27/09/2010 by info.

I was looking at a business forum today, someone was asking for help as his ex landlord was pursuing him for £13,000 in unpaid rent.

Basically his story was that he was buying another business and wanted to complete quickly on that purchase, so allowed the potential buyer of his business to start trading from his premises before the lease was assigned. Unfortunately the new owner of the business did not pay the rent hence the landlord asking the lessee to pay it.

Now this person was incredibly stupid, and the possibility is that his finances could be ruined because he wanted to rush the process of selling a business too quickly.

You should never allow a prospective new owner to start trading from your business before they have completed.

Unknown to me one of my clients did similar thing a year or so ago. I was talking to this client about the fact that they would be out of their business in a week’s time and they mentioned. “Oh I’ve been out for the last 2 weeks he has started trading already!” Now fortunately this owner suffered no loss, but if I had known this was their plan I would have advised against it.

I would suggest that it would even apply to training a new owner or letting them too much about your business. The very first offer that was made for one of the businesses I was selling was withdrawn without explanation. I spoke to the owner and she said that she was angry at him as she had spent hours and hours and hours with him telling him all about her business. No doubt she told him things he didn’t like.

So if you are selling your business, think twice before allowing a potential buyer inside knowledge prior to completion, it could mean that your sale could collapse. Or even worse never allow them to start trading without a legally binding agreement in place drawn up by a solicitor, as it could leave you financially ruined.

Posted in Selling Your Business, Buyers, General | No Comments »

25/09/2010 by info.

The value of your business is directly related to your businesses profitability and turnover, and for businesses with premises this has in the past been directly related to the businesses location.

Location, Location, Location was the mantra expressed. The greater the number of people walking past your premises, (the footfall), the greater probability that someone will see your premises and display and be inspired to browse.

Location however comes with a huge price and it is called Rent & Rates you can expect to pay a much larger amount in Rent & Rates for premises in a primary position compared to a secondary position.

This increases your breakeven point, risk, and cash flow requirements for your business, and leaves you vulnerable in a downturn. During the recession numerous High Street businesses went bust, because they could no longer cover the costs of their business.

The use of Social Media is one way of increasing your footfall without having that prime high street position, and I am surprised that more businesses are not using it.

For those who don’t know, I am talking about using of Facebook, Twitter, Foursquare etc to promote your business, the costs are low, the risks are low and your customers are already there! By engaging with your customers and potential customer you can increase your footfall and customer loyalty.

Lets take an example of a Hairdressing business.

During a Saturday you will have no problem with appointments, perhaps even you might have to turn business away, but there will be times during the week when your appointment book is empty. You could tweet special offers “First person to book an appointment for this afternoon gets £10 off our prices”

Or offer free haircuts to the major on Foursquare (you need to investigate!)

Or simply ask people to like your business on Facebook and become a Fan and create Facebook only discounts.

So perhaps you don’t need that High Street position anymore, and you can create a business model of buying cheap businesses and build up their profitability and value using Social Media.

Posted in Buyers, General | 1 Comment »

17/09/2010 by info.

The sale of a business is often the second largest transaction that a businessperson will have in their life behind the sale of their house. And a house sale will be of more interest to a Will Writer than an IFA. For some people it will be their largest.

A business owner invariably expects that the sale of a business will fund retirement; the proceeds will be reinvested in order to gain an income.

However when I am called into providing a marketing appraisal/valuation on a business prior to a retirement sale I am often met with the sentence. “If that is how much my business is worth I can’t afford to retire”.

The owner has assumed that his business is worth more than it really is, and is forced to either carry on working well into his 70’s or to place his business on the market at way above market value in the hope that someone will decide it is worth the over inflated price.

So I am shocked that no Independent Financial Advisor has contacted me asking for an assessment on a client’s business value, after all it is part of their client’s retirement portfolio. Surely they should be looking at ALL their client’s investments in their retirement planning advice? And this includes the value of their clients business. However what is seems they do is to either ignore their clients business or take their clients word for how much it is worth.

If an IFA knew the likely selling price of a clients business they would have time to help them plan their other investments to meet their needs I would have thought.

How many times has this oversight by a business owner and his IFA lead to their client having to work well into their retirement? Or having to retire on a much smaller income?

Posted in Selling Your Business, General | No Comments »

14/09/2010 by info.

About 15 years ago before I started selling businesses I was a consultant for Petrol Stations around the South of England, one of the chains I advised was Esso Petrol Stations.

Around that time Tesco’s started an agreement with Esso to rent some of their larger sites and to re-brand the shop as Tesco’s.

I was telling a client what was happening and he said, that Tesco’s would not be interested in his Petrol Station in Haslemere as there is a Tesco’s a mile down the road. I replied to him that I wouldn’t bank on it because Tesco’s don’t really care whether every shop in the country was Tesco’s.

I was absolutely correct.

Today I tweeted the fact that Tesco’s have 15 outlets in Norwich and received a large number of retweets, clearly this is an issue that strikes a nerve with a lot of people

I am not anti Tesco’s but I do not think that bigger chains like this are good for the economy and I would only wish that customers would support local businesses more.

Some of it is purely selfish as the less independent businesses there are, the less there are for Horizon Business Agents to sell, and it affects the total market size for selling businesses. Having all these larger companies dominate the high street damages the local economy in other ways as well.

Why?

These worried residents in Dorking, Surrey explain some of it on their website.

Perhaps therefore you should be supporting towns such as Sheringham, Norfolk who are opposing planning permission, they know what it will do to the town and local economy.

Posted in The Economy | No Comments »

13/09/2010 by info.

It is often overlooked that the Internet is a new invention. In the early days in the growth of the Internet, businesses often did not use a website to market their services.

When the domains were bought, the business owner did not consider that they were buying an asset which he would develop and which would form a major part of their business goodwill.

Registration of a domain is very simple, you fill in a form and pay a few pounds and register the domain name. And because it was very simple, business owners gave no thought to the process.

A domain name and website are important assets of a company and its goodwill, and in effect for many businesses its value lies in its website.

Now you find that some businesses do not own their own domain name, the business is a limited company but the director registered the domain in their name. Or even worse, ownership belongs to the company who purchased the domain on behalf often the website designer or the Welsh Tourist Board. Or even that your business does not own all variations of the domain name.

Now let assume that your business becomes successful. You appear on Dragons Den and obtain investment from Peter Jones and Duncan Bannatyne, your businesses goodwill suddenly increases in value, your domain name is now worth a lot of money.

Surprisingly then, the business Wothenshaws did not own worthenshaws.com, the current owner is offering the domain, and has it seems turned down an offer of £5,000 for the domain.

More surprisingly worthenshaws.co.uk which currently links to the main website is currently registered as being owned by an individual. Surely, Jones and Bannatyne carried out due diligence on the company assets ensuring they have a legal right to the domain before making a large investment?

I was recently told by a client that they had sold a business privately, however I look at the registrant of their website and it is still in the name of the old owner. I wonder does the new owner recognise that they have forgotten to transfer the main asset of the business before completion? We as business transfer agents would not forget, it seems that the buyer and their solicitor may have and as a result potential problems could result in the future with a further sale.

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