Do You Treat Your Business Like A Farm or a School?

Well, come on, honestly, do you treat you business like a farm or a school?

Well known author, stephen Covey, develops an excellent metaphor around “cramming” (school) and “farming” (farm). He says that for long term benefit or to give things longevity then they need to be treated like a farm. For example, business relationships or  relationships of any kind, need to be treated like farming if you want them to be successful over time. By farming he means you need to be working on them all the time. Nurturing, developing and looking after them – long term.

On the other end of the scale you have what happens in schools and particular colleges and universities where students often leave everything until the last minute
and then cram for an exam. This gets he student a certificate but NOT an education, according to Covey. To become educated takes time – in otherwords, it’s farming.

What does this have to do with business, you ask? No, I’m not geting in to selling farms and schools!

To build a business “ready for sale” requires farming! It is a long term exercise if you want to sell for the best possible price and quickly and easily. Many aspects of a business which affect its value and saleability need to have a track record of consistency over a longish period of time. Usually a minimum of three years. A good track record of growth and profitability over a period of time are paramount – just to mention one aspect.

As I am committed to helping business owners realise their dreams through buying and selling businesses I am running some half day workshops on “The 7 Key Steps To Preparing A Business Ready Sale”. If you are interested in attending a workshop, or know someone who would like to attend just CLICK HERE for the details. If there isn’t a workshop in your area, just use the CONTACT US tab on the web site to request one! When there is enough demand I’m willing to go anywhere (well almost!).

Until the next time – remember, treat your business like “farming” and not a “school” – and like a well run farm it wil sustain you for a very long time.

Until the next post!

Regards
John

John (the Jedi) on Businesses

John Denton’s catch cry and passion is “Building Business’ For Sale or Lifestyle”. John sums it up well in that people mostly started their business for a ‘lifestyle’ reason and then somehow became a ‘slave’ to the business at some level.

John Denton is our “Jedi” knight and his core question… “What’s the objective here?” cuts straight to the bone and stops us from going over ‘to the dark side’ in all our entrepreneurial ‘flair and creativity’.

That objectiveness converts into manageable, implementable and focussed tasks that help us and many others move forward in their business with great momentum.

For those who know the ‘Jedi’ ways John also lives by the “Do… or do not… there is no try” which translates into massive action.

By Peter Butler – Smarter Websites

Why We Do The Hard Work Upfront

Hi Readers,

Last week I was reminded why at PBS we do all the hard work with the business seller “up front”. You see
I had a conversation with a young man who came to me as a ‘buyer’. I, and some of my colleagues,
showed him a number of businesses. Then, as sometimes happens, it all went quiet and no purchase was
made.

Some weeks later I received a call from someone wanting me to sell their business for them. It turned out
the young man I had been helping had referred this person to me as a reputable broker he should use.
When I rang the young man (buyer) to thank him I asked how he had gone with buying a business.

It turns out he had gone to a different business broking firm and had put an offer in on one of their business
for sale. After spending time and ‘emotion’ going through the purchase, it all fell apart in due diligence
because of problems in the financials. The young man put in another offer through that same broking
company only to have this second deal fall through as well.

What this highlighted for me was the strength of our process at PBS and how it protects both the buyer
and seller and minimises the chance of the deal falling through. We get the seller to provide us a lot of information about their business, including finalised accounts, UP FRONT before we do the appraisal. If
things don’t stack up, we don’t take the listing. If we do take the listing, then the next step is the business report and this is such a strict process that all strengths and weaknesses of the business are uncovered
and documented.

By doing the hard work upfront we make it a more successful, lower risk and less stressful process for
both parties.

I thank that young man for reminding why we do the things we do.
Bye for now!

Business Sale Prices Falling

Hi Everyone,

My posts have been infrequent – but WOW they’re good when they do come.

As I have been telling my clients for some time now, businesses values are going to decline as more baby
boomer business owners go to the market. This has been backed up by a recent article in BizExchange – here is an extract – for the full story go to www.bizexchange.com.au

A national business index, which monitors the value of private businesses, reveals that even before the impact of the US sub-prime fallout had reached Australia the value of privately owned Australian businesses was sinking.

The BizExchange Index, which covers the last quarter to Dec 07, says this trend is likely to accelerate in the wake of the tightening of credit flowing from the US sub-prime crisis and particularly if economic growth in Australia slows as a result.

The underlying driver in the Australian market is demographic change as more business owners approach retirement. This is increasing the volume of businesses for sale and decreasing prices as supply outstrips demand. The availability of funding, or lack of it, for potential Gen X or Y buyers is another factor to be considered.

Key findings included that the market is developing a definite pattern of listing volumes increasing (up 25% on last quarter) while prices are falling (down 5% on last quarter). This follows several quarters of fluctuations around a declining trend. The volume of businesses being advertised for sale continues to grow, up 25% on the previous Quarter (to Sept 07), and 46% on the same time last year. The majority of this growth in listings has been online The average price, expressed as a multiple of earnings, has dropped slightly this Quarter, and is also below the same time last year.

For further information please go to www.bizexchange.com.au

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