While I thoroughly investigate the financials and hard assets, I am also asking questions about the people. What is the culture like. Does this current owner have the respect of staff. Will this be a happy transition? This is a summary of the key points from an interview between Joanna Oakey of Aspect Legal and Tony Arena of BCI Business Brokers. “How to Maximise the Value of Your Business by Maximising the Value of Your Most Valuable asset”Value of Staff:The value of the staff roster does not appear on the balance sheet, is not reflected in sales and until recently wasn’t even mentioned in discussions about value of a business. You can go back to 1920 when business valuation books talked about tangible assets only. These days a business may have goodwill as the only asset, be it a customer list that produces regular income (rent roll, mortgage loan book, online subscription services etc) or similar businesses devoid of tangible assets. Ask these questions:You can’t value a business without looking at the situation with staff. The following questions are hardly ever asked: How well are staff paid How happy are employees Do the key people want to stay on What do their contracts or terms of employment cover? While I thoroughly investigate the financials and hard assets, I am also asking questions about the people. What is the culture like. Does this current owner have the respect of staff. Will this be a happy transition?Steps to Take:You can take the following measures to strengthen your staff situation prior to a saleSit down and talk to staff before you go on the market. Take them into your confidence and tell them that you are going to sell. Find out if they would be happy to stay post-transaction. If you are a franchisor business, speak to some of your franchisees and tell them of your intention. Gauge reaction. We recently had a case I saw business fell over because of a franchise revolt right under the nose of the franchisor.Build the Asset:We had another sale where the vendor had no operational role but every morning she would arrive and make sure she walked around and found out how everyone was going. It was important for her that her staff knew she cared about them. If your staff know you care about them, they will look after you on the transaction and afterwards.Built the Roster with Foresight.You are going to sell your business one-day. Any extra people you put on will build value into the business. Choose people who are going to relieve you of responsibility within the business. If you are going to hire a general manager give yourself at least two years to bed down that position. You don’t want to go to the market with someone who is unproven and could further disrupt your life when you find out this is the wrong person for the job.Mental HealthWe live in an era where employees spend a good part of their life at work. There is often more interaction with people at the workplace than there is at home. If you create an atmosphere of support at work you will be rewarded and this will definitely show up in the bottom line. You are the coach. Let me give you an example in the sporting world. An international rugby league player once told me the best coach ever he ever had was Wayne Bennett because Wayne used to sit down with him and make him feel he was special, not just another player. In your workplace, people need to know that you care, need to feel that their job has meaning. Under those circumstances they will want to come to work and they will give you more bang for the dollar you are paying them. This is especially so in the workplace of today. Two out of four people will suffer a mental affliction in any given year. You have the opportunity to proactively search out what’s going on in your work force and play a positive part in bringing out the best in each of the people. That shows up in the bottom line and bears on business value.Mine the Wealth:Do you have many challenges in your business, to do with costs, productivity, operations etc. The wealth of experience and ideas contained within your workers is immense. Sit down with them and share your problems with them. Ask them for their ideas. They may see the problem from a different view point and might have even seen the problem from their vantage point before. This is a win-win. You may get your solution and your staff member will feel even more valued.Build your business with the people in mind. They might now show up in the balance sheet but they may be the difference in you having a good experience or a bad one when you come to sell. For more information contact Tony arena on [email protected] or visit www.bcibusinessbrokers.com.au.
Without specialised skills and departments in marketing, financials, HR and many other functions, the business owner just has to deal with each one, juggling a constant barrage of decisions coming at them. Small business owners are the ultimate jugglers. With too many business functions to manage, too few hours in the day and usually not enough expertise in the business, small businesses rarely operate with the effectiveness and efficiency of a corporate. Without specialised skills and departments in marketing, financials, HR and many other functions, the business owner just has to deal with each one, juggling a constant barrage of decisions coming at them. To add further challenge, the business environment is always changing, so new challenges can be quietly creeping in, and can become painful issues if the owner isn’t paying attention. In this article we have highlighted five of the biggest challenges we see with our clients, that are catching them off guard, causing headaches and (quite often) financial loss. Disruption - The business world is always changing, but the pace of change is undoubtedly getting faster, to the point it’s making many business owners dizzy. Technology is driving massive changes to consumer habits, marketing is changing at head-spinning pace and becoming ever more complex. Standing still can see small businesses lose market share very easily, so extra vigilance is needed to keep up. Whole industries have been hollowed out before our eyes, including such small businesses as bookshops, travel agents and the taxi industry. Cyber security - Whilst we all enjoy more and more convenience that comes with connectivity, it’s also getting much easier for nefarious actors to find their way into your business. Cyber-crime, identity theft and hacking are just a few of the never-ending stream of attempts by criminals to relieve us of our money. Not only are they increasing in frequency, but also in sophistication, requiring businesses to be every more vigilant. Small businesses are mostly unprepared, with poor security and practices that make them easy targets. Don’t’ assume it won’t happen to you: it can and probably will.Risk management - This season’s fires and now virus has shaken many industries, with daily news stories of small businesses under enormous pressure from sudden, unexpected events. What is unusual about this season is the large number of businesses affected by the same events, and the number of businesses affected at the same time. What is not unusual is that sudden events affect small business, sometimes significantly. Risk is always present, but almost no small businesses ever do even basic risk management. Just a 2-hour risk management exercise with an action plan can save a lot of pain. The unexpected should never happen because you have already planned for it. Expectations and skills - More and more is being expected of business owners all the time. All of the challenges highlighted here are just a few of the many demands faced on a daily basis, but there are more being thrown at them all the time. New laws in HR, wages and awards, tax, changes to superannuation, trade disputes and technology are just a few. With most small business owners being control freaks, letting go can be challenging, but it is not reasonable to expect one person to do all of them well. Maintaining profit levels: costs and margins - Costs and prices are always in flux and profit margins cannot be assumed. In recent years, energy prices, rental and food costs have been particularly in focus, but are only part of this never-ending cycle. These can be ameliorated by good financial management skills, systems and regular reporting and the business owner really understanding how the business finances work. Unfortunately this is not common in small businesses, whose accounts are often outdated and basic concepts like gross profit not used. This leave the business very exposed and unable to act responsively. The common theme for all of these issues facing small business is increasing complexity and demand. Most aspects of business ownership need ever greater skills, knowledge and expertise, from online marketing, to cost management, employment law and cyber security. Juggling a bit faster will help most of the time, but it’s important to know the limit. Don’t be afraid to get expertise in when you need it: building an expert team around you and doing continual planning and review is one of the key skills of successful business owners. For more information contact Dr. Warren Harmer Chief Business Planner Email [email protected] or visit http://businessplancompany.com.au
Those on the hunt for a business investment are savvy. They will only invest in a bargain that suits their current situation and has the ability to expand their business success. The process of selling a business can be extremely difficult. When I embarked on this journey for the first time I had absolutely no idea just how arduous it would be. I didn’t realise how long it would all take and I certainly hadn’t considered what would be required to make my business attractive to a buyer. When I started the process I naively thought that all I needed was profitability. After a year of working at that sale, I learned a few lessons that just might make the world of difference to you as you prepare to take your business to market. There was a time in the middle of preparing for the sale where I had to push through the fear that I may not make it. It was a roller coaster ride that was fraught with risky unknowns. I know now that my worries were actually founded in fact. Only 20% of all of the businesses listed for sale ever sell. Those on the hunt for a business investment are savvy. They will only invest in a bargain that suits their current situation and has the ability to expand their business success. The health of your bottom line will certainly make your business more attractive, but this is only one factor your potential buyers will use to evaluate the opportunity you are presenting. Along with a profitable sales history, your buyer needs a truckload of certainty. It is essential that these five key areas ooze stability if you want to sell your business for what it’s truly worth: Staffing If you can demonstrate that your staff work well with or without you there, you will be in a strong selling position. There is not a single business buyer in the world who wants to inherit a chaotic, negative workforce. A team of reliable, competent people running a tight ship is a compelling asset for any business purchase. Well established systems for recruitment, onboarding, training, management and offboarding are even more attractive again. Suppliers Knowing the business has clean, clear lines of supply for stock and other essential resources is vital to a successful sale. You must be on good terms with all of your suppliers. You need to be able to show you have watertight processes for managing accounts, and for purchasing and receiving supplies. When you present your business to your prospect, assure them that your company has easy access to quality supplies at great prices, and that there’s no risk of this changing in the foreseeable future. Operations You will be ready to show off the value of your business asset when you can walk your prospect through well-maintained operations manuals which document how everything is done. From your workflows to your website, to your marketing, service delivery, site management, and administration… every part of a saleable business must run like a well-oiled machine. This is the proof that the cogs of your business machine can and will keep turning long after you have left the engine room. Goodwill Maximising the strength of your business reputation is an effective way to boost the final sale price. The value of your business brand name, solid customer base, good customer relations, good employee relations, and any patents or proprietary technology will all hold you in good stead with your buyers as long as they are rock solid. Success in this area cannot be achieved overnight. If you are thinking of selling up in future, you need to invest in building the goodwill of your business over the long term. Handover Your business will be irresistible to buyers if you show them you are ready to roll out the red carpet to welcome them. Map out a clear timeline of how you will hand the business over. Include an overview of the steps you have prepared to make it easy for them to take the reins. A successful handover is a natural extension of quality business leadership. Building effective systems to manage your staff, suppliers and operations will enhance the goodwill of your business and set you up for a silky smooth handover. For more information go to http://www.operationverve.com
The Australian Taxation Office offer a range of tools and services to help make it easier for you to get your tax and superannuation right, and to help your business thrive. Owning and operating a business comes with many rewards, but also a lot of work. The Australian Taxation Office knows business owners often have a lot to manage and have provided information on some current topics which you should consider if you have an existing business, or are looking to buy or sell one. For more information on starting your business you can talk to your registered tax or BAS agent, visit ato.gov.au/sbsupport, and you can subscribe to the ATO’s regular articles from the Small Business Newsroom at ato.gov.au/sbnewssubscribe. Instant asset write-offIf you’ve recently bought a new business you may need to look at buying or upgrading assets for it. If you plan on doing this, you can take advantage of the instant asset write-off which allows you to make a deduction in your tax return for an asset, costing less than $30,000 until the 30 June 2020. The threshold applies per asset, so you can use it multiple times if needed. In the 2019-20 financial year, businesses with a turnover less than $50 million are eligible to take advantage of this. To find out more about the instant asset write-off and how to claim, visit ato.gov.au/instantassetwriteoff.Record keeping for businesses Whether you are buying or selling your business good recordkeeping makes good business sense. It’s important that you stay on top of your record keeping obligations. The ATO have published the five rules of record keeping, which will help you keep accurate and complete records.This makes it easier for you when you need to meet your tax and super obligations. You need to keep all records related to starting, running, changing, and selling or closing your business that are relevant to your tax and super affairs. The relevant information in your records must not be changed and must be stored in a way that protects the information from being changed or the record from being damaged. You need to keep most records for five years. You need to be able to show us your records if they ask for them. Your records must be in English or able to be easily converted to English. To read more about how you can make sure the records you’re keeping are best practice, see the information at ato.gov.au/recordkeeping.Natural disaster support for small businessesThe ATO understands large parts of the community have been impacted by recent natural disasters, and they want to reassure you they are there to help. Your first priority is to focus on your family and community. If you need assistance with your tax affairs, the ATO can help you when you're ready.If you have been impacted by the recent bushfires and are in an identified impacted postcode, the ATO has automatically deferred any lodgments or payments you have due until 28 May 2020. If you have been affected, but are out of the postcode zone, call the ATO on 1800 806 218 to discuss your circumstances. You can read more at http://www.ato.gov.au/naturaldisasters
Within the last 6 months there have been a number of changes to laws that are relevant to small businesses. Whether you’re an owner looking to sell or a prospective buyer, it’s important to understand how these changes can affect you. As the new year has rolled in, most business owners will be in the early stages of carrying out their strategic plans with hopes of a successful start to the new decade. As an owner, it’s natural to keep an eye out for anything that may get in the way of achieving your goals. Ever changing laws and regulations can often catch business owners off guard and halt long term plans and ambitions. Within the last 6 months there have been a number of changes to laws that are relevant to small businesses. Whether you’re an owner looking to sell or a prospective buyer, it’s important to understand how these changes can affect you. Below is a summary of some of the legal and regulatory changes to be aware of. Updates to Employee Awards The most significant area of change arrives in the impending alterations to employee awards. The Fairwork Commission, as a result of a review, has decided that it will alter the provisions of 22 employee awards from March 1. The changes are primarily focused on the annualised salaries component of each award. Under the existing legislation of the Fair Work Act, businesses are required to pay full time employees an amount that reflects what they would receive under their award, inclusive of overtime and extra allowances. However, the grey area has always centred around the recording of hours worked. Given that it is rare for full time salaried employees to note their hours and days worked, it is difficult to determine entitlements owed. With high profile corporations being exposed and scrutinised for long hours and potential wage theft, the government has responded with strict requirements. As the awards involved range from hospitality to finance and manufacturing, it is likely that you will be affected as a small business owner. • Recording and Tracking Hours The key takeaway from the changes to annualised salary provisions, is that you now must track and record the hours of salaried full-time employees. This means you will have to implement a system for the employees to submit all the hours they’ve worked and their breaks. Where an employee records hours outside of the limits under the awards, it is best to pay them for this at the relevant overtime or penalty rate. • Notice of Annual Salary and Ordinary Hours In addition to recording and tracking hours worked, employers must now provide written notice outlining an employee’s annual salary and the maximum hours they can work outside the 38-hour week. As an employer, you will be obliged to ensure that employees are paid at least the minimum wage for any hours worked after the 38-hour threshold. Employee Superannuation Changes As part of the changes to annualised salary provisions, there has been an effect on superannuation regulations. As of January 1, this year, salary sacrifices cannot be included as part of an employer’s mandatory superannuation contribution. Employers are now required to pay the 9.5% superannuation contribution on an employee’s gross pay including any salary sacrifice that has occurred. As an employer, you should also be aware of the Superannuation Guarantee Amnesty bill which has just passed through parliament. This will essentially provide employers with a 6-month window of opportunity to correct any non-compliance with regards to superannuation payments. If an employer chooses not to act and is exposed after the amnesty period, significant penalties will apply. Unfair Dismissal Threshold Although this change did occur halfway through 2019, it is extremely relevant given the substantial reform to employment legislation that is currently occurring. The high-income threshold that excludes an individual from claims unfair dismissal was increased to $148,700 per year. Provided the other necessary provisions are satisfied, an employee under this threshold can apply for unfair dismissal after termination. This is likely to influence an increase in applications and is something you should keep in mind when terminating someone’s employment. Conclusion As stories of wage theft and mass underpayment continue to appear, it is clear that a crackdown has begun in 2020. With significant changes to employment awards and legislation, the Fair Work Commission has taken a stance to ensure the correct payment of employees. Significant penalties will be imposed for those who breach these new amendments. As a result, there is substantial risk for small business owners across the country, with non-compliance now a fatal move. Given that these updates can be complex and difficult to keep up with, the advice of an employment lawyer may be of use. For more information, contact Christopher Tsiknas at Lawpath [email protected]://www.lawpath.com.au
Unlike Real Estate agents, who need to understand the readily available comparative house and sales data, professional Business Brokers should be able to source comparative business and sales data which is not readily available to most business professionals. Is now your ideal time to buy or sell a business or franchise? If so, you will need a qualified team of industry professionals working with you and in your best interest to ensure you achieve the best possible sale or purchase outcome. One of the most integral members of the team of business professionals assisting you with the purchase or sale of a business or franchise is a Business Broker. There is an old saying \"a good lawyer knows the law, but a great lawyer knows the Judge\". Well, it can also be said that the difference between a good Business Broker and a great Business Broker is measured by the level of gratitude expressed by both the buyer and the seller at the conclusion of a successful business sale. What does a Business Broker actually do? Business Brokers help people buy and sell businesses, similar in the way Real Estate agents help people to buy and sell properties. Professional, qualified and experienced Business Brokers have specialised skills, training and knowledge required to professionally service clients looking to buy or sell a business, taking into account the unique circumstances of each business, buyer and seller. Unlike Real Estate agents, who need to understand the readily available comparative house and sales data, professional Business Brokers should be able to source comparative business and sales data which is not readily available to most business professionals. Business Brokers also need to understand complex and detailed business valuation methodologies as well as numerous other factors which impact a business’s value. These factors can include, but not limited to: • Understanding a business’s financials, P&L’s, balance sheets, etc • HR matters • The value of supplier and customers contracts and relationships • Intellectual property • The value of a lease • The value of an online or partially online business versus a similar business with a physical location • The implications or impacts of a strong reliance on an owner; • A business being included/involved in a ‘roll-up’ or, that might be associated with an emerging or eclining industry. Professional and experienced Business Brokers should possess an incredible amount of knowledge and a clear understanding of the business, the client, the buyer, the landlord, the market, the region the business is located, the industry, how to best negotiate with the buyer and seller, the accountants (on both sides of the transaction], external advisors, valuers and the solicitors (on both sides). They also need to be able to understand the value of a business, which valuation methodology is most appropriate for that business (ie; ROI, Capitalisation rates, DCF, Future maintainable earnings etc) and which profit figure is appropriate in each case (EBIT, EBITDA, PEBIT, PEBITDA, SDE, ROT, etc) as this will change from business to business and is industry dependent. Additionally, a professional Business Broker must be aware of changes which impact a business’s value over time and have the skills to manage the confidential marketing of a business without disclosing the location and name of the business. They should also employ a rigorous confidentiality process which safeguards confidential and commercially sensitive business or franchise information. If you are considering buying or selling a business or franchise, or you’re a franchise system looking for professional representation, it is recommended that buyers, sellers and franchisors work with experienced, professional and licenced Business Brokers and Business Brokerages who are members of the Australian Institute of Business Brokers (AIBB) or accredited through the AIBB. AIBB members are accredited and comply with the institute's code of ethics. For information about the AIBB, or to find an AIBB member or an Accredited Brokerage near you, call 1300 79 66 67, email [email protected] or visit http://www.aibb.org.au or to contact Ian Jones mobile 0402 111 500, phone 1300 BROKER (1300 276 537).
With the Coronavirus officially gaining pandemic status, many businesses are forced to close their doors. If you’re not there yet, it is a great idea to create a COVID 19 response plan to keep your business productive should you have to shut down for a period of time. Is your team prepared to work from home? They may say they have a home computer, but can it perform as well as the device at the office, or are you creating false expectations for clients around deadlines? You can only manage expectations if you have the assurance that your employees are equipped to deliver results from their homes. Alongside this, is your organisation’s personal data safe? Here are tips from Fiona Kresby from Go-VA, an offshore outsourcing expert. She shares some of the top tips from the industry to enable small business to keep operations going. Here is Fiona's comprehensive COVID 19 response plan for businesses; Step 1: Have a trial run Have your team utilise their home setup on a chosen day to have a test run. This will give you insight into the potential pitfalls you might face when you have to resort to this plan. Preparation is key! The trial run will reveal how capable your employees’ devices are at home, how stable the internet connection is (especially in homes with families where children might also access the internet line], and how capable your teams are of working quietly and undistracted. Step 2: Make use of free software Compare the specs and evaluate the capabilities of your employees’ home devices in comparison with the devices used at work by using a free diagnostic tool. Try the handy dothis.to software - it will give you a complete insight into the capabilities of both devices, giving you a realistic idea of which tasks can and which tasks can not be completed at home. Equipped with this insight, you can plan ahead which will reduce the stress and the pressure later on. Step 3: Understand the true risks around data security (and take precautions) Data security goes beyond spyware and firewalls. The truth is that while you may trust your employee, you don’t know what kind of environment they’re working from. You can’t control what kind of people might peer over their shoulder or access their device while they’re using the bathroom. The integrity of your privacy is completely out of your control. Use software like timedoctor to monitor the progress and privacy of your work. It comes with a camera, it can track screenshots, and it tracks time spent on a task for productivity analysis. Use zoom.us as an alternative to Skype when you need to host meetings. Shut down might be out of your hands, but keeping your business up and running is possible. Equipping your employees to work remotely, however, requires preparation. If you are not able to prepare adequately, offshore outsourcing can keep your operations running even if your doors are “officially” closed.
As a rule of thumb, I recommend that a first-time potential franchisee be prepared to spend at least one hour of research for each thousand dollars they are looking to invest in a business. Franchising continues to appeal to existing Australians who are looking to become self-employed, as well as new arrivals who qualify for business migration visas as a method of obtaining entry into Australia. However to buy and operate a successful franchise requires more than just having the cash to pay for it. Potential franchisees must be prepared to do some hard work to research and understand the business, the franchisor, and themselves in order to make the best possible decision. And here is the first hurdle: A potential franchisee must be prepared to roll up their sleeves and put some real time and effort (as well as some money via personal development and professional advice) into their franchise search. If not, they greatly increase their chances of picking the wrong franchise, and losing part or all of their investment. To increase the chances of picking the right franchise, here are some key pointers: What should I look out for? This boils down to three key things: Profitability. Sustainability and strong, competent Leadership. In good times, tough times, or anytime, these three criteria remain the same. Of course it’s rare that a franchisor will make representations about profitability or concede that their business is anything less than sustainable. It is rarer still that a franchisor would claim to have anything less than strong, competent leadership, so these concepts all need to be tested by a potential franchisee’s own research. If a potential franchise buyer is not prepared to invest the time to properly research what they are buying, then they must accept some or all of the responsibility if the investment fails. How much time should I spend researching a franchise? As a rule of thumb, I recommend that a first-time potential franchisee be prepared to spend at least one hour of research for each thousand dollars they are looking to invest in a business. For example, if a franchise costs $250,000, this amounts to up to 250 hours of research. That might sound like a lot, but the saying that a fool and his money is easily parted might have been created specifically for those people who recklessly invest after making hasty, ill-considered decisions. Most franchises offered at $250,000 and above will be retail businesses, so prior knowledge and experience in retailing may be useful and should be included as part of any pre-purchase research. What sort of research should I do? Such research might include (but not be limited to): Start your search for a franchise by visiting one of the upcoming franchise expos held each year in Australia Sydney, Brisbane, Melbourne and Perth, as well as look at franchise opportunities online; Once you have shortlisted one or more franchise systems, carefully read through the information provided by the franchisor. You should also engage an experienced franchising lawyer and accountant, and read the documents for yourself as well as get professional advice. (Many franchisees fail to read their franchise contracts, and then afterwards discover they have signed for something that they didn’t know about or wouldn’t otherwise agree with. Reading the documentation for themselves will also help potential franchisees understand the advice they are being given, and to ask more informed questions of their advisors and the franchisor.) You should contact current franchisees in the system (or at least as many as possible) to ask them about their satisfaction with the franchise, the lessons they’ve learned along the way, and the sort of research they did (or wished they had done) before buying the franchise. The list of current franchisees and their contact details will be included in the franchisor’s disclosure document, however this document may only be available at a relatively advanced stage of negotiations with the franchisor, and in the meantime, franchisees’ details or locations may also be available on the franchisor’s website and in the telephone directory. You should also contact the former franchisees who have left the system in the last three years. Franchisors must provide a list of these franchisees and their contact details (where known) in the disclosure document. By contacting former franchisees, you will have an understanding of their satisfaction with the business and their reasons for exiting. Again it is important to contact as many as possible of the names provided. Calling just one or two is likely to provide a distorted positive or negative view of the system, and only after contacting the full list can a potential franchisee develop a balanced view of the satisfaction of former franchisees and why they left. Compare concepts. There is usually more than one franchise concept servicing a market niche (however unique], so check out the value of the competing offer. Even if the initial investment price is the same, similar franchises may have radically different fee structures, marketing levies, support systems, purchasing or other arrangements that can radically affect the long-term value and profitability of the business, or satisfaction of the franchisee. Verify for yourself any statements or representations made by the franchisor, or issues raised when contacting current and former franchisees. This might include even spending time doing market research such as counting houses in a territory, searching Australian Bureau of Statistics and other sources of data, counting vehicle or pedestrian traffic and directionality outside a potential shopfront, or many other things. While this may sound tedious, it’s all part of ensuring that the facts being used to make the decision to buy the business are the right facts; Consider if you should work part or full time for a period in a franchised store or territory to get a genuine feel for the business (in which case, the longer the better, and the one hour per $1,000 invested rule can be extended). People who have worked in franchises before buying them increase their operational proficiency and become culturally acclimatised to the organisation, thus reducing the likelihood of a horrible “I wished I’d known this before” moment after the investment has been made. Undertake small business and franchise training courses and workshops. People going into self-employment forthe first time don’t know what they don’t know and look to the franchisor to fill this void for them. This creates the opportunity for unscrupulous franchisors to abuse their trust, or for the franchisee to develop unrealistically high expectations of the system for which the franchisor cannot deliver. Understanding basic principles of franchising, as well as basic business concepts and financial literacy are essential to improving and maximising the long-term value of any franchise investment. (The Franchise Advisory Centre (www.franchiseadvice.com.au) hold a number of workshops, seminars and short courses, as well as various state and federal bodies, and business/industry associations. What are the best franchises in the current economic climate? Established systems with a critical mass of profitable, satisfied franchisees will not only weather the current economic storm, they will come out the other side in top gear and quite possibly buy out or take market share from a competitor or two along the way. Furthermore, these systems will need to have dynamic and talented leadership teams, strong corporate governance, and enduring customer appeal. Having said that, concepts such as “established”, “critical mass”, “satisfied”, “dynamic”, “talented”, “corporate governance”, and “enduring appeal” are subjectively assessed, and relative to the eye of the beholder. An evaluation of a system on these criteria might produce different outcomes for different people. Cash businesses (or those with tight credit controls) combined with clever marketing and exceptional levels of customer service (and there are many examples of these in both service and retail franchise brands) that fit the above criteria will perform strongly in the next couple of years. What about new franchises? There is opportunity in adversity for any entrepreneur. New franchise concepts emerge in Australia at the rate of about 100 per year, however not all of these will be viable in the long run. There may be more risk associated with investing in a new franchise system with just a handful of franchisees, compared to larger and more-established brands, however there may also be more flexibility and growth opportunities for franchisees of new systems. It is also possible that the franchisor’s training, field support and marketing assistance for new franchisees may not be as well-developed in new systems compared to established systems. What should I be wary of? The recently-unemployed, particularly those with sizeable payouts for years of accumulated service, holiday pay, etc, are prey for unscrupulous operators. In particular, advertisements that claim a business is a “license, not a franchise”, or which include income guarantees or similar offers should be approached with caution. It is essential that business migrants, some of whom will not have been in business for themselves before, may well make excellent franchisees. However their potential naïveté makes them particularly vulnerable to poorly-considered decisions, hastened by unnecessarily eager franchise salesmen. Migrant franchisees should also be wary of offers to buy multiple outlets at the same time, or master franchises. It will be difficult enough in most cases to learn how to operate just one business, without compounding the challenge across many businesses. The key lesson here is to undertake proper research. (See research hints above). What laws exist to protect franchisees? It is also worth noting that although the last recession occurred before the Franchising Code of Conduct was introduced (ie. the laws that regulate the franchise sector], there is no amount of legislation that can adequately protect a franchisee from a hasty, unresearched and ill-considered investment decision. Distributorships and licensed business opportunities are often advertised alongside franchises, but look, sound and feel the same as a franchise. No matter what they call themselves, if they meet the four criteria in the Franchising Code, then they are a franchise. This entitles potential franchisees to receive a disclosure document (containing a variety of important information as well as the lists of current and former franchisees critical for proper research], as well as a mandatory cooling-off period, recourse to mediation in the event of a dispute and all the other protections available to franchisees under the Franchising Code of Conduct. The best way to distinguish between a legitimate franchise offering and something that is designed to separate an aspiring business owner from their cash is to educate yourself, and do your research. Only then can you make a balanced decision that takes into account your long-term interests. Where do I go for help? Visit the Franchise Council of Australia’s website at www.franchise.org.au to see if the franchise that interests you is a member. Membership of the Franchise Council means that franchisors have agreed to an even higher standard of conduct than the minimum required under the Franchising Code of Conduct. Also visit the Franchise Advisory Centre website at www.franchiseadvice.com.au for many free articles on what you should know before buying a franchise. Jason Gehrke is a director of the Franchise Advisory Centre and has been involved in franchising for 30 years at franchisee, franchisor and advisor level. He provides consulting services to both franchisors and franchisees, and conducts franchise education programs throughout Australia. He has been awarded for his franchise achievements, and publishes Franchise News & Events, Australia’s only fortnightly electronic news bulletin on franchising issues. www.franchiseadvice.com.au
Here today. Gone tomorrow. Such is the life of many brands in the fast paced digital world we now live in. The challenge for any brand, is how a brand can can effectively express it's own essence, it's true 'WHY\" and cut through all the social 'noise' in a way that’s more easily digested by those who will buy from you. As world famous Tennis star Andre Agassi said “Image is EVERYTHING”, and it’s especially true when it comes to creating a logo, the corner stone of any brand. A logo, by definition is a visual representation of your brand and is far more effective than a written explanation of your products or services. As a branding expert I’ve established 1000's of brands in my career and I’ve learnt a few things about how to create an iconic brand that will give your brand longevity and help your business stand out . Here are 9 ways you should consider when designing your brand. 1. Avoid a visual look too similar to another brandOnce a brand has become established it starts to become recognised by the general public. If you choose (or copy) a logo design that’s too similar to another brand, your market presence may be forgotten or overlooked - as your logo is mistaken for someone else’s and, worse still, they win the business! 2. Fonts matter, choose wiselyA font is just as important as the design of a logo. The font should incorporate the same feel as the business AND it should be appropriate and legible. Whether it's modern, edgy, timeless, or a sophisticated italic, it must match the overall appearance and personality of the brand or company it represents. 3. Cliché trends are fleetingDots, swooshes, straight lines, 3D shapes; these clichés have been so overused in a logo design that they are instantly disregarded. Don’t try to ‘spruce up’ a logo with these ineffective additions either, as it will only cheapen your brand. 4. Don’t rely on colourHaving a logo that doesn’t reproduce in black and white is a hugely common problem – even the Commonwealth Bank’s logo*, when not in colour, transpires to a black square! So make sure you check that your logos important features work well in colour and black and white. 5. Remember who you're targetingYour brand must appeal to your target audience if you ever want them to buy from you. So your logo is used as a visual tool to aesthetically draw the attention of your target audience and communicate your brand’s message. Unless your Mum or the kid studying design next door is your target market, don’t rely too heavily on their opinion. 6. Design for tomorrow, not todayBe cautious of creating a brand that look out of date or follows a trend that’s happening right now. A great brand grows with the business and can withstand time as long as the business does. Don’t choose a logo that is representative of a certain decade, era or trend, or you’ll risk making your products and services seem outdated, along with your logo. 7. Vanilla creates more blandSimplicity is important, but too much is boring and sterile. A “vanilla” brand isn’t memorable and adds to the noise out there. It won’t speak or form an emotion connection to your target audience. Your logo must incorporate just the right amount of personality, to avoid being boring or overlooked. 8. Simplicity is bestToo many styles, elements or ideas joined in the one brand could lead to a misinterpretation of your business, or attract the wrong kind of consumer. A brand is designed for quick recognition and brand loyalty – too much going on will defeat this. 9. Pay attention to spaceA busy brand with everything in it doesn’t appeal to customers. It creates a poor looking brand and becomes difficult to decipher, especially when letters are included. The visual logo must be clear and crisp to resonate with your target audience at first glance. Stick with an odd number of graphic elements, one, three or five elements work well. And, always remember the purpose of the 'why' of your brand. This single element alone will often set the tone for creating a brand that will be impactful and succinct, and can be used to represent your business for many years to come. For More Information: Stella [email protected] 109 102www.brandforbrands.com/stella-gianotto *Image Source: Adobe Stock (editorial use], References: Andre Agassi Quote http://www.tennis.com/pro-game/2015/08/image-everything-andre-agassis-infamous-ad/55425 Commonwealth Bank Logo reference: https://www.quora.com/What-does-the-Commonwealth-Bank-logo-represent
Building a business can be a tough gig, but working for your business owning boss when they’re at their wits end is no walk in the park either. The pressures facing entrepreneurs are widely known but sitting behind the owner’s stress, exhaustion and burnout are the staff doing their best to hold it together. Yes, the average entrepreneur spends nearly 70% of their time running a management hamster wheel. Yes, it’s a time consuming race that has a quarter of them working over 50 hours per week. But if the business owner is stretched too thin, chances are their staff are coming to the end of themselves too. Staff miss out on training It’s exhausting for business owners to chase their staff around to fix their mistakes. It’s frustrating for them to watch their team wasting precious time because they can’t find what they need. And it can be infuriating to realise that no matter how many times you show them, they still don’t know what to do. Even though research shows employees want to be trained, business owners in survival mode typically abandon the training and development their staff need to create business stability. Employees want to work more effectively, develop new skills, and advance their own careers. If they don’t get it, research shows 40% will leave the company altogether. If you employ millennials, 87% say they will jump ship if staying with you means missing out on professional development and career growth. Proactive business leaders make staff training a priority. They see the learning opportunity in every mistake and they champion the development of their staff as the best way to grow the business. Staff can feel unappreciated When you have been tied night and day to the work of growing your business it can be difficult to pop your head up out of the trenches to check in with your team. 30% of business owners report struggling with depression, and 50% of those deteriorate through to full burnout. Reaching out to care for your team is undeniably difficult when you can barely string five minutes together to care for yourself. It is easy to take your staff for granted, but when employees don’t feel valued or rewarded by their employer, they are likely to leave. 79% of employees who quit cite lack of appreciation as their reason for leaving, but with proper rewards and acknowledgement 90% of employees report feeling like their work really makes a difference. Strategic business owners invest just a few moments each day into acknowledging their staff and the contributions they make towards lasting business expansion. Staff will cost too much While your staff have the potential to be your greatest business asset, employees who miss out on the training and TLC they need can become a costly expense in any business. For every thousand employees, ineffective training costs businesses $13.5 million each year in poor customer care, reduced performance, and wasted resources. If a disgruntled employee leaves, replacing them will have the business owner spending half of their annual salary to find and train their replacement. The problem is that many business owners see training as a short term expense rather than an investment in the long game. Companies that invest in employee training have 24% higher profit margins than those that don’t, and they enjoy 218% higher income per employee than companies without formalised training. Business owners burning the candle at both ends in pursuit of growth will do well to remember that being the champion of their staff will accelerate the achievement of their aims. To develop a proactive leadership plan for your business, go to http://www.operationverve.com
Working on your business, not in your business, is the prevailing wisdom among businesses at the moment but growthcoaches.co founder Justin Theng said that it’s beneficial for entrepreneurs to learn to become better marketers. Speaking at a recent marketing training event, Justin Theng — a former advertising executive who now owns and operates marketing coaching business GrowthCoaches.co — said that many business owners have had at least one bad experience with a marketing agency or a marketing person they’ve hired. He subsequently told this publication that the reason is because instead of owning the marketing conversation the same way that they typically own the sales conversation, business owners abdicate instead of delegate. “For the last 15 years I’ve worked businesses ranging from large household brand names to small businesses and startups. What I’ve found is that the businesses that go onto see the most success are the ones where the owner has applied themselves to being the architect of their own marketing plans, with some guidance,” he said, “We have a diverse range of clients, from the top end who book in workshops over a number of days, and those who just want a quick online course with less than $500 to spend.” What is the most common mistake business owners make with their marketing? When it comes to their marketing, many business owners like to take a set-and-forget type approach. They’ll engage an expert to do the marketing, and hope that they’ll just get on with it, while the business sits tight and waits for the sales to come in. “When marketers don’t have regular connection with the visionary in the organisation, the chief ideas person, then the marketing can devolve into guesswork,” he said. “What’s worse, is the business owner is left thinking that they are not getting what they wanted, and the marketers wonder if their efforts are valued. That perceived indifference on both sides causes more lost ROI than anything else. How can business owners improve their mindset towards marketing? According to Mr Theng, entrepreneurs make the best marketers, because from the beginning they have lived and breathed the message to market. “Imagine one day the business owner is on a stage speaking to other entrepreneurs and inspiring them with the journey they've been on to get to where they are. In that context the brand and the entrepreneur are one in the same. They are the story of the business, and in a sense you can’t really delegate that,” he said. “Sure, they may not be able to use any marketing technology or use the tools, or even be the best with all the latest tactics and strategies, but that's not marketing. That's just execution. Real marketing is about moving people and motivating people to engage with the business and transact. That's it. That is what good sales is, and that is what good marketing is.” What to remember when planning your marketing Realise how involved you would be in your marketing if the whole world were watching. How close would you be to your marketing? You probably wouldn't set-and-forget.” Don't wait until you're on a stage to be an influencer and a brand ambassador. “Be an influencer now. You're already an influencer with your customers. When your customers or clients want the best of the best, who do they ask to speak to? You. So don't just be that in a small community of people who are already transacting. Be the best influencer you can beyond that. Whether that be on social media or in writing articles or blog posts or establishing partnerships or speaking engagements.\" Be an internal influencer. “Influence your team. Be the most customer-centric, marketing-thinking person in your business, and inspire, lead and coach your team. Be the one in your business to know the plan, like an architect turning up at a construction site. The architect is the one that designed the building. He knows what's going on. He doesn't know how to mix the concrete, necessarily. He's not there to tell the foreman how to be a foreman. But he is the guy that's carrying the vision in his head, and he knows not just what the building will look like, but what people will feel when they're in the building. What the space is supposed to feel like. What the emotions are that comes with it.\" For More Information Justin Theng [email protected] http://growthcoaches.co
Selling a business is often an emotionally taxing experience as an owner. You have to balance handling all the administrative matters correctly with preparing for life away from your business. As a result, it is really easy to overlook certain parts of the process, which unfortunately can create headaches down the track. This is particularly relevant to the legal aspect of selling your business. To help you avoid any complications, we’ve come up with a list of legal factors for you to consider before signing off on a sale Terms of Sale When presenting your business for sale to prospective buyers, it’s important to be very clear and specific about what exactly you want to sell. The goodwill of your business can be spread throughout your tangible and intangible assets. This can range from land and equipment to your business name and customer data. You will want to establish the elements of your business that you wish to sell or retain, prior to entering into a Business Sale Agreement. Business Name Transfer If you do agree for the new owners to take on your business name as part of the sale, you will be responsible for the transfer process. ASIC provides a simple to use service to transfer a business name to a new owner. This process is done completely online and is accessible here. It is important you are aware of this obligation prior to agreeing for your business name to be sold. Employees When selling your business, the future of your current employees will be one of the more pressing matters to deal with. This is something you don't want to neglect, as there can be legal consequences if you do not act appropriately. During the process of a business sale, there are essentially two outcomes that can occur with regards to your employees The new owners may want to keep your existing employees when they take over the business. In this instance, it is wise to provide as much information to the new owners in order to avoid any confusion or complication. As a starting point, you should transfer your employee’s most recent records over to their new employers. In addition, you will want to make them aware of any existing obligations you have with your employees. These could include contractual, financial, legal or leave related agreements. Despite the fact that your employees will still have work, you will need to provide notice of their employment ending. Inform them that they will have to enter into a new contract with the new owners, which comes into effect when the business is officially sold. Alternatively, if the new owners have no intention of employing your staff then you should notify them as early as possible. This can be a delicate situation to deal with, and as a result, honesty and transparency during this process is vital. Being clear with your employees about their future will not only benefit you as the employer but will also give them the best opportunity to find other employment. It’s best practice to refer to and follow the requirements of the Fair Work Act 2009. Leases and Licenses During the negotiation process with a potential new owner, it’s vital to identify any existing leases, licenses or permits that concern the operation of your business. An existing lease may require a transfer to be arranged with the vendor to the buyer. With regards to licences, councils tend to be the authority that will manage the transfer process when a business is sold. Liquor and food licences are examples of this. Failing to disclose any of these factors, can lead to legal consequences, especially if they are noticed after a sale has been completed. The key theme to remember throughout the entire process of selling your business is transparency. Disclosing relevant information about your business to a prospective buyer will ensure you don’t encounter any complications after the sale. If you are uncertain about any aspects of the selling process, the advice of a business sale lawyer be of use. For more information, contact Christopher Tsiknas at Lawpath [email protected]://www.lawpath.com.au