19 March 2013

'Apps are Forever' Article by Steve Marsten

Is hardware old hat? We’ve got our smart phones and they are fantastic. Couldn’t do without them. Doesn’t matter whether it’s an iPhone or a Windows Phone or an Android device – it’s all amazing stuff! It probably has a GPS; HD Camera; a gyroscope; a compass; a currency converter, a music identifier and a HD display. But don’t worry – if it doesn’t, your next phone will. Your next phone will be even better - maybe even the best ever! At least for a couple of months.

The top of the line phones are actually reaching hardware parity. Displays are improving, the cameras have better resolutions and the processors are smarter. Everything is constantly being made a little faster, a little brighter, a little lighter, a little better looking and sometimes a little more durable. The competition is so intense that everyone has to keep up and handsets are starting to be given away for free!

So what sets smart phones apart? Software! If you want to see the real breakout innovation – don’t look at the handset, focus on the software!
Once upon a time buying a new phone was about the service plan; the coverage footprint and the components. Today it’s all about the apps. Without apps the phones die! (Look at the history of Palm’s WebOS or the future of RIM’s Blackberry.
What an age we live in. Think about all the gadgets we used to carry in our pockets and brief cases. There gone! In many cases so are the brief cases. Apps are the gadgets. Our cameras, clocks, alarms, flashlights, calculators, GPS units and voice recorders let alone the gaming ability on these phones. You are now considered as operating in the dark ages if you aren’t using a smart phone. Where would we be without them.  Next week I will go through the 7 must have apps you need to survive in business.
Do you have an IPhone, Windows Phone or an Android Device?
Which do you think is better?
What app can’t you live without?
Is there an app that you find improves the running of your business?
At Sothertons, we specialise in helping business owners run better businesses. For further tips on improving efficiency within your business, contact us on (07) 4972 1300

12 March 2013

"What's it all Worth? - Part 2" Article by Tina Zawila

In last week’s article we discussed preparing your business for sale as a going concern and maximising its value to a potential purchaser.

Remember it’s all about preparation and ultimately it’s a “Beauty Parade”...

To make your business more attractive you should have:

·         A good track record of profit growth
·         A strong, broad customer base,
      ·         Unique intellectual property or selling proposition
·         Good strategic relationships
·         A business plan
·         Independence from the owner (and any others who will be leaving when it is sold)
·         Strong systems and documentation
·         Secure premises
·         A good financial adviser to maximise the value of the business and minimise any tax payable upon the sale.

There are also some common traps and pitfalls to avoid:
·         Cash businesses
·         Business relationships that are built on a handshake
·         Lack of documented systems and processes

Once we have primed the business for sale, we then need to consider valuation methodologies, how to market the business to potential purchasers and the ultimate tax consequences of the sale transaction.

There are various methods used to value a business.  The most common is a “multiple of EBITDA”.  EBITDA is “accounting speak” for your Earnings Before Interest, Tax, Depreciation and Amortisation.  The “multiple” can be from 1 up to 5 times EBITDA.  You should seek professional advice to assist you with calculating EBITDA for your business and determining an appropriate multiple to use. 

Usually, a set of “Special Purpose Financial Statements” commonly referred to as “Abridged Accounts” are prepared for your business to use when marketing the business for sale along with a document called an “Information Memorandum” (IM).  This document includes information on your business, about its history, position in the market, track record of growth, key clients, the economy in which it operates and so on.  Again, this document is usually prepared by a professional.

Finally, calculating any tax payable upon the sale of your business requires the skills of a professional accountant and tax agent.  Capital Gains Tax can be a complex topic and your unique circumstances must be closely considered when applying this legislation to the business sale transaction.  You will certainly need to seek advice on this area!

Are you considering selling your business? 

Have you considered how to market your business to potential buyers?

Do you need help to improve your business?

At Sothertons, we specialise in helping business owners run better businesses and ultimately increase the value of their business. Call us on 4972 1300 and let us help you.

05 March 2013

'What's it all Worth? - Part 1' Article by Tina Zawila

Approximately 80% of Australian businesses are privately-owned, and over the next 10 years the baby boomers will be looking to retire. In fact 40% of business owners are planning to leave their business in the next five years. 
So it should come as no surprise, that in the last few months we have had a number of enquiries from clients asking “What’s my business worth?”, “How do I market it for sale?” and “How much tax will I pay?”

The “what’s it worth” question is vital because 50% of business owners expect the proceeds from the sale of their business to be the primary funding source for their retirement. 

There are a number of ways for owners to “exit” their business including; succession (to children, family members or current management/employees), merging with another business, capital raising or initial public offering (IPO) via the stock market, sale of the business as a going concern, or simply close and liquidate. 

60% of business owners would prefer to sell the business as a going concern.

So how do you maximise the valuation of your business and ultimately the sale price?

The secret is in the preparation.... Ideally, preparations must be made well in advance, maybe years, so that the business is ready for sale and remains in a constant state of readiness for when the opportunity arises.

It’s a Beauty Parade... A number of things must be attractive to a potential purchaser.  Including:
· Relationships with customers and suppliers are with the business, not the existing owner
· The business has sound operating systems, good financial accounting and a clear strategy for the future
· Intellectual Property and Trademarks are protected and up to date

So it’s all about putting your business in the best possible position for sale.

If you identify who the potential buyers of your business are likely to be, and anticipate what they will be looking for, you will position yourself to maximise this final return on your investment in your business.

Are you looking to sell your business?

Are you prepared for the sale?

What is your strategy?

Are you planning on using a business broker to assist you with the sale?

In next week’s article, I will discuss exactly what buyers are looking for and some common traps and pitfalls to avoid.  In the meantime, if you need specific advice on the value of your business or on how to prepare for sale, please call us at Sothertons on 4972 1300 – we are here to help you in [Business] and in [Life].