Do You Have A Business, A Practice Or A Hobby?

December 23, 2019 by John Denton Leave a Comment

Business Owners: Are You Building Something To Sell?

Or do you have practice or a hobby?

Many people tell me that they have a business and want to sell. In reality after asking some pointed questions, it often turns out that they have a practice or are simply “self employed”.

So what’s the difference? Putting it simply, a practice is based around an expert (practitioner / tradesperson) and a business is based upon systems! A business can be though of as a commercial, profitable enterprise that runs without the business owner having to be there. A business can be sold but a practice can’t.

So do you have a business to sell or a practice / hobby? The acid test is “Can you go away for three months holiday and the business still runs without you?” Many business owners build their business around them and make themselves indispensable. This means that not only is the business ‘unsaleable’ but also that the owner cannot take holidays or have a life as well as a business. Typically the business owner is always “on call” for the business either to customer demands or staff if there are any. It doesn’t need to be like this.

Contact me for help to turn your practice or business into a saleable asset – a business that you can sell at the best price, quickly and easily, any time you want to.

I work with business owners on a one on one mentoring arrangement or in business owner mentoring groups that I have been facilitating since 2008. For more on what I do you can go to THE BUSINESS GROWTH PROCESS

If you would like to just have an informal chat then please BOOK A TIME TO CHAT

5 Common Myths About Selling A Business!

December 11, 2019 by John Denton

The biggest frustration for me helping business owners turn their business in to a saleable asset is the beliefs business owners develop around selling their business.

Very often these beliefs are etched in to their minds by well meaning accountants, bookkeepers, business coaches, friends and the media.

If you want the real facts about having a business that’s ready for sale ….

Attend my half day workshop on the ‘7 steps to turning a business in to a saleable asset’ and preparing it ‘ready for sale!’ Click the button to get more details and to register!

More Info & Register

What are those common beliefs and mistakes owners make?

(1) I’ve had my business for 30 years and my accountant says it must be worth a $million
WRONG! Whilst longevity is a factor it doesn’t affect the market value very much. It may help to make it more attractive to a buyer and therefore easier to sell. On the other hand it can also be a negative if the business hasn’t kept up to date!

(2) My accountant says my business is worth 5 times earnings before interest, tax, depreciation and amortization (EBITDA)!
WRONG! With the best will in the world, very few accountants are able to put a market value on a business. Why not? Because they are not out there in the market place day after day selling businesses. Also, there is no set multiplier (properly called an ROI factor) or ‘rule of thumb’ for different types of business. Yes, the adjusted net profit (sort of EBITDA) is one part of it, but the the risk to that profit determines the ROI factor (multiplier). This is explained in detail in my half day workshop with lots of real examples.

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(3) It’s a waste of money engaging a broker or lawyer and using a sale agreement. I’ll just write something up with the buyer.

WRONG! You most definitely need a good business broker or lawyer involved to protect both parties and avoid litigation after the sale. Dollars invested now can save you a fortune and a lot of problems post sale.

(4) My business is a simple one. As long as the buyer offers me the asking price that’s all I need to agree.
WRONG! There are numerous things that need to be discussed and agreed at the offer stage. Then everything needs to be in the buy / sell agreement before both parties sign. Failure to do this thoroughly can end up in litigation after the sale.

(5) That’s it, we’ve signed the sale agreement so I can slow down now and book my flights to Bali!
WRONG! The seller has an obligation to the buyer to keep running the business as they always have until settlement. Many sales fall through because of things which come out in due diligence! Sometimes the buyer will not get finance. It’s not over until the money is in the bank! If you let the business slow down and then end up keeping it …….

This is just a very small list of the things that need to be dealt with when selling a business.

How can you avoid making these mistakes and sell your business in the shortest time, for the least hassle and for the most dollars?

Start by attending my next half day workshop on preparing a business ready for sale!

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I am a business ready for sale coach and business broker and dedicated to helping business owners prepare their businesses “ready for sale” – whether you want to sell or not, because a business that’s ready for sale is well worth keeping!

I tried to sell a business privately and failed because I made all the mistakes! Then I learned the correct way from one of the best brokers in Australia. Since then I have operated as a business ready for sale coach and part time business broker All of that learning and experience is the value add that I can bring to you!

John Denton

What Previous Clients Have Said….

“A few years before I wanted to sell my business, I attended John’s “Prepare Your Business Ready For Sale” course and this was extremely beneficial. I discovered that selling a business was a lot more complicated than I expected. After the course John worked with me as my coach to prepare my company for sale over an 18 month period. When the time came to list I was fully prepared and achieved a very satisfying result. I cannot thank John and members of his BOB group enough for the support and guidance. – Nolan Penning, Former Owner of Magnum Essence

“When it comes time to make big decisions, to bounce ideas off people or have a focus group on a new product, that’s when it can feel very lonely for a lot of small business people. That is where I have found John Denton’s mentoring / business owners board (bob) groups to be invaluable assistance.” – Gary Maynard, Owner – Medichill

You Can’t Change History!

November 4, 2019 by John Denton Leave a Comment

As much as we would like to sometimes, we just cannot change history.

Although, some business owners still try to turn the clock back!

What do I mean by that? Well, every day in business we are creating a history of the business’ performance – reflected in the numbers. Every single thing that happens in the business is there for everyone to see – including potential buyers of the business. And that’s why I keep emphasising to business owners “be aware of the history you are creating. Know your numbers!”

One of my mantras is “Keep your financials clean, up to date and the ‘right’ numbers going up!”

A business, like shares, is much more attractive when there is a history of the numbers going up! The most important numbers are ‘adjusted net profit’ to the owner, turnover, and gross profit. The longer they have been going up the better but at least over the last three years. Steady growth is preferred by most buyers not sudden increases or decreases. Consistency is very important and spread over a good diverse mix of clients. It can take years to get to this state.

One bad number can make a big difference in the value of a business and can put buyers off – big time! Many businesses I get to look at simply do not have a well constructed process for recording and reviewing the numbers. Want to know more? Attend one of my short workshops.

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This is why every business owner who has any ambition at all to sell their business one day, and cash out with a good sale, needs to be planning and preparing their business ready for sale EVERY DAY. Build an asset not just a job for the owner.

A business that is ready for sale will be much easier to manage, run without the owner, be much more successful and will attract buyers. This is the situation you want to be in so that you can have options to sell for the price you want, when you want to. You should be in control of the whole process.

There are many more areas that need to be considered in addition to the numbers. For example how well you structure and record the numbers is also critical. Make it easy for a buyer (and yourself) to see what is happening in the business. Keep your eye on the ball all the time.

In future posts I’ll be covering the other areas but if you want to fast track your learning on the “business ready for sale front” consider attending one of my half day seminars on the topic. To get the details

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Preparing A Business For Sale – A Legal Perspective

October 13, 2015 by John Denton Leave a Comment

By Helen Kay of Rise Legal

It is important to be well prepared and organised well in advance of putting your business on the market for sale. This will not only avoid costly delays but could also maximise the value of your business.

Helen Kay from Commercial Law firm Rise Legal has provided some tips to assist you in preparing to sell your business….

Be clear on exactly what you are selling

If the business is being sold, you should prepare a detailed schedule of all the plant and equipment and furniture, etc. that is included in the sale as well as a separate schedule of what is excluded.

You must let the buyer know which (if any) of the plant and equipment is subject to hire purchase agreement or equipment lease, etc. If you are unsure, your lawyer can conduct a search for you at the Personal Properties Securities Register.

You should be one step ahead in contacting the relevant companies and obtaining discharge certificates or arranging for the transfer of the hire purchase agreements, etc.

Formalise any important contracts

If your business is reliant upon certain key suppliers, customers or employees you should make sure (where possible) that formal written agreements are in place before the sale as this could enhance the value of your business to a prospective buyer:

convert any verbal agreements into written agreements as soon as possible; and
review any existing contracts with suppliers and customers to ensure they are still current and can be easily assigned to the buyer.

Get your lease in order

If you lease your business premises it is important to review your current leasehold arrangements and determine:
How long is left to run on your lease – If your lease has expired and you are holding over, or if there is only a short period left to run, you may consider negotiating a new lease or an extension with your landlord.
What the assignment conditions require – Your landlord could be entitled to withhold their consent to the assignment of lease if these conditions are not satisfied, so it is important to be aware what they are and what the landlord can ask for.

This is just a snap shot of some of the things you should think about getting organised prior to sale.

(Please note that this article has been provided for information purposes only and does not constitute legal advice.)

For further information or for your FREE SELLER’S CHECKLIST please contact Helen Kay at Rise legal. Contact Helen via www.riselegal.com.au

With extensive experience in assisting her commercial clients buying and selling business, Rise Legal’s Managing director, Helen Kay, will be happy to assist.

Liability limited by a scheme approved under Professional Standards Legislation

For more general information on preparing your business ready for sale and increasing its value, see John Denton’s half day seminars by clicking Seminars & Workshops

Seller Beware on Selling Your Business

July 9, 2012 by John Denton 5 Comments

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 READ THIS! It includes a sample of a recent marketing campaign 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

It’s Great To Have Standards In Business!

March 28, 2012 by John Denton Leave a Comment

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.This table was set for three people! We all had a choice of style of glass we wanted to drink from! This quite funny example occurred in a very good cafe in our local shopping centre.

It was funny rather than serious 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?

When it comes to selling a business it makes the decision for the buyer much easier if there are good systems and standards in place.cIt makes the buyer feel confident that the business can continue to be a success under the new owner.

If you would like help with this or any other aspect of getting a business in to a ‘ready for sale’ state – please contact me via the CONTACT US tab at the top of this web site!

All the best, John Denton – helping prepare business ‘ready for sale’ because a business that is ‘ready for sale’ is well worth keeping!

Boom or Gloom

August 2, 2011 by John Denton Leave a Comment

What interesting and challenging times we live in.Australian dollar at over $1.10 US – who would have thought!

Australians are saving at record levels and consumer spending is at record lows. Resources are booming but we are now being told that we have a ‘two speed economy – boom and gloom’. And today’s meeting of the Reserve Bank board is shaping up as the most closely watched in months, with the decision on whether to raise interest rates expected to be a close call.

Then of course, we have Queensland flood tax (call it a levy! Is it really going to Qld flood victims? Who’s auditing it?). What will the carbon tax mean to you and your business next year when it starts on July 1st? Whose story do YOU buy on that one? The reality is that nobody knows what the flow on will be!

What does all of this change & uncertainty mean to your business? What is it doing to your ongoing profitability? What is it doing to the value of your business? Are you relying on selling your business to fund your retirement? If so, when do you sell?

I am running my half day workshop on “7 Keys To Selling or Buying a Business” on Tuesday 9th August, and will be discussing these issues. For all the details and registration CLICK HERE.

Some things which are showing up in business appraisals are;

Retail is struggling big time

Manufacturing is struggling to compete with China and Asia (What will the additional burden of carbon tax do for them?)

Exporters are struggling with the high dollar

Tourism is suffering from the high dollar

Import and distribution are having a great time. Profits are up due to the high dollar!

SOME WIN AND SOME LOSE! WHERE WOULD YOU PUT YOUR MONEY?

All the best

John Denton

“Helping business owners realise their dreams through buying and selling businesses!”.

New! Businesses For Sale Page

October 14, 2009 by John Denton Leave a Comment

Hi Everyone,

Just a quick post to let you know that I have created a new page on this web site for “Businesses For Sale”. It contains the latest listings of businesses for sale at Performance Business Sales.

You can find the Businesses For Sale page under the SERVICES tab at the top of this page.

Best Regards,

John Denton

Read The Damn Documents BEFORE You Sign Them!

September 30, 2009 by John Denton Leave a Comment

Hi All,

As mentioned in the last article I posted, associated with the lack of attention to detail is the reluctance for people to read documents before they sign them. Why don’t they do that?

I think there are a number of reasons! One is the lack of time. Everyone is in a hurry and they may feel pressured to sign rather than spend the time in the meeting ‘reading the detail’. They may feel that taking the time to read everything shows a lack of trust in the other parties and they don’t want to be seen as ‘picky’. Whatever the reason, it can come at a cost.

These are legal and binding documents that are being signed. For example, The Agreement To Purchase comes with pages of “Standard Conditions” which are supplied to both parties ahead of finally signing. They can read them or get a lawyer to read and explain them. In most cases they are written in plain English (ours are at least!). Then there are often several or more “Special Conditions” which get negotiated and agreed between business sellers and business buyers prior to signing.

Even though we spell out the consequences of not meeting many of the terms and conditions – in the euphoria of the business sale (for the seller) and the excitement of becoming a new business owner – people forget.

TIP: Get advice before sitting down to sign ANY document. Know what you are signing and the consequences if conditions aren’t met. Ask for clarification and NEVER ASSUME!

As a seller, you will generally have more than one offer to consider. Make sure you look at any “special conditions” as these may make one offer better than another – in spight of the dollars!

As a buyer, make sure you include any conditions that protect you from post sales blues. Don’t go over the top but cover the major threats to ongoing profitability.

Typically you want to make sure;

Plant & equipment is in good working order. Arrange for an inspection by a technician if appropriate
Meet with employees, suppliers and major customers to make sure they will continue on
Consider a specific Deed Of Restraint on the seller not to compete in the future
Organise a stock take to make sure stock is correct and “saleable”
Agree how work in progress will be reconciled. This is in standard conditions but I often recommend a specific clause detailing the agree handling of this. It can be a contentious issue if not handled well

A good broker will anticipate most things for you and explain everything – but always get a second opinion and READ WHAT YOU SIGN BEFORE SIGNING!

Want more on this and any topic related to buying and selling a business – come to my next workshop, or sign up for my mentoring group! Go to “Workshops” on this web site and select the one for you.

Regards
John
Helping Business Owners Achieve Their Life’s Goals Through Buying and Selling Businesses

And They Wonder Why They Have Problems ….

September 25, 2009 by John Denton 1 Comment

Hi Again,

I can’t believe it is so long since my last article. Things have really taken off since the new financial year started (1st July for the non Aussie readers) in that we are now finally getting genuine business buyers in the market place who are prepared to make realistic and acceptable offers. This is resulting in deals being done and businesses changing hands!

Yeah! We say. But it doesn’t come without some frustrations. One of the most common frustrations is people’s lack of “attention to detail”. In Australia we are famous for the “She’ll be right, mate!” attitude. Unfortunately, when it come 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 turns out later, 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 trick that gets pulled on us 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!

Next article to be posted will be “Read the damn documents BEFORE you sign!)

P.S. Check out my upcoming workshops in Perth – next one is October 23rd – go to Workshops tab for info.

Regards
John Denton
“Helping business owners achieve their life goals through buying and selling businesses!”

Do You Have A Business, A Practice Or A Hobby?

Business Owners: Are You Building Something To Sell?

Or do you have practice or a hobby?

5 Common Myths About Selling A Business!

The biggest frustration for me helping business owners turn their business in to a saleable asset is the beliefs business owners develop around selling their business.

Very often these beliefs are etched in to their minds by well meaning accountants, bookkeepers, business coaches, friends and the media.

You Can’t Change History!

As much as we would like to sometimes, we just cannot change history.

Although, some business owners still try to turn the clock back!

Preparing A Business For Sale – A Legal Perspective

By Helen Kay of Rise Legal

Seller Beware on Selling Your Business

Don’t Blow Your Money When Trying To Sell A Business!

Their Main Interest Is To Sell You Advertising – Not Sell A Business

It’s Great To Have Standards In Business!

Boom or Gloom

New! Businesses For Sale Page

Read The Damn Documents BEFORE You Sign Them!

And They Wonder Why They Have Problems ….

Rave Reviews

Testimonials

From Ros Worth – Department of Regional Development

After Andrew Huffer and I ha… Read more

Business Owners: Are You Building Something To Sell?

Or do you have practice or a hobby?

Very often these beliefs are etched in to their minds by well meaning accountants, bookkeepers, business coaches, friends and the media.

Although, some business owners still try to turn the clock back!

By Helen Kay of Rise Legal

<img style="float: left; margin: 5px;" title="Buyer beware" src="https://www.johndenton.com.au/wp-content/uploads/2012/07/BuyerBeware.jpg" alt="Buyer beware" width="87" height="130" />Don’t Blow Your Money When Trying To Sell A Business!

Their Main Interest Is To Sell You Advertising – Not Sell A Business

Rave Reviews

Testimonials

From Ros Worth – Department of Regional Development

After Andrew Huffer and I ha… Read more

Don’t Blow Your Money When Trying To Sell A Business!