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.

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

04/08/2010 by info.

The Goodwill in a business is the future profits of that business, in other words a buyer is buying next years profits.

However, buyers when they carry out due diligence do not understand this fact. They spend time and money verifying the past turnover and historic performance of the business and ask their accountant to look at the latest accounts in detail.

This is important but historic results are no guarantee that a buyer will be successful.

What is often seriously lacking in the due diligence process is an investigation of whether the buyers plans for the business will work.

You see it time and again when new businesses open, they open the doors trade for a little while and then close down. Or a business owner buys a business tries to change that business but fails.

So when you are looking to buy a business perhaps your due diligence should not be aimed so much at proving that the seller is not telling the truth about his profit, but on ensuring that you as a future owner can increase that profit and that you can increase the value of the business.

Posted in Buyers, General | No Comments »

30/07/2010 by info.

It always amazes me that some business owners do not actually know how to run their own business, or fails to properly plan that business.

Sometimes however this is good news for a buyer, but it requires them to have vision to see behind the badly run business presented before them.

This can be perfectly illustrated by the series Mary Queen of Shops where Mary Portas (who was responsible for turning Harvey Nichols into a leading modern fashion brand) troubleshoots her way around the UK on a mission to help turn around struggling businesses.


Mary Queen of Shops - Maher and Sons Part 3/3
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