Why Businesses Will Sell Up In January

Advice for people looking to Buy a Business

Business Sales to Increase in January

The turn of the year will see a raft of businesses coming on to the market.

A lot of retail and licensed business owners have been hanging on for the Christmas trade which, historically, is when turnover and thus profits are high.

If, as economists fear, spending will be down on the high street and consumers will be holding back on nights out, then a disappointing festive period could prove to be the last straw for many already struggling business owners.

We know that bars and restaurants are largely struggling as it is. The majority of owners rely on a busy December to see them through the quiet first quarter of the year and if the spend is low, which is expected, then many will simply close the doors or attempt to market their businesses for sale. Retail businesses could suffer a similar fate as consumers head to the online marketplace in increasing numbers.

If you are considering selling your business either now or in the future it is well worth speaking to Roberts Commercial in order to assess the market and to obtain a Free Valuation.

Jason Roberts Property and Business sales Specialist

Jason Roberts is a Property & Business Transfer Consultant with Roberts Commercial. Contact Roberts Commercial on 0191 280 3285

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Buying a… Newsagent Business

PART 2

In this article we focus on buying a Newsagent Business.

Remember when the only place you could buy a newspaper was your local newsagent shop? How times have changed. Not only are newspapers widely available through other retailers they are often also free in certain locations. Over the years this dilution of the printed media market has affected the humble newsagent and the number of businesses has declined in general terms.

However, on the upside of this it would seem that the newsagents that are in existence are largely good, strong businesses. Many have expanded their product range to include groceries and alcohol, other services such as National Lottery and PayPoint have also ensured a good footfall.

Of course, when it comes to buying a newsagent business you should bear in mind that the more benefits a business has the greater the turnover should be. In turn this will result in a high purchase price. Alternatively if you have a limited budget you should look for a business that has a lot of potential. Perhaps one that opens late and closes early, could be extended to provide more retail space, could become licensed and needs a refurbishment. The trick is to take advantage of all of the things that the owner has missed or does not do. Look out for retirement sales where the owner may have taken their foot off the pedal for the last few years.

Newspaper delivery rounds are becoming less popular with purchasers. As owners find it more and more difficult to keep good and reliable delivery staff buyers are not keen to take on businesses with a lot of deliveries. Besides, customers coming in for a daily paper are more likely to buy other products/services whilst in store thus increasing revenue.

The top 5 considerations when buying a newsagent are:

  1. A deposit will need to be paid to the Newspaper Distributors, this is usually equal to around 2 weeks worth of newsbills at cost. This is because you will be paying in arrears for the newspapers and protects the distributor from businesses ‘clearing off’.
  2. If you are taking over a National Lottery terminal you are not guaranteed to be accepted as a Retailer. Camelot states on its website:We sign agreements with individual retailers, so if a retail outlet changes hands, we terminate the existing Retailer Agreement. However, you can register your interest in having a National Lottery terminal but will be treated in the same way as any other new registration. If we select you as a National Lottery retailer, you will have to sign a new Retailer Agreement.
  3. Early mornings! Unless you are an early morning person you are either going to have to think again about your choice of business or get ready to be very tired. If you have a Lottery terminal you are also duty bound to open until the cut off, usually 7:30pm on each Lottery night. Most newsagents are open 7 days a week so this is a very intensive business.
  4. Wholesale Weekly Newsbill (WWNB). A good sign of how good a newsagent business is is the WWNB. The higher the better. The WWNB is the amount of money that the retailer pays the distributor each week to buy the papers in. Newspapers are bought at cost price so the figure is usually a good indication of how many papers a business sells and therefore, usually an indication of the business as a whole.
  5. Position. This is true for most businesses but even more so for a newsagent. The business will rely on footfall and passing traffic. Look at whether customers can park outside and run in for a paper. Yellow lines don’t matter too much as people generally ignore these for a quick dash in (we’re not condoning illegal parking). Fences, barriers and the like will put people off however. Look out for businesses on a high street or near a school, college, hospital or similar.

A word of warning: Make sure that any turnover figures quoted DO NOT include the takings for Lottery and Paypoint/Payzone as this money does not belong to the business. Only include the commissions which are, in general 5% of Lottery takings and 0.5% for Paypoint (average quoted figures)

If you are considering buying or selling a newsagent business then please let us know and we would be delighted to help and advise you.

The ‘Buying a…’ series of articles aims to help and advise people who are thinking of buying a business. Reproduction of part or whole in any form is strictly prohibited without the express prior written permission of the author.

Jason Roberts is a Business Sales Expert, Commercial Property Consultant and owner of Roberts Commercial. Contact him on 0191 280 3285

Buying a Business – Part 1. General Advice

Advice for people looking to Buy a Business

This is the first of a series of short articles offering tips, advice and knowledge about buying a business. Whilst this post shares some general advice subsequent posts will be more industry specific.

Look out for the forthcoming ‘Buying a…Newsagent Business’, ‘Buying a…Convenience Store’, ‘Buying a…Post Office’, ‘Buying a…Restaurant’ and many more. In fact, if there is a particular business type that you would like us to write an article about then please let us know and we will be happy to accommodate where we can.

BUYING A…BUSINESS

So you want to buy a business but don’t quite know where to start. There are so many different websites all promoting businesses across dozens of sectors, it can seem a little bit daunting at the time and in the excitement of your new journey it can be easy to make the wrong choices.

Firstly, narrow down your choices so that you can focus on what you really want. Look for a business that fits in with you, your abilities and your interests as much as possible. If you don’t like early mornings you may want to steer clear of buying a Newsagents business, if you enjoy cooking and preparing food you may want to look at buying a tea room, coffee shop, cafe or small restaurant. Sometimes a certain business may seem appealing but if you have no passion for it and lack interest and a degree of experience you may find you start to lose interest quickly.

Once you have decided on what type of business you would like to buy you will then need to ask yourself the following questions:

  • What is my budget? Not just for the purchase price but also for things like stock and working capital. Remember too that you will have fees to pay on the purchase eg solicitors, accountants, stock takers. Will you need to budget for any upgrades, alterations to the current business? Your budget may also dictate whether you can buy a freehold business (where you own the building) or whether you opt to go for a leasehold business (a landlord will collect rent from you and you do not own the building). As a very general rule of thumb, if you are getting bank funding, a bank will lend you 50% of the purchase price for a leasehold business and around 65-80% for a freehold business
  • Do I want to live on or off the premises? You may be looking for a ‘Lifestyle’ business where you would most likely live within or adjacent to the premises. Sometimes you will not necessarily need to live on the premises nor indeed would you want to. Living over a late night pub or club if you have a young family, for example, may not be suitable. If you live off the premises then ask yourself…
  • How far am I prepared to travel? I have sold countless businesses because the owners underestimated how dull and energy zapping travelling long distances twice a day would become! Unless you love driving, a business that is  further away than 20-30 minutes drive may soon become a hassle rather than a passion. In reality you will be backwards and forwards more than twice a day, you may have deliveries, cash & carry runs etc.
  • Do I need qualifications and/or training? Some businesses will require you to have qualifications and may also require you to keep up to date with laws and regulations. Even running a small corner shop will require that you have a Personal Licence for the sale of alcohol, a Post Office will require you to go through a ‘job application’ and interview process and food businesses will require that you have relevant hygiene certificates.

The list of questions that you should be asking yourself is almost endless and depends on the type of business that you are thinking of buying. Over the course of this series of articles I will give relevant advice relating to specific businesses from spotting a good opportunity and asking the right questions to doing your due diligence and taking advantage of untapped potential.

Get in touch if I can help with any other query relating to buying a business or selling a business.

Post by Jason Roberts, a Business Sales Specialist, Commercial Property Expert and MD of Roberts Commercial Ltd, 0191 280 3285 enquiries@robertscommercial.co.uk

Is the Commercial Property Auction Route Suitable for You?

Roberts Commercial Auctions

The Modern Method of Valuation

In the commercial property world it is becoming more widely acceptable to sell through auction. In fact, it is a method used by individuals, property companies, local authorities, receivers and pension funds.

However, not every commercial property is suitable for inclusion in the auction process. You motivation for selling has the greatest bearing on whether your property is suitable. In short, you must want to sell the property and sacrifice the price. The main benefits of selling at auction can often outweigh the reduction in expected price. In a traditional auction a legally binding contract is formed on the fall of the gavel. In a modern auction a non refundable deposit is paid by the purchaser and exchange of contracts must take place within 28 days.
In short, there are a lot of certainties when selling through auction and it is this that often motivates a property owner to sell through this method.

Some vendors are often nervous that the property will sell for less than they require. This is not the case as a ‘reserve’ price is agreed between you and the auctioneer. This reserve is not disclosed to the auction room and if it is not reached then your property is withdrawn from sale.

The modern method of auction can also include an on-line auction facility prior to the actual auction. This ensures wide coverage and marketing of your property and a countdown timer showing when the auction is due to end can often stir up more excitement. Some properties are sold prior to the auction day using this method and a non refundadbale deposit is still obtained ensuring more confidence in the sale proceeding to completion.

One final benefit, especially in the modern auction method is that the purchaser will often be required to pay the agent/auction fee. This means that the property owner can most often sell a property for 0% agents fee which will save at least £3,000 on the average property sale.

For more information or to request a free appraisal please contact Jason Roberts on 0191 280 3285

Speculative Marketing

Get in the Running to Sell Your Business

With the London 2012 Games just around the corner I was lucky enough to be a guest at a talk given by Olympic Silver Medallist Roger Black this week. One of the themes running through his presentation was the importance of taking opportunities when they present themselves. In the business sales world the best way to take advantage of opportunities is to create them yourself and you can do this by putting your business on the market.

This week I have carried out several business valuations for individuals who are unsure whether now is a good time to sell or not. Indeed, a couple of them were unsure as to whether they wanted to sell at all and were merely obtaining a valuation so that they could way up the options available.

If you are in a similar situation then my advice is to put the business on the market. This is the surest and quickest way to satisfy your curiosity. No-one will make you sell the business if you don’t want to so, if the offers are on the low side or don’t meet your expectations then don’t accept them. On the other hand you may be pleasantly surprised by the offers and so agree a sale.

It is a win win situation in that you either sell the business for a price that you are content with or, the business doesn’t sell and so you know where you stand and can plan the future accordingly.

Quite often business owners think that if they are in a good enough location or the business is well enough regarded that a buyer will walk through the door with a blank cheque. I represent buyers too and I can tell you that this doesn’t happen anywhere near as often as it used to. If you are holding out for this I would advise initiating a Plan B.

Speak to a local Business Transfer Agent about possible opportunities in your sector. What is demand like? How long are businesses like yours taking to sell and is it worth putting the business on the market speculatively?

If you’re not in the race you can’t win it and if your business is not on the market you can’t sell it.

Jason Roberts is Managing Director of Roberts Commercial Ltd and is a Business Transfer and Commercial Property Expert. For Free advice call 0191 280 3285

Plan ahead for when you want to sell your business

We invited Matt Boyd of Jones Boyd Accountants  to write a guest post about planning ahead.

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Obviously if you are thinking of selling your business at some point it is best not to be rushed into it. Therefore top business gurus recommend you start thinking several years ahead.

There are 16 positive steps you can take to make your business more saleable, receive a higher price and keep more of the cash!

Guess what, implementing these steps will not only mean ultimately receiving a higher price for the business, but you should enjoy higher profits prior to disposal than you would otherwise have done. A true double whammy!

Working with the right accountant in the lead up to selling your business can mean retirement is all the sweeter. Alternatively if you are not yet ready to retire you will have more money to invest in your next business venture!

I have prepared a report detailing the 16 steps you need to take to sell your business for more money! Email me on mattboyd@jonesboyd.co.uk quoting “sell my business for more” in the subject line and I’ll rush you a copy.

Matthew Boyd

(0191) 3864739

www.jonesboyd.co.uk

Beware the Telesales Business Transfer Agents

How to spot and avoid the bogus business agents

Every week I hear stories about business owners being hounded by telephone calls from certain companies asking if they can sell their business.

The telesales operative will describe how the market is buoyant and they have buyers waiting for your business. Great!

“Can our local agent call to give you a free valuation?”

It seems an offer to good to miss, a FREE valuation and waiting buyers, what is there to loose?

Queue the hard selling salesman. Note, I said salesman and not Business Agent. In my opinion they are there to sell a marketing package and false hopes and can charge an upfront fee of anything between £500 and £3000*. The valuation is often very high and this is the ‘hook’. Why wouldn’t you want to sell when the salesperson tells you they have a list of waiting buyers looking to pay 20-50% over your initial expectations.

The business then goes on a list with thousands of others. The chance of selling? Very slim.

You will never see the salesman again and instead will deal with a call centre; there is very little if any accountability. Oh, and when you ask to withdraw from the agreement because you are either disappointed with the service or you have decided not to sell they will point out the withdrawal fee that you didn’t know you had agreed to.

My advice is do not listen to the false promises of telesales agents and salespeople pretending to be Business Transfer Agents. Stay local, use an agent who knows the region, the businesses and business people in it and someone who will ALWAYS be contactable directly.

Make sure you find out where the agent is based; where is the head office? Who owns the company? Where will the business be advertised? How can I get in touch directly?

The best service will likely come from a small, independently owned agent with a smaller book of instructions as you will get a more attentive and focused service.

Remember, as with anything, if it sounds too good to be true it probably is!

-Jason Roberts is the Managing Director and valuer at Roberts Commercial, Business Transfer and Commercial Property Agents based in the North East of England

For more information contact Jason directly by emailing jason@robertscommercial.co.

Or telephone
07727 699 604
0191 280 3285

Roberts Commercial Home Page

*even some reputable agents charge a small fee in advance. Ensure it is reasonable and fair for the services offered.

What Estate Agents Don’t Tell You About Price

As this is a blog about Business Sales and Commercial Property I try to always make sure the posts are ‘on topic’. This one is no different except   that it applies whether you are selling a business, a commercial property or a residential property.

My advice in this post relates to Price. How can you guarantee the sale of your property or business?

When selling a property you will no doubt hear the phrase ‘marketing price’. An estate agent may tell you that the value of your property is £x but the ‘marketing price’ should be £y which is usually a higher figure than the valuation.

In order to sell there has to be a demand for what you are offering. Well, here’s a little secret…there is ALWAYS a demand for what you have to sell. If you trying to sell a property or business now and have had it on the market for weeks or months without so much as a sniff then you may feel you want to take me to task on that statement. Consider this though. The demand is there for the ‘product’; if you haven’t had interest it is not because people don’t like your house, office block or business it is because the price is high relative to similar properties that have sold.

Every week at least one person will tell me that they ‘need’ a certain price for their property. “I can’t sell for £x, I need £y. Let me tell you now that if your property/business is worth £100,000 and you need £150,000 you should take it off the market, you are merely filler for an estate agents advert. You may as well need £200,000 or £300,000. The price you get is not up to you, it is in the hands of the wider market, the proceedable buyers. Once you have an offer you can negotiate the finer price, at that point you do have some control but in order to get an offer you need to get a viewing. In order to get a viewing you need to get the phone ringing and for that to happen the price has to be realistic.

When vendors say ‘there’s no demand’ what they mean (whether they know it or not) is that the people who demand their property are not prepared to pay a high price. Unless there is a significant reduction in price the property is going nowhere.

I love the auction scenario where a low price is the start point and people bid in order to get to the market price. Unfortunately a lot of vendors do not like auctions so instead we employ agents to market our properties for a high price in order to come down when we get an offer. Unfortunately it is difficult to get an offer because the perception is that the price is too high.

One last secret for you…it is impossible to sell your business or property too cheaply! Who has got a gun to your head telling you that you HAVE to accept an offer? You are not committed to accept any offer that is not acceptable. So try this and it may well put a smile on your face…put your property on the market for a fair bit less that you want eg value = £100,000, market for £90.000. What will happen? You may get zero interest, in that case the real value is not £100,000 it is unlikely to be £90,000 either. Another scenario is that your agent rings you with 5 viewing requests in one weekend. On monday you receive 3 offers of differing amounts. Your agent suggests best and final offers or sealed bids and you are likely to get at least the asking price but don’t be surprised if you get close to the £100,000. All 3 buyers are keen because they know it is cheaper than the asking price for similar properties and none of them want to lose out.

Why don’t Estate Agents tell you this at the start? Because there is always the renegade ‘overpricer’ in most areas. The agent who promises to get you higher offers than the other agents and charge you a lot less. This makes it very difficult for the hardworking, realistic agent to offer advice which relates to a low asking price.

Get creative with your price and increase the chance of a sale.

For more advice on price or any other property matters contact Jason Roberts of Roberts Commercial

0191 280 3285   jason@robertscommercial.co.uk    www.robertscommercial.co.uk

Please Don’t DIY!

STICK TO WHAT YOU KNOW

Everyone is trying to save money where it is possible to save it. However, in my work I am seeing more and more people choose not to employ the correct advisors in order to save money. The inevitable upshot of this is that it costs more in the long run.

Usually where clients try to cut corners is with accountants and solicitors.

I am a great believer in speaking to and taking advice from the right person. Because I sell businesses I know my way around a set of accounts but I wouldn’t dream of doing my own…I don’t know the current rules and legislations surrounding all of the component parts. Subsequently, I pay a good accountant (I have to say that he might be reading this) to take care of our financial affairs. It would cost a lot more in time and money if I didn’t.

My top advice for this post is to use a solicitor when one is required and the right solicitor too! I had a client in the past who used a family law specialist to do commercial conveyancing tied into a business sale. It did not go smoothly and nearly fell apart at the last minute.

Do NOT, never, never ever print leases off the internet! There are very few websites that offer good leases but drafting it up properly to reflect the correct circumstances and stay the right side of the law is certainly not straightforward. You wouldn’t take on the conveyance of your own home and commercial property lettings are a lot more in-depth than a residential Assured Shorthold Tenancy. If you are dead set on supplying and drafting your own lease be prepared for the other sides solicitor to send it back again and again and again. The more work they have to do on the lease the more they will charge their client (depending on how they charge) and the more this is likely to upset them. The easiest thing to do is get in touch with a good solicitor from the outset, it will save you money, time and stop you from pulling your hair out…afterall, you don’t see many bald solicitors!

Ask friends and colleagues for recommendations and if you get stuck feel free to give me a call, I am always happy to help and make recommendations.

Jason Roberts writes for Roberts Commercial Ltd. Commercial Property Consultants and Business Transfer Agents in North Tyneside.

Jason can be contacted on 0191 280 3285 or directly 07727 699 604 jason@robertscommercial.co.uk or fill out the contact form

www.robertscommercial.co.uk

Selling Your Business in 2012

IS 2012 THE RIGHT TIME TO SELL MY BUSINESS?

The first thing to establish is whether it is the right time for YOU. Don’t judge it first and foremost on the market or what you think might happen in 2012. Forecasters, bankers, businesses and politicians have, for the past 3 or 4 years been heard saying that “things will pick up next year”. They all got it wrong and we all got it wrong. The economy, as we all know has not improved at all in recent years. So tip number one is don’t try to predict the future.

WHAT IS MY PRIMARY REASON FOR WANTING TO SELL?

If you are retiring or you have health issues preventing you from carrying on then these are genuine reasons for sale. Starting a family can also affect your ability to run a business. However, many successful businesses are owned and operated with a baby on board so to speak. Consider offering a trusted employee more responsibility whilst you enjoy the flexibility that owning your own business can bring. If you really need to sell then prepare in plenty of time and make sure that all of the paperwork is in order. See our post 7 Ways to Prepare Your Business For Sale

If your primary reason for selling is that the business is under performing, losing money, owing money or struggling in any other way then consider this: Most business that are for sale due to onerous circumstances such as those described rarely sell successfully, fact! Surprisingly, it is not neccessarily because the business is failing that it doesn’t sell it is more likely the price. So tip number two is if you want to sell quickly price the business for a quick sale. Forget pride, don’t hold onto the notion that the business is worth more because it is long established, don’t concern yourself with what the wider community will glean from you selling up for ‘cheap’. If you hang around and put off offering the business for a realistic price I can promise you that you will get nothing for it and likely be left with a lease, stock and other bills you can ill afford. Once you make the decision to sell do it quickly and ruthlessly.

WILL YOUR BUSINESS BE WORTH LESS BECAUSE OF THE ECONOMY?

In short, yes. Most business valuations are linkled to performance and in particular multiples of the adjusted net profit. If the net profit is down the value of the business is down. Of course this is also true in reverse, so if you have seen increased net profits the chances are the value has increased too! It is, as you would expect, not always that straight forward. Why not read our post How to Value Your Business which will give you some further pointers. You should always consult with a business transfer agent selling businesses is their job afterall.

It is expected that 2012 will be a busy year with more businesses coming to the market due to poor trading conditions over the last few months and a worse than expected Christmas period. However, I believe that with unemployment on the rise that there will be more buyers out there in 2012 too! As a good friend of mine always used to say “It is always a good time to sell a good business”.

Jason Roberts writes for Roberts Commercial Ltd who are independent commercial estate agents specialising in Business Sales and Retail Property in the North East of England.

www.robertscommercial.co.uk

jason@robertscommercial.co.uk 0191 280 3285