Some business owners feel that they can sell their business themselves. After all, who knows the business better than they do?
Often, these owners become sellers by simply placing an ad in the newspaper and waiting for the telephone to ring. They think of the money they can save by not paying a broker's fee. Sounds good, but it very seldom works! First, the telephone may not ring. If it does, it may be the local competition attempting to find out what is for sale and for how much. Those who may be interested will visit the business, ask a thousand questions, leave, and never come back. So much for confidentiality, proper pricing, qualifying the prospects, and finding the right buyer.
Business brokers are not magicians. They can't sell an overpriced business or create a demand that isn't there. What they can do, however, is market the business so it is shown only to qualified and interested buyer prospects. Sellers have to understand that business brokers can provide suitable prospects from the overwhelming majority of people who don't really know what they want. Very few buyer prospects really know what kind of business they want, or what best fits their needs. In fact, 90 percent of all buyers are considering buying a business for the first time, and are open to all suggestions. A business broker can supply many prospective buyers that sellers couldn't find on their own.
Very few sellers price their business properly. A business broker has a handle on the local marketplace, access to market data, and pricing information not available to a seller. Business brokers are also good sources of outside financing, if available. In some cases, the full sale price is not the issue, but rather how the sale is structured is the key to a successful sale.
Business brokers generally have a backlog of buyers that they work with on a current basis. They prepare a business profile on the businesses they represent, designed to show the business in its best light. They know how and when to advertise, when to use trade publications, how to use the Internet, and how to qualify buyers. Business broker can maximize the price of a business and create added value so that their fee is generally a non-issue. Sellers usually receive a higher price when working with a business broker, even after the fee, than they would if selling the business on their own. Remember, it almost always pays to use a professional
Adding Value to Your Business
If you are considering selling your business, remember that there are positive factors that influence value and those that detract from it. Looking at your business from a buyer's perspective is important since a prudent buyer will be adding and subtracting these various factors when arriving at an asking price. It is perhaps more important to recognize when the buyer arrives at a price at which he or she will leave the negotiations. Buyers naturally try to buy the business at the lowest possible price possible, however most also have a top price over which they are probably not willing to go. Here are some of the "high value" indicators as well as some of the "low value" indicators to consider when evaluating your business.
Kindly complete the online application to List as a seller . Feel free to contact me directly .... Jacques Griessel for the Greater Durban Area - 074 954 7798 (mobile) - send me an email
Saturday 26 October 2013
Friday 25 October 2013
What is my business worth
It is important to establish an accurate sales price when considering the sale of your business.
• The Seller definitely does not want to under-price the business and give it away for free.
• An overpriced business will never sell. The Seller might choose to lower the price after a while, but prospective buyers get suspicious and believe something is wrong with the business, which means it doesn't sell at all.
The valuation of a business can be done by using a multitude of methods the most accurate is based on the financial achievement of the business. The value of a business is however an open argument that if you ask twenty different people to value your business you will receive twenty different answers but opinions or perceptions unfortunately will not do.
The valuation method we use calculates an average estimated value utilising 3 calculation methods and has proved to be within a 10% range of the selling price usually achieved.
1.) Extra Earning Potential [EEP] - Also known as the "Super Profits" valuation method
This method states that in exchange for the risk of being in one’s own business, a buyer should receive an extra amount over and above what he could earn if his money was placed in a bank and he worked for a salary.
2.) Return on Investment [ ROI ]This method sets the value based on the return an owner would expect, as an investor, for the risk of being in business after allowing for a manager’s salary.
3.) Payback Period - Also known as the "Magic Multiplier" valuation MethodThis method, sometimes referred to as the Magic Multiplier is bases on the period of months over which a buyer would expect to recoup his investment multiplied by the net profit.
Feel free to contact me directly for more information on our FREE listing options.... Jacques Griessel for the Greater Durban Area - 074 954 7798 (mobile) - send me an email
• The Seller definitely does not want to under-price the business and give it away for free.
• An overpriced business will never sell. The Seller might choose to lower the price after a while, but prospective buyers get suspicious and believe something is wrong with the business, which means it doesn't sell at all.
The valuation of a business can be done by using a multitude of methods the most accurate is based on the financial achievement of the business. The value of a business is however an open argument that if you ask twenty different people to value your business you will receive twenty different answers but opinions or perceptions unfortunately will not do.
The valuation method we use calculates an average estimated value utilising 3 calculation methods and has proved to be within a 10% range of the selling price usually achieved.
1.) Extra Earning Potential [EEP] - Also known as the "Super Profits" valuation method
This method states that in exchange for the risk of being in one’s own business, a buyer should receive an extra amount over and above what he could earn if his money was placed in a bank and he worked for a salary.
2.) Return on Investment [ ROI ]This method sets the value based on the return an owner would expect, as an investor, for the risk of being in business after allowing for a manager’s salary.
3.) Payback Period - Also known as the "Magic Multiplier" valuation MethodThis method, sometimes referred to as the Magic Multiplier is bases on the period of months over which a buyer would expect to recoup his investment multiplied by the net profit.
Feel free to contact me directly for more information on our FREE listing options.... Jacques Griessel for the Greater Durban Area - 074 954 7798 (mobile) - send me an email
Qualifying Buyers
When handling inquiries from Prospective Buyers I will give very basic information without disclosing the specific business only to create interest and then ensure the relevant documentation (Buyers Profile & Continently agreement) is in place before I would reveal any specific information of the business. The questions asked is to extract the necessary information required to qualify the prospective buyer and will include.
1.Do you have any experience in this type of business? If they say yes, I want to dwell deeper in that subject. Where, when, how long. I want specifics. If it was local, I will know that company or will be able to research to see if they are telling me the truth or giving me a line. I want to know if the Buyer is “REAL”. In all my line of questioning I am trying to determine if I want to spend my time with this Buyer.
2.The second question I ask is; how much liquid cash do you have on hand today? Can the Buyer afford my business? Many initial inquires will not be realistic feasible Buyers. I know how much money it will take to complete the sale, how much money, if any can be borrowed against the business. Why would I even want to give a Buyer the name and address of my business if they can’t afford it?
3.In line with the cash down payment, there might be other liquidities a Buyer has to purchase a specific business. Stocks, equities, property.
4.I will ask the buyer for proof of funds before disclosing specific information on my business. A real Buyer will not have a problem with this. Buyers who are dreamers and fakes will fight you on this. Real Buyers who have the money they say they have will not be afraid to prove it to you if the business interests them.
5.Non Disclosure Agreement. After I am satisfied the Buyer is real and if the Buyer wants to see my business, I want him to sign a Non Disclosure Agreement. During this part I emphasise the importance to be very discrete when viewing my business. Do NOT talk to my employees or customers. If you have any questions come ONLY to me.
6.After I receive this document (signed buyers profile and confidentiality agreement) and supporting documents from the prospective buyer I will verify as much of the information as possible and handle the rest in a telephone interview.
7.Only once this process is successfully completed will I reveal specific information of you business or arrange for an interview with the Seller.
Kindly complete the online application to List as a seller . Feel free to contact me directly .... Jacques Griessel for the Greater Durban Area - 074 954 7798 (mobile) - send me an email
1.Do you have any experience in this type of business? If they say yes, I want to dwell deeper in that subject. Where, when, how long. I want specifics. If it was local, I will know that company or will be able to research to see if they are telling me the truth or giving me a line. I want to know if the Buyer is “REAL”. In all my line of questioning I am trying to determine if I want to spend my time with this Buyer.
2.The second question I ask is; how much liquid cash do you have on hand today? Can the Buyer afford my business? Many initial inquires will not be realistic feasible Buyers. I know how much money it will take to complete the sale, how much money, if any can be borrowed against the business. Why would I even want to give a Buyer the name and address of my business if they can’t afford it?
3.In line with the cash down payment, there might be other liquidities a Buyer has to purchase a specific business. Stocks, equities, property.
4.I will ask the buyer for proof of funds before disclosing specific information on my business. A real Buyer will not have a problem with this. Buyers who are dreamers and fakes will fight you on this. Real Buyers who have the money they say they have will not be afraid to prove it to you if the business interests them.
5.Non Disclosure Agreement. After I am satisfied the Buyer is real and if the Buyer wants to see my business, I want him to sign a Non Disclosure Agreement. During this part I emphasise the importance to be very discrete when viewing my business. Do NOT talk to my employees or customers. If you have any questions come ONLY to me.
6.After I receive this document (signed buyers profile and confidentiality agreement) and supporting documents from the prospective buyer I will verify as much of the information as possible and handle the rest in a telephone interview.
7.Only once this process is successfully completed will I reveal specific information of you business or arrange for an interview with the Seller.
Kindly complete the online application to List as a seller . Feel free to contact me directly .... Jacques Griessel for the Greater Durban Area - 074 954 7798 (mobile) - send me an email
Thursday 24 October 2013
Start a business with no money
Many of the world’s richest people on the Forbes Billionaires List started as entrepreneurs, so no wonder so many believe that’s the path to wealth and happiness.
But we are told:
- You need money to make money and unless you have allot of money it is impossible start your own business.
- Statistics show that more than 50% of companies fail in their first five years.
- To own your own business you will spend much of that time skipping vacations and luxuries and sometimes even meals.
The Grow Your Own Business Network assists new and first time business owners to address the root causes for the above mentioned perceptions
Financing – Many business owners finance their businesses and then become a slave to their debt.
Training – Through the Grow Your Own Business Network we assist you to avoid the potholes & pitfalls of owning your own business
The Grow Your Own Business SystemMany people do not reach their dreams due to a lack of planning or impatience........
Human beings invent things for two of simple reasons.
1. - We are lazy or
2 - We do not have patience.
In today’s instant society we have put all types of superficial methods in place to reach our dreams now. With instant credit we can own our dream business now, and then things go wrong – The business goes though a tough economic time - we cannot service the debt and the dream shatters.
To reach the dream of owning a business can be a sprint but to live the dream is a marathon, by taking small steps to improve your financial IQ one can “get fit” to speed up the process, to keep in the race for the long haul.
Most of us dream of owning our own business – walking in one morning and tell the boss what he can do with his job – but very few have a plan of how to get there, it seems impossible to reach the dream of owning one’s own business.
By following The Grow Your Own Business system you will not only be able to reach your dream of owning your own business but also be able to provide for retirement without putting strain on your business. But you firstly have to decide if you consider yourself a decision maker or a procrastinator, we believe you have three options.
1. You need to decide if you are willing to do what is needed to live your dream
2. Are you going to consider instant methods to reach and most possibly lose the dream
3. Or you can choose to stay in your comfort zone and complain because I never had the opportunities.
The Grow Your Own Business Network aims to equip you with the knowhow and financial IQ it will take to reach your dream of owning your own business. This step by step system will empower you to implement the actions needed to manage your business successfully and take educated, calculated risks to reach your dream. It is not a gift you are born with or the family you are born into; but rather financial Intelligence and knowledge you are equipped with to implement strategies that will to ensure long term sustainable success.
The Grow Your Own Business system includes:
* short term methods to raise capital
* medium term results created by financial discipline taught
* long term financial freedom due to the result of compounded interest earned
* The Grow Your Own Business Network will enable you to take control of your future to reach your dreams
What are the benefits of joining the Grow Your Own Business Team?
- You are given access to various channels that will enable you to create capital to start building your dream.
- You are given access to investment vehicles that will allow you to grow your capital.
- You are given accesses to inside information on how to buy your dream business.
- You have your own personal Business Broker to assist you with the following services, free of charge should you purchase your Business through the Renwick Business Network (Durban) office.
- The drafting of Sale and Purchase agreements which protect both buyer and seller.
- Assistance with obtaining the services of an independent appraiser to value the assets of the business. (Major pre-requisite for bank)
- Assistance with the obtaining of financial statements, VAT returns, management accounts and bank statements of the business from the Seller, as well as the present lease agreement and franchise documents if applicable.
- Assistance with compilation of a comprehensive bank approved business plan.
- Assistance with compilation of bank approved cash flow projection.
- Assistance with compilation of a comprehensive curriculum vitae should buyer not have one.
- Assistance with the Collating and checking of all documentation before submitting to financial inution for their consideration.
- Continued interaction on behalf of Buyer, Seller and financial institution should either party request such interaction.
- You also receive personal assistance at a reduced cost when evaluating and considering buying your dream business directly from a business owner (In the collation of all the above documentation, there are a number of KEY aspects which we pay particular attention to. It is imperative that YOU the purchaser do likewise irrespective of whether you are buying through a broker or privately.)
- You are regularly updated with the latest trends and developments in buying and owning your dream business.
- You are regularly updated on new businesses for sale or opportunities available
- You are regularly updated on new franchise opportunities available
- You have accesses to business documents and templates needed to buy and manage your business.
- You have the personal service available to assist with the registration of your business
- Access on information & systems needed to manage your own business.
Feel free to contact me directly to arrange a FREE consultation on various exiting options available to you.... Jacques Griessel for the Greater Durban Area - 074 954 7798 (mobile) - send me an email
But we are told:
- You need money to make money and unless you have allot of money it is impossible start your own business.
- Statistics show that more than 50% of companies fail in their first five years.
- To own your own business you will spend much of that time skipping vacations and luxuries and sometimes even meals.
The Grow Your Own Business Network assists new and first time business owners to address the root causes for the above mentioned perceptions
Financing – Many business owners finance their businesses and then become a slave to their debt.
Training – Through the Grow Your Own Business Network we assist you to avoid the potholes & pitfalls of owning your own business
The Grow Your Own Business SystemMany people do not reach their dreams due to a lack of planning or impatience........
Human beings invent things for two of simple reasons.
1. - We are lazy or
2 - We do not have patience.
In today’s instant society we have put all types of superficial methods in place to reach our dreams now. With instant credit we can own our dream business now, and then things go wrong – The business goes though a tough economic time - we cannot service the debt and the dream shatters.
To reach the dream of owning a business can be a sprint but to live the dream is a marathon, by taking small steps to improve your financial IQ one can “get fit” to speed up the process, to keep in the race for the long haul.
Most of us dream of owning our own business – walking in one morning and tell the boss what he can do with his job – but very few have a plan of how to get there, it seems impossible to reach the dream of owning one’s own business.
By following The Grow Your Own Business system you will not only be able to reach your dream of owning your own business but also be able to provide for retirement without putting strain on your business. But you firstly have to decide if you consider yourself a decision maker or a procrastinator, we believe you have three options.
1. You need to decide if you are willing to do what is needed to live your dream
2. Are you going to consider instant methods to reach and most possibly lose the dream
3. Or you can choose to stay in your comfort zone and complain because I never had the opportunities.
The Grow Your Own Business Network aims to equip you with the knowhow and financial IQ it will take to reach your dream of owning your own business. This step by step system will empower you to implement the actions needed to manage your business successfully and take educated, calculated risks to reach your dream. It is not a gift you are born with or the family you are born into; but rather financial Intelligence and knowledge you are equipped with to implement strategies that will to ensure long term sustainable success.
The Grow Your Own Business system includes:
* short term methods to raise capital
* medium term results created by financial discipline taught
* long term financial freedom due to the result of compounded interest earned
* The Grow Your Own Business Network will enable you to take control of your future to reach your dreams
What are the benefits of joining the Grow Your Own Business Team?
- You are given access to various channels that will enable you to create capital to start building your dream.
- You are given access to investment vehicles that will allow you to grow your capital.
- You are given accesses to inside information on how to buy your dream business.
- You have your own personal Business Broker to assist you with the following services, free of charge should you purchase your Business through the Renwick Business Network (Durban) office.
- The drafting of Sale and Purchase agreements which protect both buyer and seller.
- Assistance with obtaining the services of an independent appraiser to value the assets of the business. (Major pre-requisite for bank)
- Assistance with the obtaining of financial statements, VAT returns, management accounts and bank statements of the business from the Seller, as well as the present lease agreement and franchise documents if applicable.
- Assistance with compilation of a comprehensive bank approved business plan.
- Assistance with compilation of bank approved cash flow projection.
- Assistance with compilation of a comprehensive curriculum vitae should buyer not have one.
- Assistance with the Collating and checking of all documentation before submitting to financial inution for their consideration.
- Continued interaction on behalf of Buyer, Seller and financial institution should either party request such interaction.
- You also receive personal assistance at a reduced cost when evaluating and considering buying your dream business directly from a business owner (In the collation of all the above documentation, there are a number of KEY aspects which we pay particular attention to. It is imperative that YOU the purchaser do likewise irrespective of whether you are buying through a broker or privately.)
- You are regularly updated with the latest trends and developments in buying and owning your dream business.
- You are regularly updated on new businesses for sale or opportunities available
- You are regularly updated on new franchise opportunities available
- You have accesses to business documents and templates needed to buy and manage your business.
- You have the personal service available to assist with the registration of your business
- Access on information & systems needed to manage your own business.
Feel free to contact me directly to arrange a FREE consultation on various exiting options available to you.... Jacques Griessel for the Greater Durban Area - 074 954 7798 (mobile) - send me an email
Why it “pays” to use a Broker when you buy a business
As a Business Broker I can help to determine a realistic and defensible purchase price as we use 3 different valuation methods calculate a realistic value. I act as a buffer between the buyer and the seller. As a broker I can say certain things to a buyer; I can tell the owner the price is too high, relay what has to be done to make a deal--very openly and candidly--and discuss how the differences in viewpoint can be ironed out effectively.
I can help you find a business that suit your specific needs Including location, industry and size. With my help, you may discover an industry you had never considered before As a Broker I turn down many of the businesses Either because the seller won't provide full financial disclosure or because the business is overpriced. You would therefore not be wasting your time perusing fruitless opportunities.
As a Broker I know the regulations affecting Everything from licenses and permits to financing and escrow. I can assist you in cutting through the red tape, which can slash months off the purchase process.
Best of all this service is free at no charge to you as the seller pays my commission Kindly complete the online application to Register as a Buyer to enable me to assist you according to your requirements. Please contact me directly - Jacques Griessel - 074 954 7798 (mobile) – or send me an email
Sunday 20 October 2013
How the rich get richer
I had an enquiry recently of a person who dreams of owning his own restaurant. Having a very nice restaurant in mind selling for R800 000, all he needs is the finance and he is on his way to reach his dream!
THE MOST OBVIOUS SOLUTION? ….. Find a financial institution to finance his dream.
Assuming he finds an institution willing to grant him a 100% loan (highly unlikely in our current economic climate as financial institutions are not even willing to finance 100% property bonds)
= Loan amount R 800 000
= Interest Rate 10%
= Loan repayment period (Years)
= Loan Instalment per month R 16 997.64
Reasonable? YES! ...... Important point to remember: a loan helps reaching the dream BUT will he be able to live his dream?
HE will most probably resign his current job and draw a salary from his new the business (being in the hospitality industry for 20 years, he has the experience to manage his own restaurant).Assuming he is prepared to sacrifice for the 5 years he has to repay the loan and draws only R10 000 per month.
The loan repayment is R16,997 + R10,000 Salary = R26,997.
But what would a reasonable monthly before-tax net profit be on an R800k business? He would do very well finding a business genuinely netting around R33,000 per month. (Many sellers claim different buy inflating their figures)
R33,000 Net Profit - R26,997 (loan repayment & salary) = R6 003 left for expansion and unforeseen expenses. This means for the next 5 years; He will not be able to implement any of the good ideas he had when he bought the business due to a lack of cash flow.
He lives in fear that the cold room or griller packs up needing replacements (he bought an existing business, all equipment is 2nd hand) He soon has a staling business and profits start going down because he does not have the capital to do sufficient marketing to retain his customers.
CRISIS SOLUTION: He approaches his bank to assist him with an overdraft facility. The bank informs him; his application has unfortunately been rejected due to insufficient collateral. Is this your grim reality of wanting to own your own business?
THE MOST OBVIOUS SOLUTION? ….. Find a financial institution to finance his dream.
Assuming he finds an institution willing to grant him a 100% loan (highly unlikely in our current economic climate as financial institutions are not even willing to finance 100% property bonds)
= Loan amount R 800 000
= Interest Rate 10%
= Loan repayment period (Years)
= Loan Instalment per month R 16 997.64
Reasonable? YES! ...... Important point to remember: a loan helps reaching the dream BUT will he be able to live his dream?
HE will most probably resign his current job and draw a salary from his new the business (being in the hospitality industry for 20 years, he has the experience to manage his own restaurant).Assuming he is prepared to sacrifice for the 5 years he has to repay the loan and draws only R10 000 per month.
The loan repayment is R16,997 + R10,000 Salary = R26,997.
But what would a reasonable monthly before-tax net profit be on an R800k business? He would do very well finding a business genuinely netting around R33,000 per month. (Many sellers claim different buy inflating their figures)
R33,000 Net Profit - R26,997 (loan repayment & salary) = R6 003 left for expansion and unforeseen expenses. This means for the next 5 years; He will not be able to implement any of the good ideas he had when he bought the business due to a lack of cash flow.
He lives in fear that the cold room or griller packs up needing replacements (he bought an existing business, all equipment is 2nd hand) He soon has a staling business and profits start going down because he does not have the capital to do sufficient marketing to retain his customers.
CRISIS SOLUTION: He approaches his bank to assist him with an overdraft facility. The bank informs him; his application has unfortunately been rejected due to insufficient collateral. Is this your grim reality of wanting to own your own business?
Subscribe to:
Posts (Atom)