WHY USE A BUSINESS BROKER?……….Selling a business can be a complicated and lengthy process, so it’s a good idea to get professional help.

Business brokers are experts in helping their clients to sell businesses and act as intermediaries between buyers and sellers in the sale process.

There are many benefits to hiring an experienced business broker, as opposed to, say, a real estate agent or going it alone. Here are just some of the perks :

Confidentiality 

Brokers will protect the identity of the business and provide information to only pre-qualified buyers who have completed a confidentiality agreement.

Business brokers feel confident and comfortable with requesting the disclosure of a buyer’s financials and are well placed to make decisions about them.

“They can also save you time by screening buyers and deciding who is and isn’t serious.”

Staying focused

The business owner can maintain a focus on running the business while a broker is working on the sale, thereby avoiding the risk of deteriorating the prospects of the enterprise during the sale process.

Expert marketing advice 

An experienced business broker will have expert skills in marketing and advertising businesses for sale.

“They will present your business in the best light to maximize the asking price.”

He or she will have an understanding of the key values that buyers are looking for and can assist in identifying changes that can lead to a better financial outcome.

Reaching a wider audience 

Business brokers have the tools and resources to reach the largest possible base of buyers. They will usually have a list of contacts who are looking to buy.

Emotional detachment

A broker will remain dispassionate throughout the process and work efficiently towards selling your business without the emotional attachment that you may have, which could lead to bad decisions.

Valuation

Putting a value on a business is far more difficult and complex than valuing, for example, a house. Every business is different, with hundreds of variables that have an impact on the sale price.

Business brokers have access to business transaction databases that can be used as guidelines or reference points.

Negotiation skills 

Typically, business brokers have strong negotiation skills.Since the business broker’s sole function is to sell the business, there is a much better chance that a deal will be closed in less time.

“The faster the sale, the lower the risk of employee problems, customer defection and predatory competition.”

Getting the best buyer

When selling your business, you don’t want just any buyer, you want the best buyer. Even if you know what you want from a business sale, you may not get everything you want when making a deal.

A reputable business broker or intermediary will be sure that the right questions are asked to help you organise your thoughts, review your priorities and understand what the market is saying. In the end, you’ll find yourself in a better position to negotiate and close the deal—without sacrificing your goals.

{Source – www.businessesforsale.com}

WHAT DOES THE FEDERAL BUDGET OFFER SMALL BUSINESSES?…………. The federal budget is finally here and small business is clearly one of the winners, as Small Business Minister Bruce Billson previously predicted .

The Abbott government has abandoned many of last year’s cuts in a ‘giveaway’ budget which also champions working families with $3.5bn in childcare handouts.

Small business, however, was obviously top of the agenda. So what has Treasurer Joe Hockey’s budget offered the sector?

Tax

Prior to the federal budget, there was much speculation as to how much small businesses would benefit.

The final outcome was resolutely positive, with Hockey giving small businesses the ability to claim an immediate 100% deduction of $20,000 tax deduction per item if their turnover is smaller than $2 million.

Hockey claimed that businesses which may previously have been reticent to spend money, now have a ‘trigger’.

‘If you run a cafe it might be new kitchen equipment, or new tables and chairs. If you’re a tradie, it might be new tools or a computer…cars and vans, kitchens or machinery…anything under $20,000 is immediately 100% tax deductible from tonight.’ he said

This deduction also comes in addition to the previously scheduled 1.5% tax cut for incorpoated small businesses.

The total small business-specific package is worth a staggering $5.5 billion and, according to Hockey, 96% of Australia’s businesses will benefit in some way. These moves have eclipsed last year’s decision to scrap Labor’s instant asset write-off provisions.

Other small business breaks:

Start ups – Tax deductions for costs incurred in starting a new business

Unincorporated businesses – Will receive a 5% tax discount of up to $1000 a year

Capital Gains Tax – Rollover relief for restructuring existing business.

Employee share schemes – Employees now no longer have to pay tax on shares until they receive a financial benefit from them

Mobile benefits –  Fringe benefits tax on portable electronics devices used for work will end for small businesses from April 1st 2016, where employers use more than one device.

Hockey reiterated the importance of small business, stating that elsewhere they had developed into ‘the great disrupters of the world economy’ and that this should be the opportunity for Australian small businesses to join them.

{Source – www.businessesforsale.com}

WHY SHOULD I BUY A BUSINESS IN 2017?……………..

It’s that time of year for sober resolutions like shedding some pounds, quitting smoking and buying a gym membership with the sincere belief that you’ll get your money’s worth.

Returning to the drab reality of our 9-5, many of us also sit at our desk dreaming of a new career path. So what better New Year’s resolution than to become your own boss?

In recent years it seems a growing number of Australians have done just that. According to the Australian Bureau of Statistics, the entry rate for businesses increased from 11.3 percent between 2012-2013 to 13.7 percent between 2013-2014.

National Australia Bank (NAB) executive general manager for small business Leigh O’Neill told the Australian that the small business sector is “really energised by the value it adds to the Australian economy”.  She also declared her admiration for the growing number of women in business and “the wonderful gutsy attitude” of small business owners who are “really giving it a go”.

Why should I buy?

‘Start-up’ may sound glamorous and you might think “why should I buy someone else’s business when I can start my own?” However, many who start a business struggle to keep their new businesses afloat.

Indeed, almost 50 percent of start-ups fail within the first year of trading, according to the Australian government. You have to start from scratch: no customers, no brand awareness, no guarantee that your big idea will fly. An exciting challenge, sure – but a gamble and a lot of hard work, nonetheless.

Buying an established business is less risky. Rather than working on assumptions about your prospective market and cash-flow projections, a business with a trading history generates revenue from day one.

You can make realistic projections about future profits – indeed, even deciding which business to buy in the first place – based on its previous years’ trading figures.

Buying a business confers on you a ready-built going concern. Already established in the local community it dodges some of those difficult start-up hurdles: training employees, building up your credit rating, building your brand and reputation, generating revenue from scratch.

A ready-built brand is another invaluable benefit of buying a business and one you should never underestimate (we all recognise the immense value of the iconic swoosh or bitten apple). With brand recognition comes respect from consumers, lenders and suppliers.

Perhaps the hardest part of starting a business is building a strong customer base. When you buy a business the price is partly determined by an intangible yet invaluable asset, ‘goodwill’ (an investment in the loyalty of pre-existing customers).

With an established market presence comes a loyal customer base (so long as you choose your acquisition wisely), so all the hard work is done for you – it’s just down to you to maintain and build on its success.

What next?

If you’re interested in buying a business, there are certain things you will need to consider.

Here’s a summary of the key points:

Budget

Only pay what you can afford and don’t overstretch yourself financially. Consider not just the initial investment but whether you can afford to honour any loan repayments based on the business’s ability to generate revenue.

Professional advice

Not everyone appoints a business broker and/or accountant to help them with their acquisition, but they could help you get the right business at the lowest price possible. Make sure you employ an accountant or agent who knows the local area and is familiar with the market.

Location

Location is obviously a factor – particularly for bricks-and-mortar retailers that rely on footfall. If his applies to you, assess whether the area is a prime trading area and research the local demographics, competition and economic outlook.

Due diligence

Thorough due diligence checks – uncovering the true reasons behind the sale and the full, unvarnished facts about the business’s health or lack thereof – are vital. Are there any hidden liabilities that could land you with unexpected costs and legal consequences? Does it have a bad reputation, or any outstanding debt?

Market research

It’s not just about the health of the business itself; you must also understand the trading environment. Can you rely on the loyalty of its customer base? Even if historic trading figures are positive, can you foresee any negative consumer trends underway or on the horizon (think DVD hire stores in the late 90s)?

To gain a better understanding of the forecasted returns and future financial needs of your new business, look at any projected financial statements. Can the business owner justify these projections based on the market and its trajectory?

Legalities

Don’t rush or skim read. Take your time to carefully read the purchase agreement, taking into consideration all assets and leases alongside any registered trademarks, copyrights, patents and intellectual property. If this sounds scary, then it could be – if you fail to get the right professional advice.

Any business acquisition takes a considerable amount of time, money and commitment, so don’t expect it to happen overnight. Set against the – admittedly exhilarating, but so too is taking an existing success story to a whole new level – challenge of starting a business from scratch though, it’s arguably a much smoother ride.

Buying a business could well be the head start into the business world that you’re looking for as you skip the perils of the start-up. Could 2017 be the year you finally take the plunge?

Melanie Luff, BusinessesForSale.com

WHAT THE HELL IS THE PPSR?………….

What is The PPSR?

The Personal Property Securities Register (PPSR) offers your business excellent risk protection. It’s also a tool that can help you raise finance using your business goods and assets.

Using this register can protect you in the following ways:
• When buying goods
• When selling goods on retention of title or consignment
• When leasing, renting or hiring out goods

And… don’t rely on your contract’s retention of title clause or you may be bitterly disappointed.

When Buying Goods

Searching the register lets you know if the valuable goods you are interested in buying are being used as security for a debt or other obligation. The register won’t tell you the value of the obligation, but it lets you know who the obligation is owed to so you can find out more.

For example, someone may try to sell you used goods, such as a van or piece of machinery, without telling you they still have finance owing on it.
And if they stop making payments on the loan there’s a very real chance the finance company can turn up on your doorstep and take those goods away, without paying you a cent for your loss.

For the princely sum of $3.40 you can check that goods you want to buy are likely to be free of financed debt, and safe from repossession.

When Selling Goods on Retention of Title or Consignment

Making a registration shows searchers that you are claiming an interest in the goods or assets you are selling on retention of title terms, or have consigned to someone else to sell on your behalf. This interest means the goods or assets secure the debt or obligation that someone owes you.
The registration protects your interest in the goods or assets should the customer default or go broke.

If you don’t make a registration on those goods or assets and your customer goes broke before they have fully paid you, your property may be sold to pay secured creditors first. If you are not registered, you will be an unsecured creditor in an insolvency and may not recover much, if anything, of what you are owed.

If you register as early as possible, you stand the best chance of being first in line over other creditors. It also helps you to protect your interest even if the goods or assets are sold on, mixed or installed onto other goods.

When Leasing, Renting or Hiring Out Goods

If the lease or hiring arrangement is for at least one year, or may last for more than one year, or is for an indefinite period, then this applies to you.

Registering your goods or assets helps protect your interest in them when they are not in your possession. It shows you are claiming an interest over the goods or assets you are hiring, renting or leasing out.
If you don’t and your customer goes broke or is liquidated – your goods and/or assets may be sold to pay creditors.

Think You’re Already Covered by a Contract?

A retention of title clause (indicating that title remains with you until goods are paid for in full) in your contract or invoice, no longer protects you on its own. If you don’t make a registration, your retention of title clause is unlikely to stack up against others when you need to rely on it.

In other words, anyone else who has registered an interest will be ahead of you in the queue should your customer default or be wound up. Registering on the PPSR is a super smart move.

Article by Peter Kirkham, Business Development Manager, Professional Collection Services

5 QUESTIONS TO ASK WHEN BUYING A BUSINESS………………..

Once you have decided to purchase a business, it is very useful to draw up a list of questions to ask your business transfer broker or directly to the seller that will help you make your decision.

The more information you gather, the more you will feel comfortable with making a rational assessment of the business you are looking at.

At Advance Business Brokers we always spend time with each of our sellers to understand the exact nature of the opportunity.

Here are five questions that you should ask sellers before progressing with the purchase and signing a provisional contract.

1. What is the primary reason for selling the business?

Crucial to understanding the true nature of the sale, the response to this question will help you assess the opportunity.

2. How would the current owner recommend growing the business?

This is a great question to ask, especially if the owner is selling due to non-business reasons. An honest response will provide you with insight that could save you months of testing, research and investment.

3. What are the businesses biggest challenges?

The answer to this question should help you avoid any unforeseen issues after taking over a business.

4. How are the business’ processes documented?

Taking over a business with well documented procedures and processes in place will ensure that there are very little teething problems when you take over the business.

5. What are the primary skills required to operate the business?

Discover the skills and leadership attributes that are most important to run the business. Honestly assess your current skills and see if you fit the profile. If not can they be learned or can you afford to recruit a manager with the skills to run the business.

For further information and advice on the next steps, contact Angela at Advance Business Brokers on 0416 109 017.