What Should You Look For When Buying a Business?

If you’ve decided it’s time to expand your operations, RTA Business suggests that there are certain things you should look for when buying a business.

RTA Business Are Here To Help Potential Buyers

Have you decided it’s time to expand your operation, to take your company to the next step? If you have, then let RTA Business - the business sales broker - lend a heling hand. You’re sure to find the right firm for you with us, as we have the largest business database of any UK business transfer agent.

Therefore, we understand how hard it is to decide which company will be right for you and your circumstances. It’s certainly not an easy decision to make, and in our experience, there’s several things you need to consider:

What Do You Need to Consider? 

1)      Profit Margins: The most obvious is how much money they’re making. If they’re not making money now, then how will they make money for you, once the company has fallen into your hands?

2)      Potential for Expansion: Sometimes, it’s good to take a gamble on a business that may not have strong profit margins, but has a lot of potential for expansion. To figure this out, look at the potential business and see how it’s working in relation to the wider marker, can you see growth potential?

3)      Their Reputation: You need to think about how other people see them. Basically, if they have a bad reputation, that reputation will carry on with you at the helm, meaning that the company could prove to be a drag on your own bottom line.

4)      The Employees: The employees are the life blood of any organisation. If the company in question has employees you feel you can’t work with, it would cost you money to replace them. Ask yourself, is it really worth it?

5)      The Target Market: Is the potential business’ target market one you know? One you can work with? If the answer to both questions is no, that business just isn’t for you.

Most importantly, RTA Business would suggest that you think about how you can use the company in question to make money, both in the short and long-term, and use that to decide whether this is the right business for you.

If you want to learn more or need to speak to a member of the team, please contact the RTA Business Complaints department today.

Here are RTA Business’ Top Five Reasons a Buyer Won’t Purchase Your Company

If you’ve put your business up for sale and it’s not selling, you need to know why so you can rectify the problem and clinch that elusive buyer. That is why this week, RTA Business has listed its top five reasons a buyer is saying no to the opportunity to purchase your business!

As one of the leading business sales brokers in the UK, RTA Business consultants has been facilitating lucrative business acquisition deals for a fairly long time, and as such, we know what works and what doesn’t.

Get Proactive and Show a Buyer the Value of your Business

More to the point, we know that you have put your business up for sale because you want to make money. The longer you have to wait, the longer you have to wait to get your hands on the cash, which can be frustrating or down right obstructive.

In our experience if a buyer isn’t biting, there are several reasons why, and there’s always something you can do about it.  Get proactive so that when the buyer of your dreams comes along, sees the value of your business and makes you an offer, you can reap your reward for building up your company into one to be proud of!

In order to do that, you need to identify the problem, and in RTA Business’ experience it’s probably one of the following:

1     They Don’t Know You: Even with RTA Business on your side, you need to let people know who you are, otherwise, how will they know why our business is so valuable? Always make sure you have a killer marketing strategy.

2      They Don’t Know the Value of What You Do: We live in a world of sceptics and even profit margins sometimes won’t convince them of the value of what you do. Craft facts, statistics, data, testimonials etc. into your marketing strategy to present a solid case to potential buyers.

3      Profit Margins: In many cases, a buyer may lack interest because your profit margins are too low to catch their eye.  Diversify your service and show them other avenues they can take advantage of to increase revenue with your business.

4      They don’t understand Your Product’s Appeal: In other words, the buyer doesn’t really understand the consumer base you market to. In this case, double down on market research so can readily show the gap in the market that you cater to.

They Believe the Profitability of the Business Isn’t Transferable: A potential buyer may be of the opinion that the company only works because you are at its head. Convince them otherwise by highlighting the key role played by your employees and convince said employees to make a long term commitment to the firm.

Pub Sector Receives Major Help from UK Government

If you trade in the beleaguered UK pub industry, there is good news this week, as the government has announced new code of practise designed to help aid growth in this key sector. What could this mean for your long term prospects if you hope to one day sell your pub?

At RTA Business we specialise in giving you the help you need when you decide it’s time to sell your business, so that you can make the most money possible from the result of that sale. We understand the difficulty this sector has had in recent times and welcome this news.

The Changing British Pub Landscape

The pub industry was once one that sat at the heart of British commerce. Back in the 80’s and 90’s, there would have been no problem selling your pub, because they were the centre of British life, regularly drawing in custom. Therefore, they were highly lucrative and valuable to potential buyers.

However the world, and the pub industry, has changed. The gradual encroachment of bars on pubs’ core client base, as well has the ramifications of the smoking ban, has driven customers away, forcing pubs up and down the country to close and making them that much harder to sell.

A Statutory Code to Control Costs

This is why the government has made the announcement of new rules that are aimed to help struggling pub tenants cover the cost of beer payments or rent. Specifically, this statutory code includes  the right to request a rent review after a five year period,  which followed after a raft of sustained complaints about the infamous “beer tie.”

Business Secretary Vince Cable spoke was reported by the BBC speaking on the issue. Cable said: "Far too many landlords feel their income is squeezed by big pub companies. So today we are taking action to make sure they get a fairer deal." 

RTA Business on the Potential for the Pub Industry

Although this change primarily concerns those who rent, it does have a provision that says that tenants of companies with over 500 pubs, will now have the right to request "parallel free-of-tie rent assessment," to show whether they would be in a better position going independent. This could theoretically open up a pathway to pub ownership, which could generate massive revenue when you eventually sell.

At RTA Business we also recognise that these changes will have wider effects for pub owners, as it will put them in a stronger position with potential buyers when it’s time to sell.

RTA Business’ Top Four Tips to Improve Employee Relations

One of the most difficult areas of management is striking the perfect balance with your employees, and if you need help improving your strategy in this pivotal area, then you might want to take a look at RTA Business’ top four tips to improve employee relations.

A business is only as good as the people that work for it, and those people tend to be more productive, to contribute more to your business, if they are happy. An unhealthy relationship with the boss is a major reason why an employee may be unhappy at work, as they feel unable to forge a positive working relationship with their boss, and as such, they are not fulfilling their full potential.

If you are looking to eventually sell your business, you need to create a positive working atmosphere, to ensure that when it comes time to sell, your business is the best it possibly can be and is more than capable of attracting a buyer. That is why employee relations is a key area of your management style, and if it’s an area somewhat lacking, you need to improve them if you ever hope to sell your business.

The Top Four from RTA Business

There are multiple ways you can improve employee relations, however some are more effective than others, and these top four tips from RTA Business should drastically improve relations in your office.

1       Politeness: It’s a basic issue, but you’d be surprised how often employees quit their jobs because of an impolite boss. Everybody in that office deserves respect and if they don’t get it, their productivity, and thus your bottom line, will suffer due to resentment.

2      Incentive: Whilst you must be the authority figure for your employees, they need to also see you as the person who can reward them if they follow your direction and work as hard as they possibly can. Incentivise your employees to motivate them.

3      Co-Operation: This tip is pivotal. No employee wants to simply feel like a drone, following direction without any input. When a major business decision comes up, consult with your employees to make them feel involved. It will show them that you value their opinion and respect them. Respect usually fosters respect.

4      Outside of Work: Whilst you don’t need to build an intimate relationship outside of work, it helps to at least show an interest in your employee’s life away from the office. It shows that they are not just another number to you and endears them to you in return. 

Financial Regulators for Treasury Review

UK Chancellor George Osborne has announced this week that the Treasury will conduct a review of the enforcement processes adopted by financial watchdogs, to ensure they are in line with national regulations. What could this review mean for you if you are looking to sell your business right now?

Financial watchdogs such as the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) are the final arbiters for disputes over financial products and services in this country. Should your business enter a dispute of this kind, they will resolve it.

George Osborne Speaks

The Chancellor of the Exchequer, the government minster ultimately responsible for financial matters in this country, and the executive in charge of the Treasury, has said that he is planning to examine whether both the PRA and FCA were striking the “appropriate balance of fairness, transparency, speed and efficiency”  in carrying out their remit.

This decision to further examine the activities of financial watchdogs comes at a difficult time for the FCA in particular, as it has come under fire as of late for the way it is carrying out its mission to police the financial market.

Specifically, the Chancellor openly suggested that the watchdog had committed an “egregious” error in the manner in which it briefed local and national media on its yearly business plan last month. It’s important to note that this incident did not result in any action being taken.

The FCA under the Spotlight

The FCA in particular has been far more effective than its predecessor, the Financial Services Authority (FSA). Not only has the FCA taken a stronger line against individuals, it managed to raise the total value of fines from £35 million in 2009 to £472 million in 2013.

However there has been a trade off, and that has been a lengthening of the period of time FCA investigations take and an increase in the number of incidents being referred to the Association’s enforcement division. Experts suggest that these are key areas the Treasury will investigate.

The Financial Times spoke to Nathan Willmott, a partner at law firm Berwin Leighton Paisner, on the issue. Willmott said: “The main concern from all sides is the time it takes from launching an investigation to making a decision on whether there is a case to be answered, and then going through the FCA’s internal decision-making process.”

At RTA Business Consultants we realise that the significant role the FCA in particular plays in the financial sector means that any finding by the treasury could have a significant impact on the business community. If you are looking to sell your business right now, it is certainly an issue worth keeping track of.

Can Shares Rise Without Profit?

For larger companies looking to sell up, share prices are everything. Share prices indicate how much an investor stands to gain from ploughing money into your company, so they’re an important indicator of your value. This leads us at RTA Business to ask, can shares rise without profit?

Shares are a crucial measure of wealth for a business that has floated on the stock market (making shares available for investors). That means that you need to ensure that your share prices are as high as possible, so that a buyer will know that your business is valuable.

The most obvious factor in share price rise is profit margins. The amount of money you make is a direct reflection of the value of your business. However when profit margins don’t rise, is it possible for share prices to rise anyway?

Share Prices Rise at Yahoo

In fact, it really is possible to increase share price without profit and all you have to do is look at the latest market activity at search engine corporation Yahoo to see how.

At the moment profits at Yahoo are actually falling. There was a 20% fall in first quarter profit. It measured $312 million (£187 million). It still beat expectations, but it wasn’t exactly fantastic. However share prices, at the time of writing, had jumped 9%. How is this possible?

The company came out with a raft of facts of figures to assure investors that Yahoo is on its way up in the world. Apart from the fact that profits still beat expectations, overall revenue was actually at its highest since 2010. Yahoo raked in $1.1 billion in the first quarter, with display advertising revenue rising by 2% to stand at $409 million.

Yahoo’s share price was also spurred on by the fact that Chinese internet monolith, Alibaba, of which it  owns a whopping 24% stake, saw revenue rise 44% in the last quarter of 2013. Of the situation, Yahoo Chief Executive, Marissa Mayer said that she “is really pleased by our first-quarter performance."

What RTA Business Has to Say

So at RTA Business we remind you that share prices aren’t as simple as how much profit you’ve got in the bank. Investors, whilst they are certainly interested in profit, also use the long term likelihood of business success to measure a company’s worth on the international market.

On a wider scale, Yahoo’s impressive share price rise should remind those looking to sell their business right now that buyers look at the long term viability of your business. It’s not enough to have a strong profit margin.

Small Business Lending Scheme: Just What Your Business Needs?

Growing a business with the intention to eventually sell it off is a complex process and one of the most difficult parts of that process is raising the capital to get it off the ground. That may no longer be a concern if a new small business lending scheme comes to fruition.

This week officials representing the UK government have announced the creation of a new scheme that will offer to share the financial cost of losses on some small businesses loans. This scheme will take place through a concerted effort to convince banks to lend more to these borrowers.

This scheme has been designed to facilitate the growth of the small business sector – a pivotal part of UK industry – which would in turn boost economic growth, which would benefit everybody. It’s the brainchild of the British Business Bank.

The British Business Bank was launched last year by the Conservative led coalition government and since its creation it has focused efforts on improving lending rates to small and medium sized businesses, a sector of the market that has found it difficult to generally secure lines of credit in the wake of the economic crash. This is seen as the latest attempt to do so.

Marketed as a pilot “wholesale guarantee” scheme, the plan would offer a government backed assurance to lenders that would act to cover the burden of a degree of net credit losses they build up on their SME portfolio.

The government’s goal here is to lessen the amount of capital lenders have to hold against their SME loans, so they can provide loans to small and medium sized businesses in a way that will cost them less. Naturally this has been put in place so that banks are more willing to lend to those businesses, which will give said businesses funds to use to expand, which will in turn inspire economic growth.

Reinald de Monchy, managing director for wholesale solutions at the Business Bank said of the scheme that: “Our aim is to incentivise new SME lending by making it a more capital efficient activity for regulated banks, thereby enhancing its commercial attractiveness.” 

The potential benefits for business sales ere are obvious. It will be easier to secure a loan for a small business with this policy, which will make it easier to grow. This in turn will make your business look more attractive to potential buyers when the time is right to sell. At RTA Business we believe this will have positive effects for those who eventually want to sell their businesses. 

SSE Energy Prices Freeze Until 2016

Major energy firm SSE announced this week that it’s freezing energy prices until 2016. A big move by any measure of the imagination, it’s a move that could benefit businesses up and down the country that have their energy supplied by SSE.

Last year as a result of Labour leader Ed Miliband swearing to impose a 20 month energy price freeze should his party sweep next year’s election, the big six energy companies came under fire for just how high they were raising prices.

The amount of press it got last year was astounding, and future estimates showed that it somewhat hurt profit margins as customers abandoned the big suppliers in droves heading to smaller rivals for their energy needs.

It looks like SSE has now addressed this concern as they have come out saying this week that they have decided to freeze energy prices until 2016. It’s a move that been hailed by the company and customers alike.

Representatives of SSE said that the move, even though it would lower profit margins in the short term, would streamline its service to cover the shortfall, another move that is likely to benefit customers in the long term.

Streamlining plans are already under way and the energy company announced that among those plans will by the axing of 500 jobs across the board and the development of at least three offshore wind farm projects to promote greener energy. The company predicts that these plans will save them at least £100 million, which they can then pass on to customers.

Despite criticism from industry rivals, SSE chief executive Alistair Phillips-Davies hit back, saying that "delivering the lowest possible energy prices" to customers was "central to everything we do". He further claimed that "we're looking to do whatever we can to bring down prices for consumers."

He also called the government to remove energy taxes out of bills and collect them through general taxation instead. This is most likely a reference to ECO Funding, a green energy initiative that the government funds through the taxation of the major energy companies.

This is bound to have an effect on any business that gets their energy from SSE, lowering bills significantly considering the amount of energy used on a daily basis. It’s also likely that it will further boost the recovery UK economy, which will have benefits for businesses across the board.

This money can then be fed into ensuring the company is primed and ready to sell when the time is right. At RTA Business Consultants, we believe that this could help you sell your business.

Summer Should Signal Pre-Recession Levels for UK Economy

Experts across the nation have told everybody this week that by the summer the UK economy should be back to pre-recession levels. At the RTA Business blog we ask what exactly this means and what it could mean for the business sales industry.

Business lobby group The British Chamber of Commerce (BCC) has gone on record this week stating that the overall size of the UK economy will return to pre-recession levels by the time we hit the summer. Specifically, they said that the largest measure of economic size, GDP, will exceed the level it was measured at when 2008 began, before the financial crash.

The BCC has now actually upgraded its economic growth forecast for the UK economy for 2014. Whilst it originally stood at 2.7%, it has now risen to 2.8% on the back of a slew of strong data about the trajectory of UK business.

Furthermore the BCC has predicted a strong year for the finance industry in 2015. They have upgraded their 2015 growth forecast from 2.4% to 2.5% and have also predicted that the end of 2015 will see the end of the Bank of England scrap their policy of keeping interest rates unusually low. The BCC predicts that the Bank will raise interest rates from 0.5% to 0.75%.

BCC director general John Longworth commented on these figures. Longworth said that "our economic recovery is gaining momentum." He then elaborated by saying that: "Businesses across the UK are expanding and creating jobs, and our increasingly sunny predictions for growth are a testament to their drive and ambition."

It’s also notable that back in December, when the BCC made its original forecasts on UK growth, they said that the nation would reach pre-recession levels of growth by autumn; now they’re saying it’ll be by summer.

However it’s not all good news. The BCC also warned of unacceptably high levels of youth unemployment. Longworth said in the  issue that: "We urge the chancellor to use this month's Budget wisely by incentivising businesses to hire young people so that the next generation of workers are not left behind."

So it’s quite clear from these figures that the economy is only set to expand in 2014; this in turn will help businesses grow which can only benefit the business acquisition industry. More business owners will be looking to buy due to stronger economic prospects, and those looking to sell will be in a better position to do so. It really might be a record summer this year in the UK!