John Denton - Preparing Businesses Ready For Sale
Boris Bikes - Great Business Idea!
Occasionally I spot something and think “Gee, that’s a great business idea!”
That’s what went through my mind when I saw a business recently during a trip to London.
It impressed me because I thought what a great idea to reduce traffic congestion in a city centre. It has many other benefits too. For example, it is also helping to reduce pollution from motor vehicle exhausts whilst providing locals and visitors with an inexpensive, convenient and easy way to get around the city. This is what the business looks like…(see photo above)
Automated bike hire! (Knicknamed Boris bikes after Boris Johnson the Mayor of the City Of London) When you look at it as a business it ticks a lot of boxes. One of the biggest ticks for me is the fact that it runs without the business owner having to be there! It’s all done by some simple mechanics and machines to process credit card payments. People just serve themselves!
One of the key things about developing a business to a “ready for sale” state is making it independent of the owner. It’s an area many business owners struggle because they don’t systemise their business and they are reluctant to delegate. These two things are probably the top two reasons why business owners stay stuck in their business, and why it makes the business difficult to sell!
One of my consulting clients is making great progress in these areas and it’s great to see the staff taking up the challenge of the extra responsibilities. Often, as business owners we underestimate the abilities of our staff and their desire for my ‘meaningful work’! As they take on more work and responsibility it frees up the owner to work ON the business and less IN the business. All of which helps to grow the business, making it more valuable, and makes it more attractive to buyers.
Think! What would a new owner have to be able to do and be prepared to do, to replace you in the business? How easy or difficult would it be to find buyers like that?
Do you have a sales system and process in your business? Want help? Contact me!
Don’t Blow Your Money When Trying To Sell A Business!
This will be a short post as I want to get it to you quickly. I have advised clients about this in the past but following a recent marketing campaign by a firm claiming to be business brokers, I thought I should re-post this message.
Basically, there are a few large corporations out there making claims to be business brokers and selling businesses via very expensive glossy advertising in magazines. Sometimes the company involved claiming to sell businesses has interests in the media publication involved.
Their Main Interest Is To Sell You Advertising - Not Sell A Business
Before you engage anyone to sell your business, check out the following;
- Are they registered business brokers complying with Australian Government regulations?
- Do they know and operate in your local market? That is, do they have an office in the state and people on the ground?
- Did you get a written appraisal of your business or did you just ‘agree a price’?
- Can they give you names of business owners for whom they have sold businesses?
Just make sure you do your due diligence on anyone before you list with them and find out how they will go about selling your business, not just placing an expensive advertisement in a magazine. For detail about how the ACCC and the NSW Government view these people click the title to this post to see the reports. It includes a report from the Australian Government and an Australian Institute of Business Brokers press release.
On a slightly different topic - also beware ‘online business evaluations’. Many of these are based in the USA and in any case are very basic and unlikely to reflect true local market values in your area.
To get the low down on valuing a business and preparing it for sale, attend one of my half day workshops. DETAILS HERE
Until next time - keep those numbers going up!
John Denton
Hi Business Owners,
It’s almost the end of another financial year – well at least it is in Australia. The end of the year is a good opportunity for reviewing your business performance over the last year as well as setting strategies, goals and plans for the coming year.
One of the opportunities which is often overlooked, is the opportunity to restructure your chart of accounts in your accounting package. Why would you want to do that?
Business owners: make sure you don’t build the business “around” you, who you are and your qualifications etc. That is not very appealing to a buyer who has to come in and replace you!
When building a business ready for sale, remember to think like a buyer. For example, don’t use your name in the business name! Don’t build the web site all about you! Separate yourself from the business.
When I am asked to help a buyer who is looking at buying a business, the meeting is usually me asking a long series of questions. Many of the questions end up being questions which the buyer should be asking the seller in relation to the business and their reason for selling.
At the end of the meeting with the buyer, they will often say “Thank you, now I know what I need to know and what questions I should ask”. Then I sit and wonder why they hadn’t thought of these seemingly obvious questions before. But of course, if you haven’t been through the process of buying a business before – then you don’t necessarily know what you need to know!
It’s all about asking the right questions to get the right information to be able to make the right decision FOR YOU! The trick is knowing what information you need!
There are some basic areas that you need to explore as a potential buyer and therefore areas as a seller which you need to have covered. These are…….
Read the full article on my web site CLICK HERE
Obviously “key economic advisory group” members are NOT business owners in Perth CBD. According to the Business News headlines email today;
A congestion charge, where motorists pay to enter the central business district at peak times, should be introduced in Perth, a key economic advisory group has said. The West
Business owners in the Perth CBD are already complaining about the lack of parking discouraging people from coming in to the city. Add to this the fact that City Of Perth parking fees all go up by 20 cents an hour from July 1, and then if you add a congestion charge on to get in to the city - who is going to go in to Perth to shop, relax and spend money?
Given that the State Government are developing the river front and sinking the railway line between the CBD and Northbridge to encourage more people to come in to the city and spend time and money there - then a congestion charge would seem to be working against that.
If you are a business owner in the City of Perth - what do you think?
John Denton
www.johndenton.com.au
It’s great when you spot a business which “sets high standards” and pays attention to detail. Here is a small and not serious sign of a business which doesn’t pay attention to detail or train staff to maintain standards.
It was funny rather than serious, in this case, but reminded me of how a lack of attention to detail can detract from an otherwise good business. How well do you set standards in your business AND train staff to maintain them?
This is a major supermarket and retail strip in a shopping centre in suburban Perth, at 1.00 pm on a Tuesday lunch time! And we’re told by the Federal Government that WA and Perth is still booming. The economy is not just slowing - IT’S STOPPED! Well for these retailers it is.
I took these photos because I was so shocked to see this shopping centre so quiet at 1.00 pm on a Tuesday. I couldn’t get over the lack of people at a normally busy time of the day. I could have driven my car in and parked it in the centre and not hit a soul!
Who’d be in retails at the moment?
When a prospective business buyer is looking at a business, an area which is becoming more and more important in their decision making is “marketing systems”. Especially the social media marketing systems like the ones used by many larger businesses and corporations.
More and more business owners and business professionals are using social networks to build relationships, meet new contacts, market themselves and grow their businesses.
For the uninitiated, however, diving into the “virtual meet-and-greet world” can be daunting. Where to begin? For first-time users, the answer is LinkedIn.
LinkedIn was developed specifically for business owners and professionals. The site doesn’t run the risk of mixing your professional life with your private one; and with more than 135 million users (3 million in Australia as at March 2012), it serves virtually every industry and profession.
Joining a network like LinkedIn is simple, but turning it into a powerful networking tool that promotes you and your business; well that takes some knowhow and experience. See details of our workshop CLICK HERE!
Do it right and LinkedIn can really lift your professional ‘online presence’ and set you and your business up as the “go to people” for whatever product or service you are selling. It’s all about having an ‘online presence’ and being the person or business which comes up first in searches on the Internet. Become the authority and “go to business” for your area of expertise.
I am a partner in another business called Smarterworshops. Our business involves running practicable, hands on, done with you workshops where you get things done and come away with tangible outcomes. We DO NOT run fluffy feel good information workshops.
For example, with the upcoming Smarterworkshops “Hands On” Done With You LinkedIn Workshop participants will learn how to optimise their personal and business profile, promote their products and services, build a community of prospects ‘predisposed to do business with them and set themselves up as the “authority” in their field.
Want to know more, then CLICK HERE - or contact me.
John Denton
In Australia we are famous for the “She’ll be right, mate!” attitude. Unfortunately, when it comes to legal contracts and the exchange of large sums of money if “She ain’t quite right mate!” then it can end up costing someone a lot of money, time and stress. And none of us need any more of that.
An example is the legal entity of the seller’s business and the buyer’s business. It’s one of the first questions I ask people. And they tell me it is, e.g. XYZ Pty Ltd. It gets put on to the paperwork and the owner signs the Authority To Act, for example. In spite of repeated questions it can turn out later, possibly at a critical time, that there are multiple directors and some don’t want to sell. Or, there is a “trust” involved and the Pty Ltd is a trustee for the trust.This can cause all kinds of complications down the track.
Another common mistake is the incorrect spelling of business names. Over a period of time the owner forgets that they registered XYZ (W.A.) Pty Ltd and not just XYZ Pty Ltd or something along those lines. When I pull them up for it they ask “Well isn’t that close enough?” to which I always answer “If you are one digit out dialing a telephone number, does it really matter?”
Of course it matters!!! And then settlement of the deal gets delayed and people get angry and frustrated and start looking for people to blame. No matter how much as brokers we strive to get the correct information and detail, we are usually at the mercy of the owner’s memory (apart from certain things which can be searched on government databases) – which has often faded with time!
TIP: Always check what you are writing on forms BEFORE you fill it in. And the old adage “NEVER ASSUME” – please!
P.S. Check out my upcoming workshops in Perth – next one is March 7th 2012 – CLICK HERE for more details and registration.
Regards
John Denton
“Helping business owners achieve their life goals through buying and selling businesses!”
