31/03/2009 by info.

For the candidates, The Apprentice is about impressing Alan Sugar to the detriment of the other team members. To the producers its all about entertainment, and drama. In reality however it is really about taking part in simple tasks that test basis business acumen.

This series, the cleaning task was about recognising that profit is more important than turnover. The task was won and lost in the first hour when one team spent considerably more than the other thinking that a budget was a goal.

This week’s task is the catering task, what does this test? Well surely it is all about buying the right amount of stock to meet the forecast demand, and I am sure that the task will be won or lost not on whose food is the tastiest but on who throws away the most food.

Who can forget Syed Ahmed incredibly ordering 100 chickens for 500 pizzas, losing his team the task?

I wonder, do The Apprentice candidates look at the previous series and recognise what a task is designed to test? I’m sure they don’t, they never learn from the mistakes made in the previous series.

Do business owners who want to sell their business learn from their and others sellers mistakes?

Do they carry out proper research before they decide to sign a contract with a business transfer agent?

Do they ensure that their financial information is current?

Do they clean their premises and remove redundant rubbish?

Sellers make the same mistakes time and time again, and then they wonder why they cannot sell their business. Even after being given feedback, they do nothing about it.

The buyer is in effect firing businesses from THEIR reality show, every single time that they view, and decide that that business isn’t worth the asking price.

Unfortunately just like in The Apprentice the seller often doesn’t learn from his own mistakes even though they have personally taken part in every previous series of the show.

Posted in Selling Your Business, General | No Comments »

30/03/2009 by info.

Buyers often ask me what is a good business to buy? The answer is, a good business to buy is the business that suits you in the long term. A business is for life not just for Christmas, a play on a now famous slogan.

The question they really wanted to ask is “What is a good business to buy in a recession?” as they don’t want to have the risk of failure.

Ok so here are a few ideas after 30 minutes thought on a Monday morning:

There is a saying that there are only two certainties in life, death and taxes, so the first category would be to buy a business that regardless of the economic climate people will always need. On the basis that if someone has to eat sure as hell someone has to sell.

Next is to look at the way a person changes their behaviour when they are afraid, so buyers will be more driven by fear than pleasure. So look for the business that reduces peoples fear and loss.

People reduce discretionary spending and substitute that spending. So they may not buy a new car but use a proportion of that money in the maintenance of their existing car.

People may not be able to carry out their preferred plans so look for alternatives, so if they can’t sell their houses they will look to rent them.

Certain people will be in distressed financial situations - due to debt for example, so look for a business that helps or is associated with this distress.

I often look back 20 years ago at Films and TV programmes at the technology that was in use then, how they have changed in such a short period of time. So you should be looking at existing businesses and seeing how new applications or technology can improve that business.

You should always be looking for products that are on the upward slope of their Product Life Cycle, there is still growth in that market. And if you are really just looking for something to do before the economic boom starts, perhaps you can look for products with short life cycles, in other words a fad - to make a quick killing.

Of course some people will never start in business due to fear, the pure fact that you have taken that step means that you have a much greater chance of being successful in a recession. “We only have one thing to fear and that’s fear itself” as FDR said in his inaugural address.

So what are you waiting for there’s plenty of opportunities out there!

Posted in Buyers, The Economy | No Comments »

23/03/2009 by info.

If you have not read Richard Koch’s “The 80/20 Principle” perhaps you should, it has applications thought your life.

In business this 80/20 Principle suggests that 80% of a businesses profits come from 20% of that businesses efforts, Business Brokerage is no different.

I was trained by a very experienced, no longer with us, Business Transfer Agent called Todd Barriscale, who told me that he didn’t actually want the Internet to take off and that he never supported any new venture because he simply wanted one place to advertise, that was at that time Daltons Weekly.

Now is well known there are a multitude of places a Business Agent can technically place an advert for a business for sale. In fact on a regular basis I receive telephone calls from new websites offering free advertising if I place my businesses for sale on that website. I always decline, why? For the simple reason, for the same reason Todd gave, it simply increases the effort for no return, time is a cost in business.

That is the reason why most Business Transfer Agents primarily use two websites, businessesforsale.com and daltonsbusiness.com.

Business Transfer Agents are also working on the premise that buyers are also using the same 80/20 Principle. Buyers will find a website at the top of the search engine rankings find plenty of businesses for sale and search that website.

If Business Brokers advertised on all websites available and in all publications they would simply be spending all day updating websites for price changes etc, not a productive use of their time.

So if you want to buy a business in the UK, simply visit the websites at the top of the search engines no further; they will list most of the businesses on the market.

If you are one of the new websites, get to the top of the search engine rankings, perhaps then you will persuade Business Agents to advertise with you.

Posted in Selling Your Business, Business transfer agents | No Comments »

20/03/2009 by info.

There are reports that EU Commission proposals to remove the obligation for small companies to file annual accounts at Companies House could restrict small firms’ access to credit, as removing annual accounts filing would make it difficult for banks and credit insurers to assess the viability of Companies.

However small firms are already not helping matters as many of them currently file abbreviated accounts at Companies House. This already affects these Companies access to finance. If these businesses were to file their full accounts, they may find that more and more lenders would be willing to lend greater amounts to them.

Why am I telling you this? It is because business owners often make small decisions without thinking about the consequences of these decisions.

The decision to try to hide information from anyone external to their business may actually hurt their own business and mean that they cannot obtain the funding that would make their business more profitable and increase its value. This simple decision may even lead to liquidation or receivership.

Business owners should always have one eye on their exit strategy, and consider what impact any decision may have on their businesses value and saleability.

Perhaps the first decision should be to file full accounts with Companies House from now.

Directors should not be so naïve to think that a prospective buyer would not obtain a credit report and use that information as part of their due diligence, and ultimately as part of their own assessment as to the businesses value.

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18/03/2009 by info.

Life and Business Coaches are taught that if someone makes a negative comment that that comment should be reframed. Reframing is simply changing the meaning of an event or experience. The same way that placing a picture in a different picture frame somehow changes the look of it.

So today it was announced that unemployment has passed two million barrier in the UK. Now I am not suggesting that this is not a stressful situation. However perhaps being made redundant is a blessing in disguise for some of those people, allowing them to move on from a job that they hated and towards something much more rewarding such as running their own a business.

Speak to thousands of self-employed people and business owners and they will tell you that being their own boss was the best thing they ever did. Just because someone may have been made redundant at the age of 55 it doesn’t mean to say that their working life is over.

In fact the vast majority of business buyers are between the ages of 45 – 55 exactly the age when employers start to discount them in the recruitment process. This age group however has significant life experiences and plenty of transferable skills, together with the training that is offered by a seller of a business; this often equals a recipe for success.

So for anyone who has recently been made redundant the best thing you can do, if you have funds, is to think about of buying or establishing your own business. At least you can then be guaranteed that you will never be made redundant again.

Posted in Buyers, The Economy, General | No Comments »

10/03/2009 by info.

Buying a business is considerably less risky than establishing one, however it can have its downside as well if your legal team do not ensure that the T&C’s of the sale are watertight.

One area of concern is often the strength of the ongoing trade and whether new ownership will have an effect on whether customers still wish to use the business being bought.

This seemily is what happened to the owners of Patisserie UK the makers of macaroon bars in Scotland. They were bought by Lees Foods, however their major customer Costa Coffee who represented 75% of their turnover decided to end the agreement only three weeks after completion.

The loss of three quarters of the turnover has of course lead to the business losing all of its value and the sellers are now being sued under the warranties contained in the sales agreement. I assume that the buyers are suggesting that the sellers knew or should have known that this contract was not going to be renewed and failed to disclose the fact.

Perhaps though Costa Coffee did not like the change in management?

This can often happen with the smaller business, and a buyer should make enquries as to whether the profits of the business is as a result of the personal goodwill of the owner. I.e When John and Linda sell their business their customers simply decide to use another supplier as they only used that business because John and Linda ran it.

When planning their exit stategy, the seller of a business should try to ensure that their business is not based around personal goodwill.

The business may have been obtained via networking and personal recommendation however it is part of the planning process in selling your business to ensure that you then withdraw from the ongoing business of maintaining that customer. That XYZ Ltd, customers obtained from a breakfast meeting referral, are used to dealing with Fred in the sales department rather than John and Linda.

Only then does personal goodwill become your businesses goodwill and a buyer can be sure that you have something to sell, and they have something of value they can buy.

Posted in Selling Your Business, Buyers | 1 Comment »

09/03/2009 by info.

Competitions to win a house started at the start of the residential property slump because the owners could not get the price they wanted for their property in a falling market. It was hoped that although one person was not willing to pay the asking price by selling 20,000 tickets the owner could obtain the money they wanted.

Now business owners, unable to obtain the price they want for their business are starting to run a competition in desperation to offload their businesses.

There are currently two pubs you could win that I am aware about, the Filly Inn, in the New Forest, which the owner say is worth £400,000 Leasehold. Yeh right, so is my pen! http://www.win-pub.com/

And now the Plash Inn, in Wales, which is all the tickets are sold the owner will gross £600,000 for their Freehold pub http://www.winapubinwales.co.uk/

Now the simply question I would ask is, if they wanted to sell and couldn’t sell at the current asking price why not simply reduce the asking price rather than run a competition?

The answer probably is that they need the amount of money the competition would give them to get out of debt, and that is often the main criteria for business owners valuations of their own businesses.

Business owners think well, I bought it for £100,000; I have spent £10,000 on it I have an overdraft of £5,000 so I would need £115,000 net proceeds to get out of debt and recoup my investment. So they place the business on the market at £130,000 even though it is worth only £80,000.

Interestingly enough neither of these pubs is willing to disclose how much or little money they are making, so are you simply entering a competition for a poisoned chalice?

Somehow I think they will find that 30,000 – 40,000 people would not be willing to buy tickets knowing that firstly they would need a license to run the pub, secondly that they would need a significant amount of working capital in addition to their £10 - £20 stake, and finally knowing that running a pub could ruin them financially, as they would not know how to run a pub.

Let’s keep an eye on the links to see what happens, my personal opinion is that they are simply wasting time and at the right price these pubs would sell.

Posted in Selling Your Business, General | 1 Comment »

06/03/2009 by info.

Imagine you are driving along the motorway, the road is clear and you can drive safely at 70 mph without any trouble.

Now image trying to drive at that speed in rush hour traffic, what often happens is that someone gets concerned about whether they are too close to the car in front, they apply their brakes, you are not sure about how quickly they are slowing down and you apply your brakes. This creates a pulse and leads to all the cars on the motorway coming to a halt.

This could be used as an analogy for the recession, as there were simply too many businesses trading, leading to inflation. The brakes were applied and everything stopped, in fact there has been a big crash.

So now the Bank of England has further reduced base rates and has decided to take the route of quantitative easing. Quantitative easing without being too technical is the creation of new money out of ‘thin air’ by a central bank, its injection into the banking system, which allow the bank to technically lend the money to others. It is the same as creating another lane on the motorway.

It is now hoped that all of the cars on the road can continue along their journey simply by some of them taking the new lane on the motorway, or having access to this new money.

But wait it was the banks who were policing this motorway in the first place, the motorway grinded to a halt because they gave money for everyone to buy old cars, and then feasted on hamburgers and pizza on the hard shoulder out of their profits.

It these same banks do not lend this new money, and let people move into this new lane then the economy will remain blocked.

What is needed is for the banks to use a great deal of business acumen, being able to recognise the businesses that should survive and the businesses/old cars that should be scrapped.

Do the chief executives of the banks and your bank manager have this business acumen? To recognise a good business opportunity when it is presented to them? Some of them couldn’t even run their own business. So we will see.

Posted in The Economy, General | No Comments »