Five steps to buying a business on the NSW South Coast

Sound advice for those wanting to buy

Grant Business Brokers Australia provides sound advice to those wanting to buy a business, whether it is a small business, shop, agency, family business, or a larger business such as a motel or caravan park.

Buying a business is a complicated affair, it involves a purchaser, an accountant, a solicitor, a banker, a vendor, their accountant, their solicitor, their banker & a business broker. All of these people get involved BEFORE any settlement. It gets very crowded in there & needs the expertise of a professional Broker to keep all parties heading in the right direction.

On this page, we have identified the five essential steps people must go through before buying a business.

Whether you are buying a small business you can run yourself, a family business, motel or a caravan park, it is essential that you follow these five steps in the correct order.

These five steps will ensure that you know the full potential and viability of the business you have in mind. Grant Business Brokers Australia will guide you through steps to help you make the right choice about a business that suits your needs and your proposed lifestyle.

STEP No 1
Make sure that you are suited to this industry.

Can you handle the work mentally & physically. Are you happy to move away from your present location. Is the family happy to move. Are the facilities at the new location to your & the family’s requirements, schools, sporting facilities ? What do you hope to achieve from this business. Who will work the business ?

When you are happy with all of the above go to step No 2. OR pull out.

STEP No 2
Identify the business you are interested in. Contact the Broker & discuss the business in general terms. Get some history, reasons why the proprietor is selling, local information including housing, schools, sport, local features, main industries, & population movements.

IF you are still interested ask for a confidentiality document to be forwarded. The Broker will either (1) Ask you to attend his office for a discussion to qualify you before he sends you anything OR (2) IF he is confident that your request is genuine he may send you the confidentiality document.

You have now registered a formal interest in the business. Go to step No 3 OR pull out.

It is of paramount importance to be sure that this is the business for you BEFORE you request the vendors financials, remember that the vendor is providing strictly confidential information to you, you have never meet & at this stage he knows little about you. IF the financials are strong & you simply pull out of the deal the broker will ask for a payment for services rendered, similar to, say, a visit to your accountant or solicitor.

STEP No 3.
Complete the confidentiality document & return to the Broker. The Broker will now give you a full disclosure of the business including the last few years financials.

You should now take these to your accountant for a general discussion. IF he is happy for you to proceed, then assess your financial capacity to proceed. It may involve a trip to the bank to get an approval in principal to get the funds to proceed.

By now you will have a good ideal of what you believe the business is worth. You are now a qualified potential purchaser. Go to step No 4 OR pull out.

STEP No 4.
The Broker will now invite you to meet the proprietors & inspect the property. You are now free to discuss staff matters, training requirements, supplier details, & other matters relative to this business.

You have now been qualified, you are a genuine buyer, you have a price in mind, & you are looking at alternate directions or how you can possibly do things better. Go to step No 5 OR pull out.

STEP No 5.
Negotiate an offer through the Broker, a takeover date & what training is required.

Pay the 10% deposit & start the ball rolling.

FINALLY
The MOST important aspect of the 5 Stages is that they MUST be taken in the correct sequence 1 to 5, IE IF you have progressed to stage 4 (Inspection) you should NOT go back to stage 2 & say that you are not happy with the figures.

IF you have progressed to stage 5 that means that you now know a substantial proportion of the vendors business, you know his history, staff matters, finances, supplier details & you are now obliged to make an offer for the business.

All we ask is for people to treat us & the vendor with respect & to tell the truth. IF you are not going to proceed, let us know at the appropriate stage, why you are not proceeding, & RETURN all of the documents to us.

Grant Business Broking Australia will also act on behalf of a buyer as a buyer’s advocate if there is no conflict of interest. Our services include, trading analysis, investigations & entry price negotiations. Our brokerage is 1% of the list price up front & 1% of the final figure at settlement.

You can contact Jim Grant on 0409 449 045

Buying or selling a business on the NSW South Coast

Grant Business Brokers Australia has listed the essential issues that must be considered when buying or selling a business.

These are important, such as the asking price, profitability of the business you are thinking of buying, profit, trading figures for the business, and your own suitability to the business you want to buy.

If you are selling your business on the NSW South Coast, Grant Business Brokers Australia has identified ways they can help you while maintaining confidentiality of your business and trading figures, assessing the value of your business, marketing your business for sale, and negotiating the sale of your business to the buyer.

Lets Look at the Purchase Price

Lets look at the “Purchase Price” vs “The Figures”

There are three situations concerning the entry price of a business in relation to the existing proprietors trading figures,

  1. The entry price is relevant IF you are going to trade at the same level.
  2. If you are going to trade below his figures you are going to make a capital and trading loss.
  3. If you are going to trade above these figures you are going to make a capital and trading profit.

Ask yourself which option are you going to take, 1  – 2  or 3.

If you take option 1, you will probably achieve the existing bottom line income.
If you take option 2 you probably have not investigated the biz sufficiently.
If you take option 3, then what is the relevance of the existing trading figures.

Instead of hawking someone’s else’s trading figures around the traps you would be a lot better off, preparing a smart business plan or consulting a business advisor or learning how to do formal market analysis to quickly identify problems or advantages as they happen to rectify or capitalise on current situations.

What I am suggesting is that it is more important to look inwardly at your own ability & convert that energy into your business direction & profit making potential rather than looking at the performance of the prior occupant.

The ENTRY price should be based on what YOU can do with the business NOT what the other guy did.

Vendors

Want to sell your business or commercial property ?

Here are 10 steps that you may consider.

  1. Contact GBBA on 0409 449 045.
  2. We will forward our terms & conditions & basic information for your information.
  3. GBBA will request financials etc & provide you with a written report revealing a market assessment of your business as seen from the perspective of a purchaser accountant. This is of course the most critical part of the program. IE To get the price right.
  4. Agree with GBBA on an effective list price.
  5. Discuss a marketing strategy with GBBA.
  6. GBBA will take ALL enquiries & progress ONLY potential purchasers to an inspection AFTER they have been fully qualified.
  7. Negotiation & acceptance of an offer.
  8. Fine tune entry conditions / Exchange contracts / 10% deposit.
  9. Training conditions.
  10. Final settlement.

Why not give Jim a ring right now ?