Business Advice

HOW TO NEGOTIATE WITH CONFIDENCE PART 1: Being in business provides many opportunities to negotiate. The aim of negotiation is to settle differences and achieve some sort of compromise or agreement. The process occurs through a combination of influential and persuasive techniques, communication and strategy.   Sometimes, the only way to get what you want is to negotiate - but negotiation can be stressful. In this 3-part series, we explore how to negotiate with confidence.  One way to ensure that you can confidently negotiate, is to prepare for the negotiation process. The more prepared you are, the more confidently you will be able to align the outcome of the negotiation to your objectives.  So, if you are buying a business, what should you consider when preparing to negotiate?    Tip 1: Understand the business  You need to understand what you are dealing with, the potential of the business and the environment the business operates within, which can be achieved by undertaking market research and gathering information about the business.  Market research enables you to identify trends and identify similar businesses so you can determine the perceived value of the business.  A SWOT analysis will help identify the strengths and weaknesses of the business and determine whether there are any market opportunities, competitors and any potential threats that will impact on the viability of the business including whether there is a continuing demand for the product or service that is being supplied by the business. Knowledge of the market and the business will increase your bargaining position and enable you to construct an offer and determine whether any further information is needed before an offer can be made. Tip 2:  Prepare your argument and ideal outcome   Being prepared means understanding your position and what you would like to achieve:   Consider your argument or presentation, including the questions that need to be answered; whether there is any other information that you need or changes that you would like to propose to the transaction. Your comparisons of similar businesses can be used to strengthen your argument. Also, consider whether there are any mitigating circumstances in the environment the business operates within, or in the business itself, which will likely impact on the transaction and the value of the business.  Tip 3: Know what you would like your ideal outcome or objectives to be:  Consider your objectives and your ideal outcome. Ensure you have an alternative position or some compromises that can be offered if the ideal outcome is not accepted. Also consider if your objectives are not met, at what point you would walk away from the transaction.  Tip 4: Understand the framework  It is helpful to have an idea of the scope and framework of the negotiation before the meeting.   Suggesting and preparing an agenda will enable you to explore what will be discussed. It will enable you to verify facts and the other party’s position. Once you are in the meeting, the agenda will be useful to keep the meeting on track. Tip 5: Understand the location  Believe it or not, where the meeting is held, has the ability to provide a competitive advantage.   It might be preferable to meet at your own premises, as this will allow you to control the meeting and access any backup paperwork that might be required. If you concede to the other party’s demands by having the very first meeting at their premises, then you have lost the first negotiation, and it might put the other party into a stronger position by making them feel empowered and, on the day, more comfortable. Alternatively, you could meet at a neutral location, which will enable both parties to focus on the negotiation, rather than using the space to strengthen a particular party’s position. Tip 6: Understand who will be at the meeting  Consider who will be present at the meeting. Calling the other party in advance of the meeting and asking who will be present at the meeting for the purposes of the agenda will provide you with advanced knowledge of the number and quality of the attendees; their personality; motivations and style of communication and negotiation. This will help you prepare how you communicate and respond to them and enable you to match those people with people who are of the same calibre and who have a similar level of experience. Tip 7:  Understand what might happen at the meeting Seating:  Also be aware that the seating arrangements and the choice of table being used at the meeting might impact on the negotiation:  Someone might sit at the head of the table, as a way to jostle for power and control of the meeting.  If the table is square or oblong and you sit opposite the other party, you might be perceived as being equal, but on the other hand, it might set the parties into opposing positions, ready for battle.   A round table softens the negotiation and allows, as a starting point, for equal representation.  Speaking for agreement:    Aim to get some sort of agreement early in the negotiation.  You can have the other party agree to a general comment, or something that is common knowledge. By obtaining an initial agreement, the negotiation will start in a positive manner, with each party subconsciously feeling that their needs might be met. Tip 8:  Prepare your mindset  You can prepare for negotiation by ensuring, despite what is happening around you, you have the right mindset.  Your mindset will be the strength or an impediment to the transaction. A positive mindset will help you appear and feel confident, relaxed and in control of the situation.    You can prepare your mindset in advance by doing the following:      Understand that the process of negotiation and asking for what you want is often unpredictable. The process might take longer than anticipated, and not everything will be smooth - there will likely be obstacles and surprises along the way, such as the tactics used by the other side which might take you off guard.  If you are stepping into an unfamiliar situation, you might feel nervous or fearful – but these feelings are normal and knowing this, will help you manage the process emotionally. Assume from the beginning that you don’t know everything and there will be matters that need to be resolved. Adopt an inquiring mind.  Instead of accepting the information that you receive at face value, investigate that material.   Act consistently and direct your mind and the discussion to the outcome of what you would like to achieve.  Remain open but in alignment with your objectives. This will help direct your focus to achieving your objectives rather than reacting out of nerves.  Think that you want to solve any disparity between the parties. A solution-based mindset will provide the opportunity to think clearly and laterally. It will allow you to be flexible and come up with alternative proposals that might help traverse through any blocks. Key takeaways: In summary, you will be more confident when you prepare for the negotiation, if you:    Understand the business you are buying by completing research and comparing the business to existing businesses.  Examine whether you have everything about the business on which to make an informed offer or whether you need other information.  Know your intended outcome and any compromises that you are willing to provide before you attend the meeting. This will ensure that you do not make rash emotional decisions and can confidently align to your objectives.  Consider where you would like to meet the other party. The location of the meeting might provide an immediate strategic advantage, particularly if the location makes you feel comfortable or empowers you. Understand who will be at the meeting, and ensure you have similar calibre of people attending the meeting on your behalf and have framed your argument to match the styles of the participants.  Have knowledge of what might happen at the meeting, including the framework of what will be discussed, where to sit and what you can first say to obtain an agreement given these factors will likely have a bearing on the discussion and influence the power between the parties. Use your mindset to shape the outcome and help manage your nerves, so you can function more effectively. The more prepared you are, the more confident you will be, and the more likely you will be able to influence the outcome as you will know what questions to ask, the information to source and refer to, what you want and how to respond to any offer. About the Author: This extract has been taken from the book, ‘Entrepreneur Know How – Mindset and Winning Steps for Buying a Business,’ written by Sharon Robson (Available through Amazon). Sharon is also the principal lawyer, director and founder of the boutique law firm, Antler Legal – a corporate commercial legal practice in Sydney, Australia. She has played a key role in facilitating, advising and negotiating many business transactions on behalf of her clients. Sharon is also a speaker, marketer and business owner. She is passionate about mindset and empowering people through education.   Sharon Robson Antler Legal www.antlerlegal.com.au

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

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  

“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

\"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.

Whether you use a registered tax agent or lodge your own tax return, it’s helpful to have information you can refer to when you want to get ready for tax time. The Tax Time 2020 toolkit is now available, and it includes a directory of links as well as several updated, and new, fact sheets for small business. The fact sheets can help you get an overview of what you need to know if you're: claiming deductions for the costs of using your home as your main place of business claiming a deduction for motor vehicle expenses for your business claiming a deduction for expenses you incur when travelling for your business a director or shareholder of a company that operates a small business, and you take money out of your company or use its assets. We also have information to help if you’ve had to pause or permanently close your business due to COVID-19. Ask for help if you need it, it’s never too late to speak with us or a registered tax professional. For more information visit www.ato.gov.au  

When you're running a business, there’s a lot to think about. Don't forget to protect your personal and financial information. Scammers often try to ‘phish’ for information by impersonating government agencies such as the ATO. If you hand over your information, scammers might use it to: drain your bank account establish fake businesses in your name gain access to your online government services scam your clients and employees. Scammers have many opportunities to trick you into giving away your valuable information. There are some things your business can do to help stay safe: use complex passwords and change them regularly remove system access for people who no longer work for you log out of systems and lock computers when you're not using them maintain up-to-date security and anti-virus software on computers and other devices. There are also some things you can do to stay safe when you're dealing with government services online: don't access services via a hyperlink in an email or SMS access services through an independent online search if you're ever in doubt, look up the service's phone number separately and call them to check. Next step:  Visit the Scamwatch website for more helpful tips and resources. See also: How to protect your business Top cyber security tips for business

Make sure you complete the Cyber Safety Checklist to help improve your cyber security and protect your identity Australian businesses are being targeted with COVID-19 scams, fraud attempts and deceptive email and SMS schemes. It’s important to protect your business, especially during tax time. The Australian Taxation Office (ATO) and Australian Cyber Security Centre (ACSC) are sharing tips and resources to help you improve your cyber security and protect your identity. Cyber Safety Checklist During this time of heightened scam activity, businesses are encouraged to: Use multi-factor authentication where possible and don’t share your password with anyone. Run the latest software updates to ensure operating systems security is current. Secure your private Wi-Fi network with passwords (not the default password) and do not make financial transactions when using public Wi-Fi networks. Exercise caution when clicking on links and providing personal identifying information. Only access online government services via an independent search – not via emails or SMS. Call us on an independently sourced number to verify an interaction if in doubt. Educate your staff on cyber safety and scams.   Find out how to report a data breach or scam.Australian Taxation Office Learn more about COVID-19 malicious cyber activity.Australian Taxation Office Watch the short video on Stay secure online and protect yourself from scams.Australian Taxation Office Watch the short video on how to keep your digital identity safe by protecting personal information.Australian Taxation Office

Practice owners who are looking to sell often adopt a wait-and-see approach, which can be risky. Making a sale is not as easy as it appears, of course, but practice owners who avoid waiting too long to sell their practice may enjoy a more successful outcome. Waiting too long to sell, or not planning ahead, can cause practice owners to miss a valuable window of opportunity. Because it takes an average of 6 to12 months to sell a practice, long-term planning is necessary for any successful sale. Never Wait Until You Have to Sell One of the keys to a successful practice sale is selling when you don't absolutely have to. If a buyer sees that you've been planning this move for quite some time and that it's not a desperate “I've had enough” step, you can dictate a much higher price. Proper planning means careful financial records, a detailed practice history and an extensive sales portfolio. Many practice owners make the mistake of waiting until their practice is on the decline to sell, which is exactly the opposite of what you should do. The best time to sell is when your practice is at its peak, at the top of its game. The Right Conditions for a Sale In an ideal situation, a clinic sale would be completed when two conditions are met: when demand in the industry is strong, and buyers with deep pockets are available. It's a smart idea before selling to take a look at market conditions for your industry in order to achieve the best return. Working with practice brokers can be beneficial in this case, as they often closely monitor market conditions and can advise you on when conditions are favourable for your industry. What Can Harm Your Practice's Value When You're Trying to Sell? Many factors can affect the asking price of a practice, including industry competition, current market conditions and the overall economic climate. Events such as a recession or a practice downturn can affect your practice's value and lower the asking price. This is why it's beneficial to sell when the economy is healthy. Of course, even in the healthiest economic climate, having too high an asking price can lead to a dead-end street. Deciding on the right price for selling your practice is important, and it's one that practice brokers can help you determine. They take a careful look at your overall profits, the state of your industry, similar practices and the marketplace when choosing an asking price. Pricing is crucial to selling your practice. The right price draws in buyers, but the wrong price turns them away. Many owners make the mistake of overpricing their practice. An unjustified value can make buyers walk away — for good. And if buyers walk away, your practice is sitting on the market for longer, quite possibly losing even more value. Take the time to get the price right, and you’ll find it much easier to sell your practice. You Can’t Sell on Potential The first thing to understand is that a buyer is not interested in what your practice might be able to do. They’re interested in what the practice is doing. The truth is, every practice has potential. Converting that potential to dollars is going to require the new owner to invest time, money and skills, and the potential may not even be realised. Valuing based on potential means the new owner is paying you in advance for the improvements they make. If you claim your practice is full of potential, a buyer will also question why you haven’t exploited it yourself. Your broker can help you talk about potential in ways that make your practice attractive to buyers, but you can’t rely on potential to raise the value of your practice. Maintainable Earnings Many practice owners get caught up in the value of their assets and weigh them heavily in their valuation. Assets can help increase the value of your company, but buyers are interested in how those assets translate to cash flow. It’s no use being asset-rich if you don’t have enough money coming in to maintain those assets and any loans associated with them. Buyers also look at whether earnings can be maintained. If your profits have held steady or risen in the past few years, this will be reflected in offer prices. In the same way, if your profits have been decreasing, you will have to lower your valuation. Keep in mind, your buyer will also look at industry trends when deciding on an offer. Changing demographics, government policies or environmental concerns can affect the value of your practice. Technology can have a particularly large effect on value. If the potential buyer is aware of technological advances in the industry, they may think your earnings aren’t maintainable. Outside Valuation It’s very rare for owners to value their practices accurately. In fact, some experts believe that as few as  10 percent of practice owners have a realistic view of the value of their practice. Owners have usually spent countless hours, effort, sleepless nights and plenty of stress on building their practices. As a practice owner, you want to include all that sweat equity in your appraisal, but potential buyers aren’t interested in that. They’re only interested in whether they’ll continue to make a profit from their purchase. The other issue you have as an owner is that you know what you need to make from the practice. Owners often want to retire, travel or invest in a new enterprise so they reverse-engineer an appraisal, naming a price that matches their wants rather than on fair market value. Because objectivity is difficult in the appraisal process, going to a broker is the best way for you to get an accurate idea of your practice valuation. Brokers understand the different ways to value practices, the standard in your industry and current market trends, which all contribute to a fair price. In the end, your practice is worth what someone is willing to pay for it. If you have a realistic view of the value of your practice, you’ll be able to find the right buyer. Here’s some ideas on how to add value to your practice by making it less dependent upon you as the clinic owner: 1. Ask Questions: What will your business look like when it’s ready to be sold? Will all your patient offerings remain the same, or will you pare them down to the most profitable products and services? How essential are you to these products and services? Asking these questions allows you to get clear on how to make your practice as attractive as possible. 2. Decide on the Critical Functions: What are the things that must happen to ensure your clinic continues to make money? These are the critical functions and should not be limited to providing your service. Are you critical to any business management processes and how can you ensure someone else can handle the task? 3. Document the Processes - A large part of the sale of your clinic relies on being able to transfer knowledge to new owners. If this knowledge is trapped in the current owner’s head, it means a long handover period, or the information is lost when you depart. Well-documented processes are essential to making yourself redundant when selling your business. A business with everything written down looks a lot less risky to prospective buyers.  4. Build a Strong Team: Once you have the procedures documented, it’s time to hire a strong team to handle critical functions. Having an established team reassures a prospective buyer that the business will continue to run as the ownership transitions. Ensure your team understands every aspect of the business. If you’re the one that normally undertakes anything other than clinic duties, make sure you have a new staff member who can take over these jobs. Spend time training the new staff and creating your dream business. 5. Take a Step Back and Let Your Team Work: It’s time to get out of your business’ way. Take a break. Fly overseas, renovate your bathroom or visit your in-laws. Don’t check your emails. The purpose of this step is to ensure that your business can run without you. You’ve created it, helped it grow stronger and now it’s independent and you can leave it to run on its own. This is an essential step. When you go back to the clinic after a break, your team will be able to point to holes in the process and places where you are still needed. Or, hopefully, you’ll come back to everything running smoothly and a continued profit. This will tell you what you need to fix for prospective buyers or if you’re ready to get your practice on the market. Owner dependence is one of the most important factors in the valuation of a business. Buyers know that in an owner-dependent business, much of the value can be destroyed as soon as the owner departs. Taking steps to make your business independent will help you get the best price when you’re ready to sell your practice. So….when you have decided it is the right time to sell…and the practice is ready to sell, it important to consider how to position the clinic for sale. All buyers will be looking for the following in their search for a good business:  Quality Information – the more transparent the business information, the more trustworthy it is. Buyers won’t make decisions if the quality of information is poor. Realistic Price Expectations – Most sellers have unrealistic expectations of their business’s value and believe it’s worth more than the market is prepared to pay. Well Presented Sales Collateral – A complete business information memorandum with comprehensive details about the business, the industry, its resources and its future opportunity for growth or expansion. This document needs to make an impression so you can ‘sell the sizzle’.  Owners Who are Prepared to Stay Involved After the Sale – Expect buyers to want to retain owners for a period of time to ensure a smooth transition and to download all of their IP to the new owner. Depending on how your deal is structured, your final payment from the purchaser may be determined or incentivised by future business performance which you’ll want to ensure is optimised. Do Your Own Due Diligence  Most business owners review their financial performance on an annual basis and judge the ongoing performance through their business bank account. Compliance, contract and employment documentation is often poor or non-existent, and the value in documenting business processes and operating systems is never even considered. When the time comes to sell, there is no documentation to demonstrate the value of the business aside from annual accounts which have often been prepared to minimise tax rather than demonstrate financial value. A failure to identify business weaknesses in advance can often lead to the withdrawal of an offer or be cause for a price reduction when uncovered. Prospective buyers typically review every detail of the business in a process called due diligence. As a seller, you’ll need to anticipate the buyer’s questions and scrutiny and prepare your answers and arguments in advance. In order to do this, the owner needs to be their own biggest critic. This is usually the first time since starting the business that such a detailed review has been performed. After completing this process, many owners have a much more comprehensive understanding of their business – some even identifying that had they known what they learned through the process, they might have been more successful. If you want to sell your business to create retirement funds in the future, take the time now to create an appropriate business exit strategy. Identify your critical assets and your potential buyers. Carefully structure your plan so you understand what liquidity should be there for you. Make it an objective to run your business in a manner that if you received an irresistible offer today, you would be confident that the buyer’s due diligence wouldn’t uncover anything that would cause them to withdraw their offer. Once or twice a year look at your business as though you were interested in buying it. For more information contact Sally StuartBusiness Sales Specialist - Health sector P. +61 2 9899 1999 M. +61 437 082 045www.linkbusiness.com.au