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.

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.

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.

A Stabilisation: The UK Unemployment Rate Holds Steady

The latest employment figures from the Office of National Statistics (ONS) have revealed that the UK unemployment rate has held steady at 7.2%. What do these figures indicate about the business sales industry and how might they effect it going forward?

According to the national statistics agency, the national unemployment rate has slipped even further, falling to 7.2% from 7.4% a few months ago. This means that the rate has generally held steady with some decreases since the ONS last discussed unemployment figures.

Specifically, the number of those in this country who are now in full time employment rose to 30.19 million; this is a record total for national employment figures. The unemployment rate fell by roughly 63,000 and now stands at 2.33 million people in the UK.

This isn’t the only good news for the UK economy coming from the ONS this week, as the agency revealed that there has been a rise in average earnings. Pay in the three months up to January 2014 was up, on average by 1.4% from the same time the previous year.

When honing in on one of the country’s major employment issues, young people, there was also good news this week from the ONS. The agency revealed that the number of unemployed people between the ages of 16 and 24 measured 912,000 in the quarter to January; this is a fall of 29,000 and brings the total number to the lowest recorded since January 2011.

The BBC reported Employment Minister Esther McVey talking on what these figures mean. McVey pointed out that "the growing economy is helping record numbers of people to find a job".

McVey went on to elaborate, saying that: "The rise in employment is being fuelled by businesses and entrepreneurs across the country who are feeling increasingly confident with the improving economy." Furthermore, these figures will inspire further confidence in the economy from business leaders, which will lower unemployment even further; it’s cyclical.

As far as the business sales industry goes, RTABusiness sees several relevant points from these figures. First, they act as an indicator of how strong the business sector is right now; they are further proof that it is a good time to sell your business as buyers are looking to expand.

They also illustrate the fact that unemployment is proving less of a drain on the national economy; which will in turn benefit businesses and give them another reason to expand and gives those looking to sell more resources to utilise to make their business more attractive to potential buyers. It’s a good time for the business acquisition industry.