Frequently Asked Questions
Many times, people that contact us for information about buying or selling a hotel, restaurant, bar or other hospitality business in Melbourne or country Victoria have similar questions that they need answered.
The following are some of the most common questions we are asked. If you can't find the answer to your question, regarding the sale or purchase of a business or commercial property, feel free to contact us during business hours.
What is a business broker?
A business broker is a professional that assists in the buying and selling of a business.
If you are selling your business a broker can help to identify potential buyers and market your business to these buyers. A broker can also provide you with advice about preparing your business for sale, help you form an exit strategy and perform negotiations with buyers.
If you are buying a business, a broker can help to find business for sale that may meet your needs and pre-screen businesses that may not be right for you. The broker can represent you in negotiations with the seller.
Your broker can assist with the necessary paperwork including any necessary licenses and permits to help cut through red tape and ensure that the transaction is smooth and thorough.
What questions should I consider when buying a business?
Do you have a particular skill or interest that will benefit the business? What can you contribute to the business? Can you run the business at least as well, if not better, than the current owners? How much financial risk can you assume?
How can I calculate the value of a business?
If you are considering buying a business it is vital to know what the business is worth. Often, what you may think a business is worth, and what the seller thinks it may be worth, are two different figures.
Ultimately, a business is worth as much as someone is prepared to pay.
There are many factors that could affect the value of the business, some of these may include:
- The reason the business is for sale
- The business's assets and liabilities
- The value of the stock
- The condition and age of any property, fixtures, fittings or equipment
- The amount of time the business has been operating
- The business's annual turnover and pre-tax profits
There are pricing "rules of thumb" that may be appropriate to use as a rough guide but, each business that you assess should be considered independently. You should definitely seek professional advice as to the value of a business.
Is there a best time to sell a business?
This will depend on your reasons for selling your business. It is best to plan ahead and have your business in the best possible position before putting it on the market. Developing an effective exit strategy is also important to consider.
Generally speaking, it will be easier to sell your business during times when the economy in your industry is performing well, when your sales and margins are on the increase.
How can I maximise the sale price of my business?
Plan ahead. Make your business an attractive proposition to any potential buyers.
Make sure that your financial records are in good order - bank all of your takings, cut any unnecessary expenses.
Make sure that any necessary repairs or maintenance work is carried out and that all equipment is in good working order.
Ensure that your customer records, staff records, supplier agreements etc. are up to date.
Liquidate any old stock.
Make sure that the premises is kept clean and tidy.
Demonstrate to the buyer that your business is a well run, low-risk investment and point out areas of potential growth. To maximise the sale price of your business, make it as attractive as possible to any interested buyers.