Losing key employees during the business sale process could both damage the business before the successful sale is finalised, or potentially stop the business sale from being completed. There are a few main reasons as to why staff leave a business when they hear it is for sale. These include:

1. Job security – They fear that their job is no longer secure and that they will need to secure another as soon as possible to continue earnings and maintain stability
2. Loyalty – They have a loyal relationship to the existing owner of the business and do not want to work for another employer
3. Change – They’ve been wanting a change for some time, and figure this is the perfect catalyst

With the above points in mind, there are measures a seller can put in place to safeguard themselves and the buyer against reasons 1 and 2 above. Let us explain…

1. Transparency – Staff will very quickly “sniff” out that the business is for sale. To prevent your staff fearing that their job is no longer secure, engage with them early on to let them know of your intentions and that they have nothing to worry about. Any buyer would always need the staff to remain and indeed staff retention may well be an important condition of the sale proceeding. Being transparent about the business sale and letting your team know before hearing about it from a third party is always a good idea, and the staff will respect you for that. Let your employees know they are appreciated and that their jobs are not at risk. This will alleviate any concerns and make them feel both valued and included.
2. Contractual agreements and/or retention bonuses – Create reasons for your staff to continue their good work throughout the business sale process and into the future, by giving them an incentive to do so. A retention bonus gives them a percentage upon the successful business sale with the remainder to be given at a time in the future. E.g. 30% of their retention bonus is given upon settlement, with the remaining 70% given 12 months later. This incentivises their loyalty to the business and eases any doubts in the buyer’s mind that the staff may leave them high and dry.

It’s always wise to place yourself in the buyer’s shoes when analysing your business in preparation for sale. If something appears to be a risk or a weakness, address that issue immediately so that it doesn’t affect the buyer come sale time. A buyer will want the business to transition smoothly from the previous owner to themselves, with key staff remaining in place with as little disruption as possible. If there is a risk of disruption, this may be reflected in the sale price.

This is the business you built, ran and operated for years. Aim to work hand in hand with the buyer to ensure your business is successful for many years to come.

If you’d like to discuss your options and chat through your business sale journey, contact Core Business Brokers today, on (02) 9413 2977, or email Roy on [email protected]. We’ve got countless years of experience in Business Broking and will be more than happy to get you on the right foot on your business sale journey.

A non-disclosure agreement otherwise known as a confidentiality disclosure agreement or NDA/CDA, is a legally binding document that safeguards business owners during the sale of their business. When selling a business, part of a potential buyer’s due diligence is to investigate your business from a to z; examining profitability, financial statements, staff rosters and often sensitive information that you don’t want made available to the public. Importantly, you do not want that information to be used in future competition against the business.  So, what’s stopping a prospective buyer from reviewing your information and telling their friends? A non-disclosure agreement.

What is a non-disclosure agreement?

An NDA prohibits the signed parties (interested buyers) from disclosing any information about your business to external parties and which is not readily available to the public. It isn’t necessarily mandatory, especially for businesses that are very transparent and not concerned about information becoming available to the public (e.g. some public companies). However, if the buyer is potentially viewing proprietary or confidential information about your business, it is highly advisable that a non-disclosure agreement be signed.

When is an NDA used?

NDA’s can be used in various industries, where people want to keep confidential information solely between the parties involved. Whether that’s in business transactions or during acquisition or dismissal of employees, NDA’s can be incredibly beneficial to the person of whom the confidential information belongs to at that point in time, as it safeguards that information from becoming common knowledge. Think of NDA’s as a more legal version of a promise. The person signing the NDA is ultimately promising to keep their lips sealed about the topic in question, which in this case – is your business information.

What do NDA’s typically include?

Non-disclosure agreements typically include legal clauses that state that information made available between the parties in question (business owner and potential buyer) must remain confidential. Generally, any information obtained by the buyer about the business from any other source is not covered within the NDA, as it was not part of the confidential knowledge transaction outlined within the NDA.

Where do I obtain an NDA?

Understanding NDA’s are key to using them efficiently and correctly. At Core Business Brokers, we have years of experience dealing with non-disclosure agreements between business sellers and prospective buyers. If you are looking to sell your business, chat to us today. We will go through the process with you and explain all key areas of interest, allowing you to feel confident in your business sale endeavours.

Contact Core Business Brokers today, on (02) 9413 2977, or email Roy on [email protected]. We’re always to schedule an appointment and to chat through your options.

Thinking of buying a business? Or maybe starting one from scratch? Either way, understanding the industry is key to growth, profitability and success. So we sat down and dived into the latest IBIS World report on industry growth in 2019 and 2020. The results? Very interesting.

When it comes to business sectors, there’s a definite trend in which ones are growing in 2020. There is no hiding the fact that Australians are leaning toward a more sustainable way of living. Younger generations are caring more about our planet than the baby boomers, and business is not exempt from their standards for a sustainable future.

According to the IBIS World ‘Fastest Growing Industries in Australia by Revenue Growth (%) in2020‘, the top growing business sectors are those that aligned with these sustainable living practices. However, not all sectors were following this trend. Other clear factors were convenience, such as rideshares and online food ordering. Sitting at the top were sectors such as:

1. Cryptocurrency Exchanges in Australia
2. Litigation Funding in Australia
3. Online Food Ordering and Delivery Platforms in Australia
4. Car Sharing Providers in Australia
5. Ridesharing Services in Australia
6. Organic Crop Farming in Australia
7. Solar Electricity Generation in Australia
8. IT Security Consulting in Australia
9. Digital Advertising Agencies in Australia
10. Petroleum Exploration in Australia

Out of the above list, at least three of these sectors are sustainable trends, while another three prove convenient for the consumer. It makes you think, as a potential business buyer or a current business owner… How will my business appeal to the current market? Do they need me? Do they want me? If so, for how long?

It is important to note that trends in sector growth and profitability are variable, so this list – although current at present, will change in the future. The vital takeaway is to do your research. Understand what consumers in your industry are expecting and what they are yearning for. Can your business deliver this? If you can service a growing market, there is no limit to your business growth.

At Core Business Brokers, we are more than happy to discuss industry trends and past sales data that we have experienced firsthand. Contact Core Business Brokers today, on (02) 9413 2977, or email Roy on [email protected]. We’re always to schedule an appointment and to chat through your options.

Times are changing. We are well into an era that has a strong online presence, which means that businesses that previously survived quite well with nothing but a brick and mortar store, face the reality that they need to adapt and grow, or simply be left behind.

For those business owners that have put off the creation of a website, social media and the thought of online advertising, the process can seem daunting. Therefore, it may be wise to consult a professional marketer to gain insight into the current trends and the components they believe you should implement to stay relevant in the ever-evolving world of business.

So, what are the basic changes I need to make?

There is no right answer that suits every business. Each business is unique and staying relevant in your industry is going to be a different process to your neighbour. However, let’s take a look at some important changes that may need to be undertaken to stay current in 2020:

1. Website: Is your website outdated? Do all the links function properly? Does it take a while to load? A crisp, modern website that reflects your brand, is easy to navigate as a viewer and has concise information about your product and/or service is an asset to your business. Gone are the days of the majority of your customers using the yellow pages to find you. If your website isn’t up to scratch, your customers will most likely find a competitor that looks better from the outside.
2. Social Media: Statistics show that younger demographics are searching for businesses using social media more than they search via Google. That surprised you, didn’t it? Not on Facebook or Instagram? You should be! These free platforms are just another advertising tool that allow you to connect with your target market. It’s not enough simply to ‘have them’, you also must use them. Post relevant facts about your service or product, the industry, FAQ’s, fun facts. The list is endless. Use these platforms to build professional relationships and advertise to your target market.
3. SEO: Otherwise known as ‘Search engine optimisation’, SEO works on keywords and allows your business to be shown more prominently on search engines, such as Google. Using SEO correctly means more people visiting your website, finding out about your business and hopefully converting into customers.
4. Online Advertising: With the increase in popularity of social media platforms such as LinkedIn, Facebook and Instagram, comes the ability to advertise via these platforms to reach your customers. Gone are the days where you’d put an ad in the paper and hope that people see it. Nowadays, the internet collects information about your behaviour online and then social media platforms and search engines (such as Facebook and Google) use this information to display ads that appeal directly to the viewer. Long story short, online advertising is targeted and much more precise than it used to be – meaning it can be a valuable tool for modern businesses.
5. A customer-first approach: As time goes by, more and more competition arises in the market. More products and services are available in more areas, making it harder for businesses to secure customers. People value a deal, but they also value the experience. Emphasise your customers’ needs and desires, putting them first and making them feel important and special. Creating customers that return to your business time and time again is invaluable.
6. Monitor your competitors: Stay up to date with what your competitors are doing in the industry. Are they a part of events? Where are they advertising? Are they hosting a customer function? Producing a publication? Whatever they are doing, keep your finger on the pulse and find a way to go one step further (if what they’re doing is successful, of course!)

Before you make any changes to your business model and plans, it’s always wise to do a risk analysis – building a moat around your business so that a potential buyer does not see too many risks associated with your business when it comes time to sell.

At Core Business Brokers, we advise that you chat to a Business Consultant to grow your business into its most productive, profitable state. Make sure to conduct due diligence before making changes and always view your business from the eyes of a potential buyer. If you’d like to chat through ways to stay up to date in your industry, in preparation for a potential sale. Contact Core Business Brokers, on (02) 9413 2977, or email Roy on [email protected]. We’re always happy to lend a hand, offer advice and assist with your business needs.

According to the Oxford Dictionary, Goodwill is:

“The established reputation of a business regarded as a quantifiable asset and calculated as part of its value when it is sold.”

What does that mean when we talk about business? A business’ goodwill can be viewed somewhat as their reputation. Goodwill isn’t a tangible asset. Although it is an intangible asset, it can be incredibly valuable. A business with a higher amount of goodwill will reflect this in the sale price, as goodwill generally takes time to build and can strongly affect profitability.

The easiest way to explain how goodwill works is through an example. Here are three different businesses and how each of them has a different goodwill value – and more importantly, why that is the case:

• A bottle shop: You may have a favourite bottle shop. But think of why you frequent this one over others. The price and the staff come into play, but more often than not – it’s the location that is convenient. It’s nearby for a quick run to get another bottle of wine if needed, therefore their goodwill lies in their location. If the owner sells their bottle shop and a new owner begins, would you change shops? Probably not. That is why this is referred to as ‘locational goodwill’
• A hair salon: A hairdressing salon may also fall somewhat into the locational goodwill category, but unlike a bottle shop – there is one big difference… It’s a service business. In particular, a personal service business. The hair cut and colour you receive from your hairdresser may not be the same quality you receive elsewhere, therefore this is a business you may follow elsewhere if the owner decides to sell. This is referred to as ‘personal goodwill’
• A TV network: Whether you watch the news on one station or another, the likelihood of you changing each week is slim. They essentially report on the same news, however, you’ve always watched Channel 9, so why change now? This is defined as ‘brand goodwill’

When you’re buying a business, it is important to assess the type of goodwill attached to the business in question and ask yourself these questions:

1. Is this goodwill associated with the business or the owner?
2. If associated with the owner, how can it be transferred to me?

Goodwill is one of many variables that is assessed during the early stages of a business purchase. Here at Core Business Brokers, we are happy to break down the components that form the business sale price and explain why the goodwill is valued the way it is. 

If you are looking to sell your business and wonder how valuable your goodwill component is, contact us today on (02) 9413 2977, or by email at [email protected]. Our experienced team of Business Brokers have years of experience both appraising and valuing businesses and would be more than happy to explain any questions you may have regarding goodwill.

According to business sales data (BIZSTATSTM) approximately 60% of a business sale price is allocated to intangible assets. This figure varies greatly from business to business, however, the value of intangible assets in a modern age is increasing. Let us explain.

What are ‘intangible assets’?

Intangible assets are assets that don’t physically exist. I.e. They cannot be seen or touched but still form part of the business. They cannot be transferred physically from one party to another but can be transferred via legal documentation. Examples of intangible assets include, but are not limited to:

• Goodwill
• Intellectual property
• Franchise agreements
• Copyrights, trademarks & patents
• Symbols & logos
• Software
• Domain names and websites

Tangible assets, on the other hand, are the exact opposite. Physical in nature, these include assets such as plant and equipment, land, vehicles and other inventory.

Why are intangible assets important?

The importance of intangible assets increases depending on the type of business and what intangible assets they own but typically are valued according to the profitability of the company. As we near 2020, many businesses have a large online presence or operate solely on e-commerce. Large corporations such as Facebook may not have many tangible assets, but their intangible assets are plentiful. These increase the value of the business, and if it were to be sold would directly affect the sale price.

How do you put a price on intangible assets?

With intangible assets forming such a large part of the overall business value, it is important to assess all assets owned by the business you’re looking to buy and check the following:

1. How do these intangible/tangible assets relate to the operation and overall profitability of the business?
2. Can these assets be secured with contracts or registration and be legally transferred?
3. How are these assets transferred to me, the buyer if the business sale goes ahead? As legal transfer of ownership is critical.

The assessment of a business’ assets, whether tangible or intangible forms part of your due diligence when considering a business purchase. For assistance navigating your way through the business sale process, contact Core Business Brokers today on (02) 9413 2977. There are many areas to consider when embarking on your journey. Let us guide the way.

There are many reasons to purchase a business and depending on who you ask, those reasons rank differently because your motivation behind buying a business ultimately comes down to what you want in life. Is it profits? Freedom? Alongside the potential risk and the hard work involved in owning your own business, owning your own business also comes with its fair share of positives when considering the pros and cons list. Let us highlight some of the top reasons why buying a business could be a great option for you.

Profits: Unlike previous jobs where you’ve been an employee, owning your own business comes with the opportunity for uncapped earning potential. If your business continues to grow and become profitable, you will reap the rewards at the end of the day. Of course, there is always the risk/reward issue to consider as well.

Employment: Owning your own business removes any possibility for you to be made redundant or your contract be terminated by another party. If your business remains profitable, your job will be safe. For this reason, you feel more in control over your career than ever before. 

Independence: Your business means your decisions. If you’d like to steer your business in a certain direction, you now have the power to do this. There is nothing more satisfying than making strategic plans for your business and watching them come to fruition and prove successful. Your business is your time to make your mark and captain the ship!

Lifestyle: Being a business owner can be a very busy job. More often than not, the owner of the business is the person who works the most hours, as they have the most at stake. However, once the business proves successful, you may be able to take a step backwards and begin to live the lifestyle you’ve always dreamt of. Whether it’s weekends off, or an extended holiday once a year, there’s no reason why you can’t work this into future plans. The proviso here is that you have learnt along the way to employ competent staff and thus become a competent “manager” who is able to delegate tasks to staff and employ controls to maintain standards.

Opportunity: Last but not least, owning your own business comes with countless opportunities. The opportunity to make a positive change in your community, be a voice to the masses, accomplish financial growth, create an empire, the ability to franchise in the future, the options are limitless. A word of caution, always seek independent advise from a competent professional advisor who will have an unemotional appraisal of the business you are looking to purchase.

All the above points are important considerations when looking to buy a business. However, no two businesses are the same, just as no two buyers are the same. It is important to consider both sides of the coin when venturing down the business ownership path.

If you’d like to discuss the process with an expert, contact Core Business Brokers today, on (02) 9413 2977, or email Roy on [email protected]. We know business sales like the back of our hand and will be more than happy to chat with you about our experience and your future.