Business Advice

With many people comparing Covid-19 to the global financial crisis of 2008, it’s no wonder some business owners are worried about selling their business during the pandemic. However, the two situations are quite different, and you shouldn’t assume that your business won’t sell – or will fetch a lower price - because of Covid-19. Clearly, market uncertainty can be an issue in some sectors, but many other businesses remain very sought-after. And even those more directly affected by the pandemic can sell – it just requires a different marketing strategy. If you are considering selling your business, it’s for a particular reason. And that reason is generally retirement, health, burn-out or changing direction. So, why should you put your plans on hold because of Covid-19?  If you are waiting for life to return to ‘normal’, you could be waiting a long time! The question to ask yourself is this: Am I selling so that I can do something different with my life, or am I selling to make as much money as possible?  Whilst the pandemic has caused some uncertainty, we also have interest rates at an historic low. As a result, this is the perfect time for many buyers to acquire a business. Equally, whilst the pandemic has caused job losses, many of those affected have substantial savings or redundancy packages and now wish to buy themselves a job. Unlike the GFC, the current situation has generated a range of Government interventions and financial support.  This has not only generated interest in buying businesses but also enabled many more businesses to remain viable. The crucial point is how you prepare your business for sale. This is always a key factor and is now more important than ever. There are buyers who will be looking for bargains, so you need to make your business as viable and attractive as possible to achieve the best price.  As the song goes, you need to ‘accentuate the positive’. That doesn’t mean covering up what isn’t working; it means making the most of what is.  For example, the switch to remote work and tele-conferencing has resulted in unexpected efficiencies for many businesses. Perhaps you have discovered a new niche market as a result of dealing with the pandemic, or you have streamlined your products or added new lines. Many businesses have been forced to find new and innovative ways of communicating with and responding to their customers – another strong selling point. And as for online and delivery businesses, well, they are booming! Xcllusive Business Sales has methods in place that will help you package and market your business to attract buyers in the current climate – and get the right one across the line. For more information contact Xcllusive Business Sales on phone number (02) 9817 3331 or visit www.xcllusive.com.au

Navii can provide tailored advice to help your business take the next step to go digital. Do you want to increase your productivity, reach a larger audience and grow your business online? Navii can help you! What is Navii?Navii provides independent, tailored advice and support to Australian small business owners through digital tools and knowledge to increase profits and help save time in their business.The Navii team is made up of passionate small business enthusiasts and digital coaches who aim to: help small businesses navigate the vast web of information about using digital in business provide trusted advice and tested technology solutions that help businesses drive their growth and productivity guide small businesses on their next steps in going digital. How does Navii support small businesses? Free resourcesNavii offers free resources, including: the Next Best Steps 5 Day Challenge small business case studies and stories of success blog articles with advice and news a list of vetted third-party resources. Private consultationsYou can purchase a 1 hour private consultation with a Navii experienced coach to help you make the right choice for your business and your situation.Digital health checksA digital health check will provide a detailed assessment of your business’s online presence by reviewing your website and social media profiles.Online coursesNavii has online courses on a broad range of digital topics. With an online course, you’ll receive: video lessons real examples written guides downloadable templates worksheets. Industry training and development programsNavii has worked with regional councils, state governments and industry groups to design training and development programs for groups of businesses. Each program is tailored to your business’ region and industry. For more information visit www.business.gov.au

Learn what steps you need to take if you're about selling your business and the tasks you may have to undertake. Follow the proposed steps to guide you through the process to help you get it right. 1. Make sure selling is the right decisionConsider the real reason behind your decision to sell your business, and make sure it's the right one for you. This is a common question that potential buyers will ask, ‘Why are you selling your business?’.If you're thinking of selling because of financial problems, consider about getting professional advice from a business adviser to make sure selling is the right decision. Selling your business may result in additional obligations to pay, such as employee entitlements or tax amounts from asset sales. 2. Decide whether to use professionalsLook at using a reputable business broker, accountant or solicitor to help you sell your business.Business brokers are professionals who help you buy or sell businesses. They can help you understand legal and government requirements, offer advice about the profitability of your business and provide market trends for your industry. They can make the process of selling your business less stressful.Make sure you check the professional's credentials to ensure they're reputable before using their services.You may also wish to talk to family members and friends for more personal advice on your decision. 3. Decide what’s for saleMake sure you agree on exactly what to include in the sale of your business. Establishing what exactly is for sale will help you value your business. Ask yourself: Do you want to sell the business outright including all the assets? Which assets don't you want to sell? Do you want to sell your registered business name? Are you looking to sell the business’ intellectual property (IP)? Do you want to include any property the business might own? 4. Value your businessValuing your business is about working out how much your business is worth so you can set the right price when selling.There are different ways to value your business. Three of the most common valuation methods are: Analysing your market – compare your business to similar businesses on the market or that have recently been sold. While this is not a formal valuation, it does provide a guide to your possible market price. Calculating a business’s net worth – compare the difference between what your business owns (assets) and what your business owes (liabilities). You need to consider both tangible assets (such as machinery, buildings and land) and intangible assets (such as goodwill, brand recognition and intellectual property). sing return of investment (ROI) – use your business’ net profit to work out the value of your business. 5. Find buyers for your businessYou can advertise the sale of your business to potential buyers through different methods, which include: business brokers or real estate agents digital and traditional media your existing networks (e.g. family, friends, or employees) word of mouth current or former customers of your business The way you advertise will depend on your business type, industry and contacts.Check whether there are any requirements in your state or territory about what information you need to give potential buyers. 6. Negotiate the saleWhen negotiating the sale, make sure the information you give about your business is accurate and true. If you say anything or provide information that is later found to be untrue, it may be considered misleading or deceptive behaviour.You need to agree with the buyer on a range of things, including: sale price deposit amount (usually 10% of the sale price) settlement period handover training (if any) for the buyer arrangements for existing staff 7. Prepare the contractOften, an intermediary will draw up the sale contract for you.Check your state or territory to find out if there are any special requirements you need to follow when preparing your contract.You can also have a solicitor check the contract for you. The solicitor can confirm that the contract doesn’t include any false statements, and covers all aspects of the sale, including: all the relevant assets that are being transferred, including property, equipment, fixtures, fittings, stock, and any rights to use any names all the relevant liabilities, including creditors (people or businesses that your business owes money to) and the lease of the business premises responsibility for employees and employee entitlements, including whether employees are to be transferred with the sale statements about what will happen if any issues arise (for example, the buyer decides not to proceed, mistakes are discovered in the contract, etc) There are some contract clauses that will restrict you from trading in your profession after the sale of your business. These clauses are often to prevent you from competing directly against your sold business. Make sure you’re aware of all the terms and conditions of the contract before deciding to sell. 8. Take care of your employeesIt's important to communicate with your employees and let them know whether they'll be transferring across to the new owner or ending their employment due to the sale of the business. In both cases, a transfer of business ends an employee’s position with you. You must give your employees notice of ending their employment with you or provide payment in lieu of notice.When employees transfer with the business, you need to give all relevant employee information to the new owner. There are some employee entitlements that the new owner must recognise and others that the new owner doesn’t have to recognise. 9. Finalise your tax and legal issuesConsider whether Capital Gains Tax (CGT) and Goods & Services Tax (GST) apply to the sale of your business. For example, if your business is registered for GST, you may need to include GST in the price of your individual business assets or repay GST credits.If you're selling a small business, CGT concessions may be available.If you consider carefully what tax obligations will arise from the sale of your business you can also plan to meet them and avoid being in a debt situation. If you do find that you cannot pay your taxes on time, you may be able to get help through an ATO payment plan.Find out more about things to consider when changing, selling or closing your business from a tax perspective on the ATO website.Consider any insurance requirements for your business, such as run-off cover (where you are insured for any legal claims that are made after you sell your business). 10. Transfer your business to the new ownerOnce your business is sold, you need to transfer your business to the new owner. You need to: transfer leases, licenses and permits finalise tax returns, activity statements and instalment notices cancel your ABN and transfer or cancel your business name You’re still responsible for any lease agreements and obligations that are part of your business until they are transferred to the new owner. License transfers can take up to 12 months, so it’s important to plan for this early in the process. business.gov.au  

2020 saw the biggest disruption to our businesses, communities and lives for decades – probably since WWII.But the coronavirus pandemic followed close on the heels of the Australian bushfires, the resources industry crash, massive floods, the Global Financial Crisis … It seems that we no sooner get through one crisis, when another one comes along. And that is exactly what does happen. So why are we always surprised when another disruptive event happens? Why do we treat the crisis times as abnormal, and the good times as normal when, in reality, it’s the other way around.I have personally experienced many such events over my lifetime – both in life and in business. Growing up on a rural property, some of my earliest memories are of helping my parents hand-feed cattle. We experienced huge ups and downs in grain and cattle prices. Sometimes, cattle were like gold on legs and other times they would actually cost money to send to market – the freight cost more than the sale price received.  In 25 years of running my own businesses, I’ve experienced and survived several economic booms and busts when stockmarkets reached  insane heights, before plunging. Through all these booms and busts, business crises brought on by natural disasters, and tragic life events, I have concluded that it is all ‘normal’.Eventually, I put pen to paper and wrote about my experiences, and what I have learned from them, in a book Small Company, Big Crisis: How To Prepare For, Respond To, And Recover From A Business Crisis.   The premise of the book is that while nobody can accurately tell what is ahead of us, even a small amount of thought and preparation can mean the difference between life and death for a business when a crisis hits.There are some risks that your business faces that, while you fervently hope they will not happen, you can put some measures in place to limit or even prevent any damage.As an example, look through this list and consider whether one of these events would disrupt your business – and potentially cause it to collapse: A long-term employee leaves and takes all their knowledge with them. Hackers invade your computer systems and delete or steal all your files. You, your business partner, or a family member becomes ill, or worse, passes away. You, or your business partner/s, go through a divorce. A trusted employee commits fraud and steals tens or hundreds of thousands of dollars. Your best, and largest customer, decides to switch to another supplier. A new technological innovation suddenly makes your product or service obsolete. Your main supplier’s premises burn down, and they can no longer supply you with product. A global pandemic strikes. That last one wasn’t on my list of business risks, but it certainly is now.The list above is by no means exhaustive, but you get the idea.  There are many, many events that can impact your business. In 2020 – 2021, it is the businesses that had done some thinking and preparation in advance that were in the best position to survive the COVID 19 pandemic – and any other crisis that may come along. Research in the UK shows that companies that had planned for Brexit – even though the outcome was very uncertain – are the ones that have best survived the pandemic. The steps to prepare your business are not difficult and do not take a lot of time, but will ensure   that a left-field event is not fatal to your business. Or, if the unfolding crisis is so large that your business is threatened, your plan will allow you to extract yourself and your family from the business with sufficient resources (and energy) to start again.But merely surviving is not sufficient. At the end of every crisis event is an upturn, and the well-prepared business owners will be at the front of the queue for the recovery – ready and able to thrive in the new circumstances that now prevail. A small amount of time spent now can save a world of pain later.   Bronwyn Reid, Owner, Small Company, Big Business For more information visit www.bronwynreid.com.au  

Buying a business can be difficult if you don’t have the funds.   There are ways to buy a business and settle on the transaction without the funds and without spending your own money, or lending money from a traditional lender.       1. Vendor financing Vendor financing is a loan arrangement with the seller for the repayment of the purchase price, plus interest, allowing you to preserve your own funds and borrowing capacity with the bank.  The loan could be repaid in increments over an agreed time following completion out of future profits of the business.  To ensure the loan is repaid, the seller might require security over the assets and the future income of the business and a personal guarantee. If you default on the loan, the security enables the seller to claw back the assets or access the funds generated by the business or make a claim on you personally for the amount. 2. Leveraging the assets  Businesses that are rich in assets offer internal restructuring opportunities, which might be used to fund the business.  Instead of owning the assets to operate the business, the assets could be leased and the existing assets sold. The funds from the sale of the assets could be used as working capital or to pay the seller for the business. Alternatively, the assets could be used as security for a loan.  The amount of the loan might be less than the value of the assets, as the assets are usually calculated on what they would sell at an auction in case the assets need to be sold quickly by the financier if the loan is in default. Before undertaking this strategy, verify that the Seller owns the assets and the assets can be used as collateral.  If the assets are already secured by a finance company, the finance must be released before the assets are sold or secured by another loan. 3. Leveraging the projected income  A loan can be obtained by borrowing against the projected income of the business, or any outstanding invoices. A loan might not be able to be obtained for 100% of the debts.  The financier might stipulate that only invoices with due payment of thirty days be secured against, rather than using all of the debts owing to the business.  4. Structuring the purchase through equity Share or equity arrangements through buy-ins or share swaps provide ownership opportunities.  Buy-ins: A buy-in is an arrangement where you can work in the business, and be issued shares in the company that owns the business rather than being paid for that work in cash.  Over time your ownership in the company which operates the business increases. Share swaps:   The Seller could be offered shares in the company that is acquiring the business or shares in an existing business you might already own, in return for shares in the company you would like to acquire.  5. Delaying payment depending upon results If the value of the business is calculated upon future contracts, sales or earnings which have not yet been received by the business, you could agree to pay the funds attributed to that future value as an earn-out after completion.  If the payment is not received by the business, then no payment would be owing to the Seller. 6. Alternative funding sources  Private equity:  Private equity financers and angel investors are alternative funding sources to a bank, who provide funds as a loan or in return for the issue of shares in the company buying the business.  The business being acquired must be a viable investment opportunity, or the terms of the loan must be attractive to the investors.    Credit Cards: Credit cards may be used to pay for the purchase and can be repaid from the profit or income of the business after completion.  Joint Ventures:  An interest in a business might also be obtained by entering into a joint venture with another person or company that has the funds to buy the business.  Due diligence and the agreement    A combination of strategies can be used to buy a business.   However before undertaking any strategy, due diligence on the business must be undertaken and before completion of the sale, the arrangement must be put into writing.  The agreement should include how the purchase price will be repaid;  details of any deferred payments; when the risk in the business will pass to the buyer;  and the consequences of failing to repay the money.   If the transaction is reliant upon funding documents, these documents should be entered into contemporaneously with the sale agreement for the transaction. Conclusion Vendor financing, leveraging the assets and income of the business, using equity and alternative funding sources can be used when buying a business to enable you buy a business when you ordinarily would not be able to afford it; retain your funds and lending capacity, or to defer the payment and the risk of the business.  Due diligence should first be undertaken to understand the business and whether the particular strategy can be completed.  The arrangement should also be recorded correctly.  About Sharon Robson Sharon Robson is Founder and Principal Solicitor of Antler Legal and author of Entrepreneur Know How – Mindset and Winning Steps for Buying a Business. For more information see www.entknowhow.com/book Disclaimer The content in this article is of general nature only and does not constitute legal advice. This content must not be reproduced without the author’s consent.

We have updated our information to make it easier for franchisors and franchisees, including prospective franchisors and franchisees, to access information and support. Are you interested in buying a franchise? Or maybe you’re a current franchisee looking for more information on your legal obligations or help resolving a dispute?     Following the Parliamentary Joint Committee on Corporations and Financial Services ‘Fairness in Franchising’ report, we have expanded our online support and resources to help you understand the risks and benefits of franchising and help you meet your legal obligations. The report found that people lack pre-education and access to advice before getting into franchising. Many prospective franchisees have not undertaken research or sought legal, accounting or business advice before signing into franchise agreements. We know that franchisees who participated in pre-entry training tend to have better relationships with their franchisor and be more successful in business. How will the updated information help you? The updated information will help you to: understand risks and rewards to decide if franchising is right for you get all the facts and ask the right questions before signing the franchising agreement access government support available for franchisees, including support for managing disputes, government websites that provide information about running a business and how to exit a business find resources and training including free online Pre-Entry Franchise Education course know your rights and obligations as an employer keep up-to-date with new changes for the franchising sector The updated information is part of the government’s commitment to increase need for transparency and accountability, protection and education and awareness to make franchising fairer. We have designed the information with franchising stakeholders to streamline access to education and support. We will be adding more information once franchising code amendments have been made and come into effect later this year.    For more information visit www.business.gov.au  

“If you're looking to sell your business, one of the things that might pop in your mind, if you've got a lease on your premises is what do I do if my lease is running out. Okay so that gets tackled a couple of different ways so I guess if you're in a situation where your lease is critical to the operation of your business, well really what you want to do is you want to make sure that for a new owner that they've got some tenure so the lease for years going to really have an impact on them wanting to buy it, but mainly on them actually getting financed to be able to buy the business because generally the bank will only fund a loan for them over the over the risk period of how long that lease is. So that's something that's important now you don't necessarily need to go and renew the lease yourself and extend that out but what you do want to do is maybe have an understanding with the landlord that when somebody else comes along that might say you've got a year left or something that the landlord's happy to then give them a further extension and you might look at that and ask them to maybe try to get at the moment on your lease, you might try to get it further option to renew. Or for yourself depending on the situation if you don't want to commit to that extra lease from you or yourself you might ask a landlord if you go on a month by month for a while so there's a couple of ways you can look at it you've just got to really wipe out the risk because if you go month by month that's landlord month by month too, they can you win a month and you can you can boot them in a month, so that's the sort of stuff that you need to take into account if your businesses if your business is critical to that location month by month can be risky because if they get a better offer…you're out, then you've got nothing to sell so these are sort of things you've got to work.” Transcribed from Steve Finnhttps://youtu.be/d-mHWoNWeAk    

We have developed a guide help you recognise common scams and share tips on how to protect your business and customers. Scammers target small business owners as they recognise they are busy and usually have limited resources to keep their systems safe. Scam risks have increased as a result of the COVID-19 pandemic. The latest COVID-19 scams are designed to take advantage of the changes to our daily life including: loss of jobs and financial vulnerability fear of infection the shortage of particular goods and services   Download the Be COVID Fraud Aware guide The Be COVID Fraud Aware guide will help you: know the common scams to look out for protect your business from scams protect your customers information know where to get further assistance and report a scam Download here

A franchise can seem like a safe way to buy your own business. However, in reality, it comes with specific risks and challenges that you should understand and investigate before signing a contract.  There are no guarantees you’ll make an income from franchising If you want the flexibility of being your own boss, franchising may not be the right choice for you Just because a franchise is for sale doesn’t mean it’s a profitable business The law won’t always protect you if something goes wrong Franchise agreements are not forever Buying a franchise? What are your questions?   There are no guarantees you’ll make an income from franchising   Starting any business can be expensive. In franchising, on top of regular operating costs, you also have franchise fees, marketing fees, and possibly expensive supplier agreements. You will need to pay all of these before you can pay yourself a wage.   Some franchise systems offer an 'income guarantee'. These often come with conditions that may make it hard to earn the promised income. You should be very wary of any guarantees or promises about income.   In franchising, if you can’t pay your expenses, the franchisor may be able to end the agreement early (termination).    Smart steps Talk to current and former franchisees. Select these yourself – don’t be pressured by the franchisor to only speak to the best performing franchisees. Ask how long it took them to earn an income from the business. Also make sure you ask former franchisees why they left the business. Do a business course before you sign up. Franchising, like any business, requires business skills to be successful. You’ll need to understand costs, turnover, profit, cash flow and all the financial aspects of running a business.  Use these skills to do your own business plan and test things for yourself. Get advice from an accountant or business advisor. This needs to be someone who specialises in franchising, not your regular accountant. Franchisee case study “I’d always wanted to work for myself, but I couldn’t take the leap without knowing I could still support my family financially.   I saw the franchisor’s ad on an employment website, with an income ‘guarantee’. It seemed perfect because it had a safety net.   But here’s what I didn’t realise at the time - the income guarantee could be cancelled. It said this in the franchise agreement that I signed, but I didn’t realise.   The income guarantee was cancelled because I did not meet all of its conditions. After costs, my actual profits in the first twelve months of operating were next to nothing. I couldn’t pay myself much with what was left over.   I had to work in the franchise full-time, seven days a week for a whole year without drawing any real wages. My family ended up supporting me - it was supposed to be the other way around.”     If you want the flexibility of being your own boss, franchising may not be the right choice for you Franchise agreements give more power to the franchisor than the franchisee, and this can have a big impact on your business.   Normally you will have restrictions on suppliers, where you can operate, and what you can sell. The franchisor can usually make you pay for important supplies at higher prices that you might find elsewhere. The franchisor may also be able to make changes to the way you run your business without your approval.   Smart steps Talk to current franchisees. They can give you practical examples of when they are their own boss and when they are not. They can also tell you if any changes have been made by the franchisor and how the changes impacted their business. Get legal advice. Hire a franchising lawyer to go over your franchise agreement and disclosure document. Know what restrictions are placed on your business and what changes the franchisor can make without your approval. This may seem expensive but could save you a lot of money later on. Franchisee case study “I thought that by buying a franchise, I would be my own boss. I wasn’t afraid to put in the hard work to be successful. But I didn’t realise that I would have very little say in how the business was run - the franchisor controlled almost every aspect of the business.   I was unhappy when the franchisor decided to run “specials” and “promotions” to get more customers, forcing franchisees to sell our most popular products at a much lower price. Participating in these promotions killed my profit margins, but I couldn’t opt out.   The franchisor justified it by saying they had done market research and that it will pay off - but I just can’t afford it! Unfortunately, I have no choice but to go along with it because the franchisor always has the final say on the important decisions – that’s the reality of being a franchisee.”     Just because a franchise is for sale doesn’t mean it’s a profitable business In many franchise systems, ongoing fees are calculated based on money paid to you by customers (turnover], not profit. So if you buy a franchise that doesn’t make a profit, you still have to pay fees, even if you are losing money. Owning an unprofitable franchise mainly impacts you, not the franchisor, because the franchisor still collects their regular fees.   If your franchise keeps being unprofitable and ultimately fails, the franchisor may still be able to make money by reselling your business to a new franchisee after your agreement ends.   When selecting a franchise, it’s important to choose one where the franchisor has a financial interest in you being successful.   Smart steps Request financial history and information about the franchise and franchise system you are buying. Take this to an independent accountant or business advisor. If the seller or franchisor won’t give you up to date and accurate financial information - walk away. Understand what’s in your franchise agreement. Read the agreement and get advice from an independent lawyer on what fees and payments you must pay. Talk to current and former franchisees. Ask them about franchise profitability and their franchise’s financial performance over time. Franchisee case study \"When I bought my franchise a few years ago, I thought I was buying a solid business. The franchise network had been around for a while and was well-known. It was a popular brand, with lots of stores, and good quality products for sale.   It wasn’t until after a few months that I realised the franchise system had serious problems. I learned that many franchisees had been operating on paper-thin profit margins for a long time and quite a few were fighting with the franchisor. The franchisor seemed to just ignore the problems and kept opening new stores, or reselling the ones that failed.    I am still running the franchise, but it hasn’t been smooth sailing. I regret not doing more research and looking for a better franchise.\"     The law won’t always protect you if something goes wrong   The ACCC receives reports from franchisees about poor business outcomes and difficult relationships with franchisors. You may be surprised to know that this can happen without any laws being broken. The laws in Australia don’t stop bad business deals from being made – including when someone buys a franchise. Franchisors do have an obligation to act in good faith, but this doesn’t mean that the franchisor can’t act in their own commercial interest. If you sign a franchise agreement, even if it ends up being a bad deal for you, you might still have to do what the agreement says.   Smart steps Seek expert legal advice. Ask a franchising lawyer to explain the conditions of the contract, the Franchising Code of Conduct and your rights under Australian law before you sign a franchising contract. Talk to current and former franchisees. Ask them about their experiences owning a franchise, what happened when there was a dispute with the franchisor, and what they would do differently. Franchisee case study “I had always thought of franchising as a safe bet, at least compared to running an ordinary small business. I’d heard about the Franchising Code and I felt the laws in Australia were fair compared to my home country. After operating for a year, my franchise wasn’t doing so well. My wife had been sick, so I couldn’t spend much time chasing new clients. But when the franchisor terminated my agreement only twelve months into my five year term, I was completely shocked, because it seemed so unfair.   I was devastated when I found out nothing could be done about it. In my case, or so I was told, the franchisor was within their rights to terminate me. They hadn’t broken any laws or breached the agreement and had just acted in their own commercial interests, so the Franchising Code couldn’t help me, and the government people couldn’t help me.   I ended up leaving the business, with nothing but debt.”     Franchise agreements are not forever   Franchise agreements are for a specific time period, usually a limited number of years (fixed term). Even after years of operating a franchise, some franchisees still have business debts or loans to pay off when the franchise term ends.   Being able to operate the franchise for longer than the fixed term depends on getting an extension or renewal of your agreement. The franchisor usually has the power to decide this. You may not get an extension or renewal, even if you want one.   If the franchisor doesn’t renew, you might be left with debts to pay. Or if you are able to renew, you may need to pay renewal fees and additional investment costs to continue with the business.   Smart steps Get specialised legal advice to understand what happens when your term ends, or if your franchise is terminated. Can you renew the agreement if you want? What will it cost you? Can you sell the business to anyone? Will you get any money back if you’ve paid for an upgrade to the premises but get terminated a month later? Are there limits on where you can work after the franchise ends? Get accounting or business advice to understand if you can break even before the end of the first term. Breaking even means you make enough money to pay back the money you paid to start the business and daily operating costs. If you don’t think you’ll break even, talk to your accountant or business advisor about whether or not you should buy the franchise. Franchisee case study “I used my savings and also borrowed from family to buy my franchise. I knew I wasn’t going to make a return on my investment in the first year or two, but I wasn’t too worried. I had a really good relationship with my franchisor and was confident about where the business was headed. I knew I would grow the profits over time.   I was stunned when the franchisor didn’t renew my franchise agreement. Apparently the franchisor had decided to “go in a different direction”. I told them that I needed a few more years to earn a return on the money I had invested in the business, but they didn’t seem to care – they said they were allowed to act in their own commercial interests. My lawyer told me the same thing.   The worst part was telling my family I wouldn’t be able to pay back what I had borrowed.”     Buying a franchise? What are your questions?   The ACCC would like to hear from people who are thinking about buying a franchise to find out what questions they have or what information they need.   Please complete our short survey to help us keep improving our education and information. Note: Franchisee case studies are based on one or more reports to ACCC. The resources and information on this page are not a complete guide. You should also get your own independent legal, accounting and business advice before you buy a franchise.         ACCC - © Commonwealth of Australia.

After reporting a recovery in revenues in the December 2020 quarter, franchise business networks are far more positive about 2021, according to the latest Australian Franchise Sector “Pulse Check”. This is backed by today’s release of the Australian Bureau of Statistics December quarter figures showing economic growth increased by 3.1%. The Pulse Check survey (including responses from 68 Australian franchise systems covering 14,596 outlets) showed that a third of respondents (33%) reported December 2020 quarterly revenue increases exceeding 10% compared to the December 2019 quarter, reflecting the agility and performance of franchises in resilient industries. Positive trading was concentrated across the quick service restaurant, maintenance, health, courier and freight industries. Sit-down restaurants and cafes, fitness clubs and accommodation businesses proved less resilient with state border issues remaining significant. While 53% reported some level of loss making within their franchise system, 47% of respondents indicated that none of their franchisees would record a trading loss in the December quarter (up from 24% in the September quarter). A total of 157 new units were opened across 35 brands, predominantly in the categories of retail stores, pet services and home maintenance services. A total of 62 franchised units were permanently closed across 18 systems, predominantly cafés. There was positive sentiment for the March 2021 quarter, with 51% of respondents anticipating a moderate (37%) or significant (14%) increase in revenue. 75% of respondents indicated they were optimistic about business conditions in the next six months and 15% indicated they were neutral. The percentage of respondents pessimistic about business conditions for the next six months halved from 20% to 10% in the December quarter. The greatest concerns or challenges reported by Australian franchise systems were: Financial performance of franchisees 38% Landlord and commercial leasing issues 35% Franchisee recruitment 32% Wellness of franchisees and support staff 25% Engagement and satisfaction of franchisees 25%     Editor’s notes: The “Pulse Check” survey is undertaken for the Franchise Council of Australia by FRANData to provide insights on the status and experiences of the Australian franchise sector during each quarter. FRANdata provides Brand Ratings, Finance Access Reports and Benchmarking services on participating Australian franchise systems. FRANdata also operates The Australian Franchise Registry™ which holds information on more than 200 brands covering 30% of the Australian franchise sector. The report of findings from the December Quarter 2020 Australian Franchise Sector “Pulse Check” survey is attached.  For further information, please contact Darryn McAuliffe on 0412 789 027 or [email protected]    

\"I want to give you some tips today if you're looking at selling your business and you've still got a loan on that business, you might have some equipment finance or something like that, so here's what help actually works, here some tips around some of the different scenarios that might actually affect you so when you sell the business you've got the chunk that you owe the bank basically hopefully you sell the business for more than that, when the buyer pays you that goes to your solicitor or your settlement agents trust account held and dispersed funds and part of that will be the bold then give you know, that chunk of money to your bank to pay them out and then whatever is left then goes to you. That's how that works sometimes you might be in a situation where you actually owe more on the business than what you sell business for so if that's the case look it's a real challenge because when you sell the business it's generally and sell for what it's worth for in the open market, unfortunately there are cases where people may have bought a business and they're now the business when they sell it's not going to sell for the same amount or it's going to sell for less than what they want to pay for it or what it costs them to set it up. So in those cases basically what you've got to do is if you've decided that you are going to sell, what you've got to do is you've just got to say okay, well it is what it is and whatever we get so $500,000 on the business, if you're going to get $300,000, you get that $300K you pay it off you're left with the balance of $200K and you've really just got to move on to the next venture and then just sort of sale took one or two steps back will now got a move forward and try to catch that up if we can that's just really how it is. If you're in a situation where you've got some equipment finance, for example in your business generally what will happen is for some parts of that finance it might be worth actually just paying it out and the new owner will take over and they'll refinance at equipment themselves however they want to but in some cases you might be on like say a rental lease or something of some equipment and the payout might be revived or they're just going to finance the same way anyway, so in that case what'll happen is normally it'll just it can be like an assignment they still need to do their own loan application, you'll end your loan with that provider, but basically what the provider will do is effectively they'll shift the loan that's there the weekly or monthly financial cost of the buyer person is buying business so it’ll pretty much sort of help out work, so if you owe some money on the business, you'll get selling it's fine it's all part of what's normal probably most of people would deal with do have a loan on their business it's just a matter of how you then decide to deal with it.\" Transcribed from Steve Finnhttps://youtu.be/ZiqxZK5LN9E    

We know what it looks like to reap the rewards of hard work because it’s easy to picture. It probably looks like a thriving business with balanced accounting books, happy clients, and satisfied staff. What do the seeds look like that grow into these successes? What actions will lay the foundations for these results?  Here are 12 tips for 12 months of business wellness. 1. January: Set KPIs for staff performance reviews  Performance reviews are important for the well-being of your company from the inside. They can also help your employees to stay on track and focused on the goals of their role. KPIs are not bout policing employees but rather about ensuring that the company is moving forward towards its goals and that each person has their eye on the target. Figuring out how to set and implement these KPIs, as well as knowing how to have difficult conversations with team members, might call for external assistance from HR professionals. 2. February: Set actionable goals for each quarter  February is the month of LOVE. Love your business. Love your staff. Love your customers. Host a get-together (COVID-permitting, depending on the area you’re in) for your clients and your teams. A casual barbecue with drinks, a dinner, or a charity event to let those that make the lifeblood of your business know you love and appreciate them.  3. March: Measure your marketing efforts and seek out your weak points  How is your first quarter going? Now is the time to evaluate the strategy you created in January. Meet with your accountant and actively look for ways to improve your cash flow management. Also, evaluate your sales-funnels to understand where your leads are failing to convert into closed business. This month is all about facing reality head-on. Get a team of professionals on your side to guide you.  4. April: Meet with a marketing whizz and fortify your weak points  Since you got up close and honest with reality in March, now is the time to build an action plan around your findings. The more weak points you discovered in your business, the room you have for improvement. Bring in an external marketing professional to go through your sales process starting from your marketing campaigns through to signing on clients and retaining leads to strengthen that pipeline. If you can master this, you’ll improve your revenue-generation without additional marketing spend.  5 May: Make a change in your workspace  Change is as good as a holiday. Introduce some plants to your workspace or undertake other subtle redecorating efforts to give you the feeling of a fresh start. You will also want to handle some of the labour-intensive tasks now and save some of the easier tasks for next month.  6. June: Take a mid-year breather (it’s part of your productivity protocol)  It’s not unusual to start feeling the effects of the year’s hard work around June. Permit yourself to take a break if you’re tired. This might mean making yourself unavailable for a long weekend or reducing your time in the office for a week or two. It’s a great time to withdraw and regroup before the second half of the year commences.  7. July: Investment in employees D&I education through collaborative workshops The EOFY leaves many businesses with a little bit of budget and investing in your team’s D&I efforts through workshops can have long-term positive benefits for the company as a whole and for the team. It’s a great way to get employees having conversations with each other that they never would’ve, and they will learn a tremendous amount through it and hopefully, it will embed in your team culture.  8. August: Find ways to build a marketing campaign around your D&I initiative  Start by introducing an internal team event like “culture-Friday”. Have a roster and invite your staff to put their name down. On their Friday, a staff member may bring a dish to share or a culturally significant item to show to the rest of the team. In this way, inclusion is encouraged while everyone gets to learn about different cultures. If the person sharing is comfortable, create a social media post about your day and what the team has experienced. This is super authentic and your audience will revel in the opportunity to learn about your diverse team. Plus, it really makes you look great to your customers.  9. September: Have a special team-building event for your staff  It doesn’t have to be big. It doesn’t have to be expensive. It has to be authentic, fun, informal, and down-to-earth. A bring and share dinner or a casual boardgames evening (BYOB) with snacks will bring the team together. Avoid those team-building exercises that involve raft-building. Stick with casual and fun. It’s cheaper and it’s more enjoyable. The last thing colleagues really want is more instructions and directions and rules.  10. October: Pick a charity that your team resonates with  Community is the heart of everything. If you want to have a prosperous year, start by helping others. Work with your team to find a charity or a cause to immerse yourselves in. It’s important that you find a charity your team feels compelled to want to support. You may volunteer, collect donations, or help out by spreading the word. Don’t do it for the recognition, do it because it feels good.  11. November: Run a campaign to monetise the impending festive season  The idea is to start monetising in December now so that you can increase your revenue-generation before the festive season starts, enabling you to shut down. Obviously, you need to plan for this a few months in advance but this is the time to implement it. Your trade dictates what you can do. If you’re pressed for ideas and your team also can’t come up with a few inspirations, bring in a professional marketing strategy builder.  12. December: Focus on the family: Appreciate your team You showed your team love in February.  You showed them love in September. The end of the year is here and it’s time to show some love again. Only around 12% of employees report leaving a job because they’re underpaid. In fact, leaving a job has more to do with job satisfaction: “9 out of 10 said they were willing to earn less money if it meant the work was more meaningful.” Source. Run a charity team-building event: Organise a beach clean up day followed by a barbecue. Or, find an organisation and help feed hungry children. Choose something that enables easy social distancing and mask-wearing if necessary.  About the author: Katriina Tahka  (CEO at A Human Agency - AHA: www.a-ha.com.au). Katrina is an HR guru with a special interest in business’ success through empowering teams. CEO + Founder of A-HA, Katriina is passionate about building inclusive workplaces where all people thrive and realise their full potential. Healthy teams with engaged people deliver both business and community success.