Tree Change or Sea Change?

Wilsons Business Brokers have recently listed for sale 2 exciting businesses, the first on the Mid-North Coast and the second in the Upper Hunter Valley.

The Upper Hunter Valley business is a busy Supermarket and Bottle Shop together with a Hardware Store and is listed for sale at a price of $795,000 + SAV, the freehold premises from which this business trades is also available at an additional cost of $750,000. Adjacent to this thriving business there is a beautifully appointed 5 bedroom, 3 bathroom brick home with swimming pool, this freehold property is available for a further $829,000, this is a substantial business with proven trading performance. Annual turnover exceeds 2.6 million.

The other business is located on the Mid-North Coast and is a Mini-Market with annual sales of just under 1.5 million. This business is listed for sale at a price of $400,000 + SAV which is estimated to be about $120,000. Adjacent to this thriving business is a 3 bedroom residence. The freehold of these premises is not available on the market; however, a long term lease is available. The present proprietors of this business are also selling their family residence which is located just ten minutes away, this freehold residential property consists of 5 bedrooms, 3 bathrooms, and an in ground pool with spa etc.

The block of ground the home sits on is 6593sqm and is now being offered for sale at an additional price of $1,250,000.

For further information on either of these opportunities please contact Wilsons Business Brokers and ask to be provided with a comprehensive Information Memorandum (IM).

Email: garth@wilsons.com.au

Or Phone: 02 4962 3388

Increased activity at the lower end of market

It is interesting to watch an increase in buyer activity for businesses from $50,000 up to $500,000. We are experiencing a phenomenon that has been fuelled by a fall in interest rates as well as a decline in the values of stocks on the ASX.

The consequence of lower rates is that retirees and particularly self funded superannuants have both a decline in their planned income streams and the face value of their share market portfolios.

Many of these folk who have been affected by these changes have considerable skills and still enjoy good health. Many of them are now contemplating buying a small business and some consider they may well be buying a job.

There has previously been a shortage of buyers in this market and an oversupply of small businesses. The tables are now about to turn.

We expect that it will soon become much more difficult to find good businesses as demand increases and existing business owners choose to stay on in business just a little longer.

We are not expecting the values of businesses to increase as a result of this increase in demand.  We expect the same principals and multiples of Future Maintainable Earnings will continue to be applied in the determination of values. The reason for this is that there is an acute shortage of funding available.

Most lending institutions are now applying more stringent conditions to the advancement of funds for the acquisition of small businesses. As a consequence most buyers need to utilise their own capital for acquisition purposes

THINGS A PURCHASER MUST DO WHEN BUYING A BUSINESS

 As part of our daily routine as Business Brokers we are often asked “what needs to be done by a purchaser of a small business to ensure everything is in readiness when the takeover happens?” Here is a list of some of the issues that in our opinion may need to be addressed

·        Establish an account with an electricity provider.

·        Establish an account with a gas provider.

·        Establish an account with a telephone company.

·        Obtain details of any equipment under guarantee.

·        Obtain details of any licence agreement.

·        Obtain details of any franchise agreement.

·        Obtain a letter of disclosure regarding the leasehold.

·        Arrange the assignment of  lease on the premises.

·        If in a shopping centre meet the centre manager.

·        Identify and list all suppliers.

·        Approach all suppliers to obtain credit and confirm payment details.

·        Identify any supply agreements and arrange their assignment.

·        Confirm the name of the trading entity that will be used to buy the business e.g. partnership, company, sole trader, trust etc.

·        Assign any trading name.

·        Assign any computer software.

·        Assign any intellectual property.

·        Identify all plant and equipment included in the sale and its written down value.

·        Assign the registration of any motor vehicle.

·        Assign any merchandising licence e.g. cigarettes, liquor, milk etc.

·        Confirm the employment of existing staff.

·        Arrange training if necessary with the vendors.

·        Identify staff, job descriptions, entitlements and reconcile same.

·        Appoint a solicitor to act on your behalf.

·        Appoint an accountant to act on your behalf.

·        Ensure you have some accounting method in place from day 1.

·        Establish a bank account in the name of the trading entity.

·        Establish a credit card/EFTPOS facility in the name of the trading entity.

·        Identify stamp duty.



Buying a Business

Purchasing a business can be one of the largest transaction you undertake in a life time.

No-one can afford to make a mistake with thousands of dollars at stake.

It has been a published view that 75% of all businesses fail in the first five years of operation.

At Wilsons we dispute the accuracy of these reports but we recognise that the chances of failure are far greater when buying a business privately or directly from an owner.

At Wilsons Business Brokers, every week we have the misfortune of telling some unfortunate vendor that their business is unsaleable.
We later find that the business is sold privately and some poor unfortunate purchaser has not known of the problems that lay in waiting.
The Australian Institute of Business Brokers (AIBB) recently conducted a survey which revealed that the failure rate of businesses sold by it's members was less than 2% over a five year period.

Business Brokers are a great safety net for purchasers in that if, in the brokers opinion, a business is unsaleable the broker walks away and leaves the problem with the vendor who often then distorts or even misrepresents in an effort to find some unsuspecting purchaser.

All businesses being offered for sake by WIlsons Business Brokers will have a tangible value and withstand the scrutiny of any expert in the field.

Prudent business brokers are aware of market trends and can offer purchasers valuable guidance and information to ensure the purchaser gets what is being bargained for.

Whilst Wilsons Business Brokers have the largest one-stop-shop of business listing for sale in their region, they don't always have what it is that you might be looking for.

In these instances Wilsons Business Brokers may know of a listing that could be purchased or they may know of one about to come on the market.

It is always worthwhile registering your requirements with Wilsons because you just never know when they may have the perfect business for you.

If Wilsons don't currently have for sale the business you are searching for, Wilsons can do the searching for you. Wilsons are often engaged to try and find specific types of businesses for people.

From time to time medium sized businesses often want to expand their current operations through the acquisition of some suitable compatible business.

To best understand your requirements it will be necessary for you to meet a representative of Wilsons Business Brokers.

All your requirements and expectations will be discussed in total confidence.

To make an appointment with a sales representative of Wilsons click here.

There is a compulsory process of self analysis that Wilsons believe every intending business purchaser should undertake. It is first of all essential to determine your alternat earning capacity (AEC). This is done by determining what you are worth in the labour market if you stepped out and sought to obtain a job as an employee for someone else.

The second thing to determine is what a reasonable return on the funds you intend to invest with the acquisition of a business.

Example:
If you intent to work 6 days in a business you may be able to find employment where you are paid a salary of $40,000 per annum.

If you intent to spend a total of say $300,000 on the acquisition of a business it is important to know what that $300,000 could return you if invested in something other than a small business.

You could buy some real estate, you could invest in the share market, or you could lodge the money with a bank or lending institution and earn interest.

Each of these alternatives has advantages and disadvantages, but if you assume that a return of 10% is a good target, this would provide a return of $30,000 per annum.

The sum of these two determinations ($30,000 plus $40,000) would suggest that, if you do not buy a business and instead obtain a job in the workforce and place your money in some other form of investment, your alternate earning capacity is $70,000.

If you chose to buy a business it is reasonable to expect that you will get a return of somewhere between 25% and 40% on your invested funds. i.e. $75,000 - $120,000 per annum plus a salary to renumerate yourself in relation to the effort provided.

Now you are on track and know what sort of return you should expect and look for when purchasing a business. Wilsons Business Brokers will guide you in the process.

Phone Wilsons Business Brokers on 4962 3388.

SELLING A BUSINESS

The most important decision for you to take if you are serious about selling your business is simple. "DON'T DO IT YOURSELF".

Selling a business is not an easy task. It is a process which involves a great deal of expertise and should be left to specialists in the field.

Wilsons Business Brokers has been established in the Newcastle region for over 60 years. They are your local experts in the sale of small businesses.

The process of negotiation is one of great importance and is best left to an expert who negotiates on a regular basis.

Wilsons have developed a comprehensive strategy for the sale of small businesses.

The first initiative is to ensure your business is listed for sale with all the required information collated in such a way that any intending purchaser can quickly make an informed decision based upon the information provided.

It is of course essential that your business be presented accurately and honestly, but it is just as important to ensure the business is presented in the best possible light.

To arrange for a representative of Wilsons Business Brokers to contact you and discuss the possible sale of your business, click here.

Or phone Wilsons Business Brokers NOW on: 02 4962 3388

Foreigners taking up residency in Australia.

The Federal Government is offering several initiatives to entice foreigners with specialist skills to take up residency in Australia. One of the visas most sought after, is the 845 visa. The requirements to qualify for this visa are very stringent and can in simplistic terms be satisfied once the applicant has owned a small business for a certain length of time. The business must have a certain value and must employ a stipulated number of existing Australian citizens. There are a variety of other different thresholds that must be achieved by the business before its proprietors are eligible to make application.  Once the business has been established in the name of the applicant for a given period of time, the individual can then make application for this much sought after 845 visa. Many immigrants are choosing to purchase businesses as a viable way of gaining residency and / or citizenship in Australia.  Further information on this visa can be found at the following address: www.immi.gov.au/skilled/business/845/

In Newcastle we have a wonderful university http://www.newecastle.edu.au/ which enjoys a splendid reputation for academic achievement. Many thousands of foreign students are enrolled in a wide variety of tertiary studies endeavouring to obtain qualifications and degrees in a variety of differing disciplines. Many of these students come to appreciate Newcastle and its fantastic way of life. Newcastle has a great deal to offer, and many overseas students feel they would like to take up permanent residency once they have been in the region completing their studies. Once they have graduated and gained their required academic skills, they can become eligible to contemplate life on a permanent basis in Australia. They can do this by purchasing an established business and the best way to for them to do that is to contact one of our sales personnel at Wilsons Business Brokers. At Wilsons are able to provide interpreter services if required.