The last month has been a particularly short one from a business perspective and a combination of Easter, fine weather and the royal wedding have reduced the number of working days in the month to something like ten with many people taking two weeks’ break from work.
There was an interesting article in last week’s Sunday Times about the spike in interest from buyers in properties with incomes. We have seen that activity too although the article went on to say that buyers were very focused on the profit figures and were not tempted to over-pay even in a competitive bid situation. I would completely agree with that analysis. If you are selling a freehold business then I do think that you need to look carefully at your asking price alongside your profit stream and ask yourself if that profit can support the size of mortgage required to buy your property. I or any of my colleagues at Amberglobe would be happy to discuss this with you.
I do get the strong feeling that the market is improving and that if the weather remains fine then consumer confidence will increase. This does not mean though that I foresee prices rising any time soon but rather that more buyers will enter the market, more transactions will happen and there will be more money sloshing around as a result of house sales freeing up.
I should also mention that there are noises being made in government that the rules about Energy Performance Certificates are about to be tightened up and that all commercial properties for sale or lease will be required to have EPCs in place before being marketed for sale. Frankly this is the last thing we all need and I do appreciate that having to pay for an EPC prior to a sale being agreed is particularly annoying. In anticipation of these changes we have negotiated a staggered payment system with a number of independent EPC providers who will accept payment over a number of months. This will hopefully significantly ease the cashflow burden on you and of course your EPCs will be valid for ten years. If you would like to discuss this or arrange for a quote then please contact us.
http://www.amberglobe.co.uk/
Showing posts with label finance to buy a business. Show all posts
Showing posts with label finance to buy a business. Show all posts
Tuesday, 10 May 2011
Wednesday, 16 February 2011
January Report
I am sure that like me you are keeping a weather eye on the property market and the economy in general. The papers have obviously decided to continue spreading the general doom and gloom from last year and are trumpeting how fragile is the economy and how we could fall back into recession. I have to say that this is not doing any of us any favours. Consumer confidence is a fragile thing at the best of times and at the moment people are holding back from making big decisions because they are scared.
And yet despite all that we are seeing plenty of buyer activity and in fact in January we recorded the highest level of buyer enquiries for 12 months. However buyers are definitely both very cautious and are also trying to be pretty cute. I have had a number of conversations with buyers who have said that they are going to wait and see if prices drop further before they make their move. This unfortunately becomes something of a self-fulfilling prophesy as prices move down to meet these buyers’ expectations and that has a domino effect across the board. What you don’t want to be then is holding expensive stock when all your competitors have reduced their prices.
To be frank I don’t see any likelihood of prices rising in the next 10 to 12 months. In fact I think prices will continue to drift downwards caused by a combination of distressed sellers, cautious and savvy buyers and a lack of first time home buyers preventing sellers further up the chain from being able to sell their houses.
We are also seeing Bank Valuers pricing in this expected fall in prices when they do their mortgage valuations. So even if a deal has been agreed, once the valuation has been done, the deal is having to be renegotiated.
Don’t forget however that if you’re seeing your asking price reduce, so too is the seller of the next property you want to buy. Consequently things tend to even out.
If your business has been on the market for a while now and you are not seeing much activity then I think that you should be talking to us about your asking price. Traditionally vendors price their businesses at some 10-20% above their expected sale price on the basis that they are expecting to be chipped. I think however the rules have changed and you should be pricing your business at what we think is the market price – that way you are likely to see more activity and more buyer interest. Then when you get an offer you can decide whether or not it is acceptable having regard to how much of a reduction you can negotiate off your next purchase.
http://www.amberglobe.co.uk/
And yet despite all that we are seeing plenty of buyer activity and in fact in January we recorded the highest level of buyer enquiries for 12 months. However buyers are definitely both very cautious and are also trying to be pretty cute. I have had a number of conversations with buyers who have said that they are going to wait and see if prices drop further before they make their move. This unfortunately becomes something of a self-fulfilling prophesy as prices move down to meet these buyers’ expectations and that has a domino effect across the board. What you don’t want to be then is holding expensive stock when all your competitors have reduced their prices.
To be frank I don’t see any likelihood of prices rising in the next 10 to 12 months. In fact I think prices will continue to drift downwards caused by a combination of distressed sellers, cautious and savvy buyers and a lack of first time home buyers preventing sellers further up the chain from being able to sell their houses.
We are also seeing Bank Valuers pricing in this expected fall in prices when they do their mortgage valuations. So even if a deal has been agreed, once the valuation has been done, the deal is having to be renegotiated.
Don’t forget however that if you’re seeing your asking price reduce, so too is the seller of the next property you want to buy. Consequently things tend to even out.
If your business has been on the market for a while now and you are not seeing much activity then I think that you should be talking to us about your asking price. Traditionally vendors price their businesses at some 10-20% above their expected sale price on the basis that they are expecting to be chipped. I think however the rules have changed and you should be pricing your business at what we think is the market price – that way you are likely to see more activity and more buyer interest. Then when you get an offer you can decide whether or not it is acceptable having regard to how much of a reduction you can negotiate off your next purchase.
http://www.amberglobe.co.uk/
Wednesday, 4 August 2010
DON’T START A BUSINESS – BUY A BUSINESS
Yesterday’s announcement that HSBC has this year loaned money to 65,000 new business start-ups struck me as a bizarre statistic.
Why would you start a business with all the inherent risks, lack of customers and no cashflow when for probably less money you can buy a business with a track record, customers, a proven business model and, most crucially of all, cashflow from day one?
I have started 5 businesses in my life and frankly, if I had my time over again I think I would rather buy a business. The thing that people forget is that the business you buy doesn’t have to stay that way, you can grow it and develop it just like a start-up. But the absolutely crucial thing is always the cashflow, a start-up will take three times as long and three times as much money as you expect to get it going and all that time you are probably not drawing a salary either. That makes it a high risk and expensive proposition. An existing business with a good history and proven accounts will pay you a return on your investment from day one and keep food on the table.
Most small businesses that we sell http://www.amberglobe.co.uk/search.aspx and which produce enough profit to pay a reasonable salary to the owner will sell for one to times the profit. After no more than two years you have got your money back and are still earning good profits. If there’s a property involved then obviously you pay more but you have the security of a freehold to back up your investment.
I would be surprised if more than 10,000 small business sales are completed in the UK each year, which stands in marked contrast to 65,000 start-ups. http://www.amberglobe.co.uk/sales.aspx
There are thousands of businesses for sale in the UK of just about every size and sector, and pretty much all of them are advertised on the internet on websites like http://www.amberglobe.co.uk/ or www.businessesforsale.com.
Why would you start a business with all the inherent risks, lack of customers and no cashflow when for probably less money you can buy a business with a track record, customers, a proven business model and, most crucially of all, cashflow from day one?
I have started 5 businesses in my life and frankly, if I had my time over again I think I would rather buy a business. The thing that people forget is that the business you buy doesn’t have to stay that way, you can grow it and develop it just like a start-up. But the absolutely crucial thing is always the cashflow, a start-up will take three times as long and three times as much money as you expect to get it going and all that time you are probably not drawing a salary either. That makes it a high risk and expensive proposition. An existing business with a good history and proven accounts will pay you a return on your investment from day one and keep food on the table.
Most small businesses that we sell http://www.amberglobe.co.uk/search.aspx and which produce enough profit to pay a reasonable salary to the owner will sell for one to times the profit. After no more than two years you have got your money back and are still earning good profits. If there’s a property involved then obviously you pay more but you have the security of a freehold to back up your investment.
I would be surprised if more than 10,000 small business sales are completed in the UK each year, which stands in marked contrast to 65,000 start-ups. http://www.amberglobe.co.uk/sales.aspx
There are thousands of businesses for sale in the UK of just about every size and sector, and pretty much all of them are advertised on the internet on websites like http://www.amberglobe.co.uk/ or www.businessesforsale.com.
Thursday, 10 June 2010
We have recently started advertising your business on a new sales website www.businesssalesdirect.co.uk as well as freehold properties on a rotational basis on www.egpropertylink.com.
Many of you will have just completed your latest financial year. Can you please send us your most recent accounts as soon as possible or, if they are still with your accountants, your management accounts, VAT returns or at the very least advise us of how the last year’s trading has gone and when you can expect to have accounts available.
Pretty much every single interested party asks for the latest accounts once they have received the sales details and any delay in providing this information can mean that we will lose their interest in your business.
We have recently upgraded our website including the free Business Advice section which we hope you will find useful. Various professionals will begin “blogging” in that Section in the next few days on such topics as Employment Law, Business Sales legal issues, VAT and Tax, and Websites and E-Commerce. If you have specific questions to ask on those topics then please feel free to email any of the bloggers. I suspect that the E-Commerce and Employment Law topics will be of particular interest to many of you.
Even though your business is for sale my strong advice is that you should continue to run your business as if it weren’t, which means continuing to upgrade your website, improve your premises and grow your business. If you don’t then the worry is that your business will start to stagnate or at worse deteriorate which will have a negative impact on your sale price. Purchasers are particularly fearful of “catching a falling knife” and any downturn in trade or profit can kill a sale.
I am still of the view that the business sales market will keep improving. We are seeing continued strong buyer interest and high levels of enquiry. I think any redundancies in the Civil Service can only be good news for us all as it will tip more buyers into the market. However prices are still very keen and buyers will definitely not pay a premium.
If you would like to discuss any aspect of your business, its asking price or its marketing then please call us on 0800 707 6370.
http://www.amberglobe.co.uk/
Many of you will have just completed your latest financial year. Can you please send us your most recent accounts as soon as possible or, if they are still with your accountants, your management accounts, VAT returns or at the very least advise us of how the last year’s trading has gone and when you can expect to have accounts available.
Pretty much every single interested party asks for the latest accounts once they have received the sales details and any delay in providing this information can mean that we will lose their interest in your business.
We have recently upgraded our website including the free Business Advice section which we hope you will find useful. Various professionals will begin “blogging” in that Section in the next few days on such topics as Employment Law, Business Sales legal issues, VAT and Tax, and Websites and E-Commerce. If you have specific questions to ask on those topics then please feel free to email any of the bloggers. I suspect that the E-Commerce and Employment Law topics will be of particular interest to many of you.
Even though your business is for sale my strong advice is that you should continue to run your business as if it weren’t, which means continuing to upgrade your website, improve your premises and grow your business. If you don’t then the worry is that your business will start to stagnate or at worse deteriorate which will have a negative impact on your sale price. Purchasers are particularly fearful of “catching a falling knife” and any downturn in trade or profit can kill a sale.
I am still of the view that the business sales market will keep improving. We are seeing continued strong buyer interest and high levels of enquiry. I think any redundancies in the Civil Service can only be good news for us all as it will tip more buyers into the market. However prices are still very keen and buyers will definitely not pay a premium.
If you would like to discuss any aspect of your business, its asking price or its marketing then please call us on 0800 707 6370.
http://www.amberglobe.co.uk/
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