Biz Mastery Online

25/01/2023

Here are some TOP TIPS on how to present the adjusted income of your business and possibly help you increase the selling price.

An income and expenditure statement, also known as a profit and loss statement, is a crucial financial document for any business. It shows the revenues and expenses over a specific period of time. When it comes to selling a small business, it's vital to adjust the income and expenditure statement to give potential buyers a true and accurate picture of the business's financial performance. This can increase your selling price considerably.

One reason for adjusting the statement is to remove any non-recurring or non-operating items that may not be representative of the business's normal operations. These may include one-time gains or losses, such as the sale of assets, legal settlements, or restructuring charges that don't reflect the business's ongoing
operations.

Another important reason for adjusting the income and expenditure statement is to reflect the fair value of the assets and liabilities of the business. This includes adjusting the value of inventory, property, and equipment to their current fair market value, as well as adjusting the value of any outstanding debts or liabilities.

Additionally, it's also essential to adjust the income and expenditure statement to remove the owner's salary, benefits, and any other related expenses as they will not be present once the business is sold. Make sure business has sufficient staff but runs mean and lean.
This will reduce wasted salaries and improve profitability.

Remember to adjust the Owners Salary also to reflect what the markets demands and not necessarily a low package that is in place. The same applies for any lease on property relating to the business.

It's essential to note that the adjustments to the income and expenditure statement should be made in compliance with Generally Accepted Accounting Principles (GAAP) and local laws and regulations, and should be supported by documentation
and explanations.

Adjusting the income and expenditure statement when selling a small business is vital for providing an accurate picture of the business's financial performance and for compliance with accounting standards and regulations. It helps to remove non-recurring or non-operating items, reflect the fair value of assets and liabilities, and remove the owner's salary and other related expenses from the
financial statements.

If your business is selling on say a multiple of 4 and there are 50 000 per annum in addbacks, this can result in an additional amount of 200 000. Not to shabby.

25/01/2023

When starting or buying a business should we begin with the end in mind – THE EXIT PLAN?

Stephen Covey tells us in his book “7 habits for Highly Effective People and Living the 7 Habits” that we need to first mentally create a vision and purpose and goals for whatever we wish to achieve.

The same goes when starting or buying a business. Surely you don’t want to plod along just for the income and fun. Although its not always fun!

It is important to begin with the exit plan in mind because it helps to ensure that the business is built in a way that will make it attractive to potential buyers in the future. As 95% of all smallbusiness started do not sell you need to build an asset that will sell and then at maximum value.

Having a clear exit plan in mind also helps to guide the business decisions that are made and can help to maximize the return on investment.

Setting goals:
A clear exit plan allows entrepreneurs to set goals and objectives that align with the ultimate goal of exiting the business. This can help to ensure that the business is built in a way that will make it attractive to potential buyers in the future.

Building value:
When an entrepreneur has an exit plan in mind, they can make decisions that will increase the value of the business. For example, building a strong brand, identifying new revenue streams, developing a solid customer base, and implementing new systems and processes that will make the business more efficient and attractive to potential buyers.

Maximizing return on investment:
Having an exit plan in mind can help to ensure that the business is built in a way that will maximize the return on investment. This can include making strategic investments, building a strong team, and developing a solid financial plan.

Identifying potential buyers:
Having an exit plan in mind can also help entrepreneurs to identify potential buyers early on, which can be important for building relationships and positioning the business for a successful sale.

Timing:
An exit plan also allows entrepreneurs to be aware of the timing of the exit, which can be important for maximizing the value of the business and for planning for the next steps after the exit.

Develop new products or services:
Identify new opportunities in the market and develop products or services to meet those needs.

It's important to note that adding value to a business is a continuous process, and that it's important to review and improve the business regularly to stay ahead of the competition.

16/01/2023

If you want to sell your small business for top dollar, what should you do before putting it up for sale?
How are a few tips to help.

Prepare financial statements: Make sure that your financial statements are up-to-date and accurate. This will give potential buyers a clear picture of the financial health of the business. I have had to turn away many business where these were not complete. Nothing more concerning or frustrating for a buyer.

Increase profits: Showing that the business has been consistently profitable will increase its value. Look for ways to increase revenue and reduce costs.

Streamline operations: Buyers are often looking for businesses that are easy to run. Look for ways to make your business more efficient, such as automating processes or outsourcing certain tasks. Systems are a great value add for obtaining a better price.

Improve customer relationships: Strong customer relationships are a valuable asset. Make sure that your customers are satisfied and that you have a good reputation in the industry. Showing up on Trust Pilot or similar as providing bad service will do little to enhance the value.

Invest in marketing: A well-executed marketing strategy can help attract buyers and increase the value of the business.

Update equipment and technology: Make sure that all equipment and technology is in good working order and up-to-date. This will show that the business is well-maintained and that there are no major repairs needed.

Review legal and regulatory compliance: Make sure that the business is in compliance with all legal and regulatory requirements. This will avoid any potential issues that may arise during the sale process. Ensure turnover vs Vat makes sense.

Prepare a detailed information memorandum: This will provide potential buyers with all the information they need to make an informed decision about the business.

Consult with a business broker or M&A advisor: They can provide guidance on how to prepare the business for sale and help find potential buyers.

Consider a business valuation: This will give you a clear idea of the business's value and help you set an appropriate asking price and in the negotiation process.

Human Resources: Ensure you have files on all the staff, they are up to date with HR requirements and staff reviews are recent.

15/01/2023

When buying a business, one of the most important factors to consider is the industry in which the business operates. Choosing the right industry can mean the difference between a successful investment and a costly mistake. Here are a few key things to keep in mind when selecting an industry:
1. Understand your own skills and experience: It's important to choose an industry that aligns with your own skills and experience. If you have a background in finance, for example, you may be well-suited to buying a business in the financial services industry.

2. Research the industry: Before making any decisions, be sure to research the industry you're considering. Look at market trends, competition, and the overall health of the industry. This will help you to understand the potential risks and opportunities associated with the industry.

3. Consider the potential for growth: When buying a business, it's important to consider the potential for growth. Look for industries that are expanding and have a strong outlook for the future.

4. Look for niche markets: Niche markets can be a great way to enter an industry with less competition. Look for industries that have a specific niche or unique selling point that sets them apart from other businesses.

5. Consider the level of competition: While competition can be a good thing, it's important to consider the level of competition in the industry. Look for industries where there is room for new players to enter the market and make an impact.

6. Evaluate the financials: Review the historical financials of the business you are interested in, including income statements, balance sheets, and cash flow statements. Also, consider the current financial trends of the industry and how they may affect the business.

Ultimately, selecting the right industry when buying a business is all about understanding the potential opportunities and risks, and making an informed decision based on your own skills and experience, research, and financial analysis. It is important to have a good legal, financial and other professional advisors to help guide the process.

26/09/2022

Love to listen to Jack

One of the principles that successful people live by is to take 100% responsibility for their lives. They do not wait for others to help make their dreams come true or make excuses for things that get in the way of their achievements.

Instead, successful people understand that where we are headed in life is under our control. This is because regardless of what is happening around you, you get to choose how you react.

Take 100% responsibility for your life today by charting a course for yourself and then choosing the positive thoughts and actions every day that will get you there.

12/01/2022

DO YOU HAVE THE SKILLS FOR THE BUSINESS YOU ARE BUYING?

All of us have skills in one area or another, and obviously your particular skills need to be taken into account when deciding on a business to buy.

Narrow down your passions, interests, skills and experience. You’ll be happier if you buy a small business that dovetails with what you already like and have some experience in.

At the most simplistic, if you have worked in a certain type of business for someone else, say a hairdresser's or confectioner's for example, you probably have most of the skills needed to run a similar business yourself.

If, on the other hand, you have worked in a job that has not provided you with particular skills relevant to running a small business, you will need to consider businesses that do not require skills only acquired after years of training. Consider what skills you would have the capability and aptitude to acquire quickly.

Some businesses require only generalised skills, and others more specialised ones. It is impossible to give a comprehensive list, but here are some examples to illustrate the point.

Running a small sandwich bar or 'fry up" is very much like running an overgrown family kitchen. That's not to say that it’s easy, but learning to scale-up what you already do at home would be relatively straightforward. On the other hand, running and la carte restaurant is a totally different ball game.

If you have trained and been a chef, then fine. However, if you will have to rely on employing a chef, then you are taking a huge risk. What happens if the chef leaves overnight without warning? It would take years, if forever, for you to be able to step in and take over the kitchen at short notice.

Running a small shop is generally straightforward, but you should not consider buying a specialist butcher's shop unless you are trained in art of cutting meat. have dexterity and good hand to eye coordination.

Slightly less obvious is accounting requirements. A retail business, where the customer pays at the point of sale, is fairly easy to run with a simple cash book. However, if you are running a B2B trade, where your customers expect trade credit, then you are going to need to run accounting software with your customers' accounts, send out statements and follow up by phone, letter and in person to chase late payments.

If it is the type of business where it is necessary to submit detailed quotations, is your English good, your mathematics OK and are computer literate?

In summary, when you consider types of businesses, think about how you will need to be spending your day, and whether you can manage or learn all the tasks you will have to undertake. Possibly a partner will be able to cover your weak areas.

29/12/2021

Its been a DISASTER for UK Small Business. The recent onset of Omicron in the UK has seen another record rise of daily Covid cases, with 138,831 reported in England, Scotland and Wales alone.

UK Small Business statistics for 2020 tell us that:

There were 5,9 million small businesses at start of 2020 with employees ranging from 0 - 49 , 99.3% of total businesses.

SME's account for three fifths of employment and around 50% of turnover in the UK private sector

Total employment in SME's was 16.8 million (61% of total)

Turnover estimated at 52 % of total UK turnover

Employment in small business (0 - 49 employees) was 13.3 million (48% 0f total), with turnover of 1.6 trillion (36%)

The more Small Businesses that close, the less employment, taxes, savings for retirement and a decline in growth and GDP and ultimately our lifestyle.

Many Small business are Financially Fragile. Beside the loss to our economy, it is the closure of another business with loss of earnings for the employees, small business owner and his family together with their dreams and aspirations. Do we need to do more for those fragile small businesses?