Published on 15/07/2015 by Punchmedia

Business Sentiment at a 2-Year High - How Can You Maximise?

Business confidence levels have jumped to almost a 2-year high, the first boost since the federal election in 2013. Firm sentiment is currently as strong as when the Abbot Government came into power in September 2013. Why the lift? It has been said that the lift has come about thanks to a number of reasons. Chiefly, lower interest rates, a lower Australia dollar, as well as a better received budget. Conditions are now in a positive trend, with the majority of industries certainly gaining traction. The only industry that hasn’t boosted in terms of business sentiment is the mining industry. The mining industry is not improving as it is taking a hit from China’s slowing economy and their recent share market turmoil, as well as the weakening Australian dollar. In fact, a recent NAB survey found that confidence was lowest amongst miners.

What Does This Mean?

The high level of confidence could signify a turning point for non-mining sectors.  It is likely the small business stimulus, presented by Abbott (read more here) could be making an impact.

Why are Firms Still Reluctant to Invest?

Firms are reluctant to invest as they require an “extremely high” rate of return, compared to current record-low interest rates, so say the National Australia Bank. In fact, a recent RBA research paper showed that it is not current interest rates that will dictate a firms’ spending, rather, it is “gut feeling” from the management team. Not only this, according to according to a recent survey, almost 1 in every 5 businesses are thinking of selling their business in the next 12 months. If you are preparing your business for sale, take a look at some of our top tips below to ensure maximum return. In fact, even if you are not preparing your business for sale, some of our tips below should be considered in order to maximise business processes and investment opportunities.

Preparing a Business for Sale

1. Have a Strong Business Plan in Place

Sometimes, we forget that after having spent years at the forefront of our business ventures, that there may be multiple business and marketing plans that are not actually documented on paper, rather, that are documented in our heads. These business and marketing plans have the power to be extremely useful to the next set of business owners. This is why it is a wise practice to formulate a strong business plan that can then be passed on, to ensure the ongoing success of your business. Include variations of the following in your business plan:

• Goals (broken down into achievable tasks)
• Future direction and strategy ideas
• Business objectives
• Sales, functions, and marketing processes if they work well and are recurring

2. Quality Finance Documents

Financial documentation from (ideally) the lifespan of the business, but if this is unavailable, at least from the previous 24 months will be necessary before you sell your business venture. Inaccurate financial information will frustrate the business purchaser and could harm negotiations between two parties. Financial information and documentation will assist the purchaser in understanding operations whilst giving confidence. The financial budget that is in place should be detailed and regularly updated, and backed by documented information.

3. Staffing – Will You Retain?

It is likely you will receive a much higher offer if the business you are selling comes with competent and reliable employees and management team compared to a business that relies heavily on the owner to function. Key employees remaining at a business will provide purchasers with additional confidence. Furthermore, key employees giving the indication they will stay at the business for an extended period of time will provide even more confidence and likely bump up business value. How can you increase the likelihood of employees remaining with the firm over the long term? Consider these suggestions:

• Develop policies and procedures that are not solely reliant on business owners, rather, they are policies and procedures that employees can be held accountable for. This will increase responsibilities and a feeling of employee-worth.
• Keep staff members engaged – this may include encouraging employees to buy into the strategic objectives of the business, providing a point of contact between business owners and staff in the form of an HR Manager so any problems with the business can be identified early will be beneficial for employee wellbeing.

4. Legalities

There are so many legal and contractual agreements involving businesses that must be considered; property leases, supplier contracts, IP registrations, and much more. All of these sorts of legal agreements must be sorted and formalised prior to the business sale. Will they be transferred over to the next owner and assigned to this party? All things you must consider. The above tips are all going to be helpful in maximising the value of the business prior to its sale. Have you taken the above steps are and are now considering selling your business? Consult the team at AnyBusiness, who will be able to point you in the right direction in order to gain maximum exposure and highest market value.

punchmedia

Curtis is a leading expert in the business-for-sale industry, serving as a senior content creator at anybusiness.com.au.

With a career spanning over fifteen years, Curtis has accumulated extensive knowledge in the domain of business sales, acquisitions, and valuations. His deep understanding of market dynamics and his ability to translate complex industry jargon into accessible insights make him a trusted resource for entrepreneurs and business owners looking to buy or sell businesses.

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