Trio Business Intermediaries Blog

Soon to be taking on a new business or an active part in an existing operation?

Some of the issues you may want to consider to make the new regime flow well:

• Talk, communicate, chat, email, liaise, - keep everyone feeling as though they’re informed and part of things

• Ensure everyone knows the basics – where the offices will be, where to park and how to get there, who’s moving where and when

• How any surplus team members will be deployed

• Clear responsibility for maintaining client contacts and ensuring they don’t even notice things have changed

• Another group need to be responsible for ensuring suppliers are on top of the changes and ready to integrate new locations or systems

• Who is mission-critical and what is being done to retain them?

• Any disparities between terms of employment, bonuses or perks

Good to see a few potential sellers putting their noses above the parapet!

If you’re waiting around to see if the business-sale market picks up use the time wisely by making sure:

• Everything that can be documented is documented – procedures, arrangements with suppliers, customer contracts,

• Key staff are happy with life at your business and not about to bolt off – you need continuity below you when you depart

• Marketing is pushing towards clearly articulating your competitive advantage.  Buyers need to feel the business is unique and a cash machine!

• You don’t take your foot off the accelerator – you need to demonstrate the business is full throttle ahead and really going places

• Long serving suppliers are being nurtured but you have new products / services on your radar to show the growth potential.

Confidentiality is a critical issue that influences everything we do in business sales and valuations. 

It’s plays out in a number of ways:

• Ensuring staff aren’t unsettled by tales of a pending sale or change of ownership

• Preventing competitors using news of a sale to undermine existing customer relationships

• Maintaining dealings with suppliers, sure of an ongoing stream of orders

• Customers may become unnerved by rumours of a change of ownership, concerned about continuity of supply

• Professional advisors, whilst likely party to the planned sale or valuation, may leak an anticipated sale to other parties in the hope of securing a buyer

Whilst keeping all of these balls in the air, there’s another side to this whole confidentiality issue that warrants some thought:

How can someone buy the business if they don’t know it’s for sale?

Where do you sit on this vexed question?

There’s no doubt that marketing and making sales is tough in any business.

If business buyers can see that there are great sales and marketing machines already in place and actively churning away then they will feel much more comfortable about the transition to them as the new owner.

So if you’re thinking of selling your business we’d recommend putting some effort into documenting your sales and marketing systems, collecting good examples and shining a light on your achievements with customers and prospects.

Some of these areas might include:

• Graphs and other visual aids showing sales / marketing / leads / customer service / online stats

• Key sales and marketing people (NOT the outgoing owner)

• Smarten up the website, including testimonials and recommendations

• Tidy up the customer list and enhance it with each customer’s tenure, avg sales per month, industry  etc

• If your gut tells you it’s got legs – push on.  If your gut tells you it’s a dog – run.  If your gut is giving you a niggling feeling of indigestion but you generally like the fundamentals – that’s normal; keep digging.

• We have a theory that buying a business is like finding a life partner – there’s only one!  Just because no one has bought the business yet doesn’t make it a bad business.  The best owner and the business just haven’t met yet.

• No two or twenty-two businesses will ever exactly fit with industry benchmarks - there’s always some reason the benchmarks don’t apply so don’t rely too heavily on them

• All successful businesses have a competitive advantage – that thing that sets them apart from the rest.  Average performing businesses often just need their competitive advantage refined.  A well priced plodder business will likely represent more opportunity than a top flight winner that may have run its race.

• When you’re looking at the financials, comparing businesses, make sure you are comparing like with like i.e. have you considered the commercial rate of rent, what owners need to be replaced by staff, what revenue streams are fixed / contracts vs discretionary subject to an economic tsunami?

There’s risk everywhere you look when buying or investing in a business.

If you’re looking to sell or attract an investor you need to be on the front foot addressing those risks for the prospective purchaser / investor before they even think of them.

Just some risks you might want to consider:

     With the outgoing owner goes all the customers

     The GFC isn’t over

     Potential regulation changes

     Key staff won’t stay

     Interest rates are likely to be going up

     The outgoing owner will start up elsewhere and take all our business

     New technologies in the industry

 We know for sure there are ways to mitigate all of these risks for a prospective purchaser / investor.  Contact us if you need a hand addressing any of these issues.