a time consuming exercise and the business owner often underestimates the amount of time it will take to sell the business. We will be talking to people on the telephone who are just browsing and those who have no money. He will be wasting hours of his valuable working life not running his business. What happens the business suffers! What most buyers do not appreciate is that business agents do this on a daily business allowing the seller to concentrate on his profits.

3. The business owner is often worried about giving away information to strangers so they will only publish basic information certainly not enough information for a buyer to draw a conclusion on whether they are interested or not. The result they will contact the buyer to get more information (see above point 2). Confidentiality is important to a seller who are often petrified that people will know that he wants to sell. An agent can however maintain this confidentiality, and only disclose the name of the business after certain formalities have been followed.

4. An agent can qualify the buyer, ensure that they have access to the money to buy your business. Buyers especially in todays market overestimate the amount of money that they will be able to borrow to buy a business, perhaps they might think that they can borrow all of the money to pay for the purchase. The result is you do not talk to people who do not have the money to buy your business (see above point 2)

5. An agent will be able to set the most appropriate price for the business and negotiate a higher price than the private seller often would, often this increased selling price pays for the agents services. It is difficult for the private seller to be objective in the negotiations. If you want to give your business away at a bargain price then of course you will have plenty of takers, the skill is to sell it at the market price or above.

6. An agent will know other professionals that can help both you and the buyer complete this transaction. Accountants, solicitors, surveyors, energy inspectors, commercial finance brokers, stocktakers, bankers and some of the professions that may be needed. This smooths the selling process.

7. Arguments, yes selling a business is stressful and often the two parties fall out with each other without that buffer of the agent the sale will collapse, an agent can ofter calm both parties and suggest solutions to the problems.

8. An agent may cut your legal bills, a business agent will provide both sets of solicitiors will head terms, basically terms that have already been agreed, this cuts the opportunity a solicitor has of negotiating the deal and antagonising the other party. Often the buyer and seller are not aware of the information the solicitor needs meaning that they have to constantly write to them increasing the cost of selling.

9. Advertising is expensive, and although an agent may ask for upfront money to cover this cost, he will be able to advertise your business for longer and cheaper than the private seller. Website publications such as businessesforsale.com and daltonsbusiness.com will give an agent much better terms than you can ever get. And for the private seller it is amazing how quickly he can spend £500 on advertising.

10. Buyers may tell the agent the true reason why they were not interested, where they would not do so with the private seller. This gives the agent and the seller an opportuinity to deal with this issue the next time someone is interested.

11. You may accept an insincere offer and spend time and money following this offer only to have to put it back on the market later. An agent is experienced in recognising whether a buyer is likely to complete the transaction.

12. An agent is experienced in overcoming objections, and will recognise whether these is a true objection that he can overcome or ones that can give the insincere buyer a way out without loosing face.

So is it ever a good idea to try to sell your own business?

The answer is yes in one case only, that is when the asking price is so small that the agents commission would swallow all of the sale proceeds. Agents will tend to want a minimum commission £3,000 - £5,000 is commonplace. If your business is not worth much money perhaps it is best to try your luck privately.

Horizon Business Agents

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