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 / job / hobby in to a business – a business that you can sell at the best price, quickly and easily, any time you want to.

Attend my next workshop on “The 7 Key Steps To Turn Your Business In To A Saleable Asset”

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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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Is Your Business ‘Ready For Sale’?

August 31, 2017 by John Denton Leave a Comment

At some point every business owner exits their business!

Will YOU exit with equity and have your biggest pay-day ever?

Do you have a ‘business ready for sale’ checklist for your business?

(O.K. I’ll cut to the chase – I run half day workshops in Perth on getting your business in to a ‘ready for sale’ state. Click the button for details)

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Don’t wait until you are forced to sell by circumstances and only get a low return for all the blood, sweat, tears and time you have invested in the business? Or worse still, close the business down.

The simple truth is that if you haven’t got all your ducks lined up in your business before you put it on the market then you are likely to be very disappointed with the outcome when trying to sell your business. And I say ‘trying’ because in the current business sales market you have to have all your ducks lined up to sell a business.

Buyers are buying businesses but they are doing much greater due diligence than they did years ago. There are a lot more businesses for sale than there are buyers. This means that buyers can be much more selective about the business they buy.

If you want your business to stand out, sell quickly and get the maximum sell price, then make sure that everything is very well prepared and ‘ready for sale’ BEFORE going to the market.

The other benefit of getting your ducks lined up is that (as I keep saying) a business that’s ‘ready for sale’ is well worth keeping. Build your business as if you are going to keep it forever, but could sell it tomorrow.

“So” you ask, “what are these damn ducks you keep talking about?”

The ‘ducks’ are basically a checklist of things to have ready! Areas I cover in my “Preparing a Business Ready For Sale” half day workshop, include;

Legal entity, ownership, business names versus trading names (often out of date)
Financials and accounting (obvious, but often a major headache at appraisal time!)
Systems and procedures (often totally absent, out of date or incomplete)
Customer records and databases (much of the goodwill is in this area)
Sales and marketing – systems and records (absolutely crucial and often non-existent!)
Suppliers (done on a handshake – may not be good enough)
HR and employment (a mystery area to many business owners)
Premises (can be a minefield)
Reason for sale (may be obvious to you but a buyer will see it differently)
Other – the business needs to be assessed through the eyes of a buyer…..

Obviously I can’t cover all of these in detail here, however I cover ‘getting your ducks lined up’ in my half day workshops. To find out about my next workshop;

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Learning from the many mistakes I see business owners make in my role as a business broker puts me in a great position to help other business owners to prepare their business ‘ready for sale’ and avoid the same mistakes. My 10 years running my training and development business has prepared me to deliver that learning to business owners. Please check out my services on this website and contact me if I can be of help.

Once again, to learn about ‘getting your ducks line up’ – click the button to get details of my next half day workshop!

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“Helping business owners prepare their business ‘ready for sale’ – and selling them!”

End Of Year – An Opportunity To Plan

June 3, 2015 by John Denton 2 Comments

If you fail to plan, you plan to fail!

Are you planning for growth?

When is the best time to plan? NOW!

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?

Your management accounts are your ‘instrument panel’ for the business. They should be set up to provide you, the business owner, with the information you need to make informed decisions in your business. Correctly set up, your accounts will tell you; what are your most profitable products and services, who are your most profitable clients, the life time value of your clients, where your cash is going and where you can increase your profits – just to mention a few.

When preparing your business “ready for sale” the profit and loss statements are crucial. Make sure you identify different income streams – not just “Sales” or “Income”. Break it down in to logical product or service lines. Track your cost of sales in the same way. Accounting packages these days allow you to assign product codes and associate costs to ‘project codes’. Make good use of the powerful features of the accounting package. Seek help from a good accountant and if you don’t know one, just give me a call.

When it comes to selling the business, it makes it much easier to put a value on the business if you separate out items which can become add-backs. That is, such things as owner’s wages and super, subscriptions and memberships and anything which is discretionary and not part of the day to day operations. It also makes it much more attractive to a buyer and improves the likelihood of getting through due diligence quickly and painlessly.

“You should build your business as if you are going to keep it forever, but could sell it tomorrow!”

I run half day sessions on “preparing businesses ready for sale and increasing their value”.

Just click WORKSHOP for dates and details.

All the best

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

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

Buy A Business – What You Need To Know

May 2, 2012 by John Denton Leave a Comment

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;

(1) Why is the seller selling? (Especially when they are telling you what an excellent business it is.)
(2) Financial aspects of the business. The seller should be able to provide you with ‘year to date’ figures and finalised accounts to the end of the last financial year. If they can’t why not?
(3) How much should I spend on a business? It’s not just about price but also working capital etc.
(4) Non financial aspects of the business. Just a few of the things are lease arrangements, staffing, systems, barriers to entry, seller hand over period, seller not competing… and many more,.
(5) Questions to ask yourself. Why do I want to own a business and why this one? Just for starters.

If you are thinking of buying a business then plan and prepare before you even start looking.

Buying a business is a major decision for most people. Unlike buying a home, where if you end up not liking it you can always sell it again and get something for your money. If you buy a business and it all goes pear shaped, you could end up with nothing to sell and lose everything – including your home! Don’t take the chance! Seek good advice before proceeding – CLICK HERE.

Having said all that, if you buy the right business for you and for all the right reasons it could be the best investment you ever made!

All the best in your decision making – John Denton (See Upcoming Events – For More Opportunities to Learn)
_________________________________________________________________________________________________________

Upcoming Events – This is where I recommend upcoming events which I believe are well worth attending if you are in business or thinking of getting in to business. They may be my events or events by people I know and trust to do an excellent job.

My Monthly Business Owner Mentoring Groups – ongoing – CLICK HERE for details.

June 7^th – “Buying and Selling Businesses” at the Small Business Centre – Stirling. Half a day and I am the presenter.

May 5^th – Mal Emery’s “From Frustration To Freedom” workshop – Your Choice between Financial Freedom or Slavery in the Chaotic New Economy”. Hands on 1 day workshop . Mal will make this FREE for you as you are my special guest. That saves you $297 (single) or $594 (double).

May 23^rd – Sue Papadoulis, who is an expert in gaining free publicity for your business, is speaking on “Publicity For Profit” at the Wanneroo Business Association breakfast meeting. Sue has addressed my mentoring groups on two occasions and is terrific value!

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!”.

I Told You So – Shopping Centres & Franchises

May 21, 2011 by John Denton 1 Comment

I don’t say “I told you so” very often, but I felt the urge to do so after reading a detailed article in the West Australian newspaper. The article is titled “Small retailers feel the squeeze of big shopping centre landlords”. (Unfortunatley, the article is not available on their web site).

The article backs up what I said in my blog post (on this site) on 1st April 2009. The post was titled “Sleepless In Perth”. I quote from the article in The West Australia – Saturday 5th December 2009, Business Section:

“Most (small retailers) mortgage themselves to the hilt to meet fit-out costs that they are barley able to recoup by the time their five year leases expire.

So when the leases come up for renewal, some owners find themselves defenceless against what they view as often ruthless, complicated and unfair leasing practices of the centre operators.”

This is so true. I have appraised businesses where the owner is still carrying debt from their fit-out after five years and facing a hike in rent for a new lease and another fit-out! I am currently working with an owner of a franchise retail business in a major shopping centre. I quote from his email to me:

“Rent and Electricity currently runs at approx $8,400 per month $108,000 per annum this is what we are paying today, when the new lease rate kicks in this will jump to $10,800 per month ($129,600 pa) and then increase by CPI plus 2% per annum each year for next five years.

We have a liability to carry out a shop fit prior to end of July 2010 which we will either undertake ourselves or we would be willing to discount the business sale by $70K to cover the cost of the refit to the new owner.”

I suspect the $70,000 discount will not cover the total cost of the fit-out. The West article quotes of cases like this with even higher increases in rent and higher fit-out costs ($250,000 to $300,000) and business owners closing down, going broke or moving out as a result of the high costs and demands of the centre management. Many Perth business owners are worried about extended shopping hours coming in, as this will mean another major hike in rent to the shopping centres.

It IS possible to make a profit in shopping centres and you do get the advantage of high traffic, car parking, and security. However, if you are considering a franchise business in a shopping centre and paying these high rents as well as franchise fees – make sure you do your maths first and get good legal advice on the terms of the lease! Do your homework thoroughly before you jump in and make sure your chosen business can generate the cashflow to pay the rent and outgoings (now and with the annual increases), pay franchise fees, pay any loans, pay you a good income and still make a profit. If it doesn’t do all these things – don’t get in to it!

Feel free to contact me through the CONTACT US tab at the top of this page if you are thinking of buying a franchise and want to discuss it first. Until next time!

John Denton

Testimonial On The Sale Of A Business

December 29, 2009 by John Denton 1 Comment

From Chris and Eva Godwin – December 2009

I tried a very well known company in Perth to sell my business. After one interview and a look at some basic figures they said; “it wasn’t worth anything and they weren’t interested”. After picking myself up I started asking around and was recommended to John Denton of Performance Business Sales. What a breath of fresh air that was.

John and PBS weren’t interested in the figures in the beginning, they were interested in the business and the owners, then the figures. The process was professional, honest and respectful and the final sale price of the business was fair and reasonable. Due to the businesses specialised nature it took 12 months to sell. John stuck by us (husband and wife directors) to the end and this may sound a little strange, but I actually enjoyed the process as it taught me so much.

My family (me, the misses and 2 kids under 10) our now living in Germany for one year (2010) before returning to Australia and if I decide to buy or sell another business again it will be through John and PBS. To whoever reads this testimonial; “If you want to sell your business, stop mucking around and use John of PBS. You want regret it; I didn’t”.

Contact details supplied. Chris and Eva are happy to be contacted.

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

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?

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!

Is Your Business ‘Ready For Sale’?

At some point every business owner exits their business!

Will YOU exit with equity and have your biggest pay-day ever?

Do you have a ‘business ready for sale’ checklist for your business?

End Of Year – An Opportunity To Plan

If you fail to plan, you plan to fail!

Are you planning for growth?

When is the best time to plan? NOW!

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

Buy A Business – What You Need To Know

Boom or Gloom

I Told You So – Shopping Centres & Franchises

Testimonial On The Sale Of A Business

Read The Damn Documents BEFORE You Sign Them!

Testimonials

From Ros Worth – Department of Regional Development

After Andrew Huffer and I ha…

Business Owners: Are You Building Something To Sell?

Or do you have practice or a hobby?

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

<img class="size-full wp-image-3180 alignleft" src="https://businessreadyforsale.com.au/wp-content/uploads/2017/06/pen_display_accomplished_400_clr_7579-1-e1504137488974.png" alt="business ready for sale checklist" width="200" height="200">At some point every business owner exits their business!

Will YOU exit with equity and have your biggest pay-day ever?

Do you have a ‘business ready for sale’ checklist for your business?

If you fail to plan, you plan to fail!

Are you planning for growth?

When is the best time to plan? NOW!

<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

Testimonials

From Ros Worth – Department of Regional Development

After Andrew Huffer and I ha…

At some point every business owner exits their business!

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