ABC Business Sales Wellington

22/08/2023

16/03/2020

Does Business Interruption Insurance cover an Interruption to my Business?

The answer is maybe, but not always. No wonder people get confused by insurance.
Business Interruption (BI) insurance can be a very valuable form of protection in the event of certain things happening but its very name can be confusing. Take certain businesses on Albert St in the Auckland CBD for example. The Central Rail Link (CRL) project has caused significant disruption to traffic flows and access to the area and most certainly caused a business interruption, right? The answer is yes, but is it covered under a BI policy?

BI claims typically require a claimable loss to happen under a Material Damage Policy (that’s the one that covers your buildings, plant and stock for example). If, as a result of that damage, you have a negative impact to your gross profit, you will most likely have a claim. Think about the situation with CRL - has there been a loss to the building, plant or stock? Probably not, so your business will have no trigger for a claim there. But wait, there are some other things to consider. BI policies can have a number of extensions that trigger a claim where the cause was something other than a Material Damage Loss.

Things like:

Loss or damage to a customer or supplier’s premises

Prevention of access

Closure by authorities

Closure of transport routes, ports or airports

Loss of utilities


So, do our friends on Albert St have a claim under one of these? Generally, a claim under one of these extensions will require an accidental, fortuitous and external type of cause. E.g. an earthquake closes SH1 up the Kaikoura Coast or a fire knocks out one of your key suppliers. With CRL, the closure was a planned and deliberate event therefore not a fortuity and certainly not accidental.

BI insurance can be very effective, but unfortunately it is an area where we come across many clients who are confused about how it works or who have been poorly advised. This often leads to a bad claims experience and lack of faith in how insurance works.
Donaldson Brown have overseen hundreds of millions of dollars in claim payments and are New Zealand’s most transparent insurance and risks advisors, providing full service, bespoke solutions to large multi-nationals, corporate entities, SME’s and individuals both domestically and internationally.

As fellow business owners, the team at Donaldson Brown understand how to tailor the various commercial insurance products available across multiple insurance companies to protect your most valuable assets, quickly. To discuss how they can protect your business against unforeseen risk, give them a call or visit their website for a copy of their Statement of Service.

13/03/2020

Synergy Hair in the heart of central Wellington offers an opportunity to work within a successful franchise in a high profile location.

Willis Street in Wellington is considered the Golden Mile of retail, and with a high volume of foot traffic past the door every day, this hair salon and retail outlet caters to the well-heeled clientele of city workers, apartment dwellers and tourists alike.

With a shop front of quality hair products, Synergy Hair Willis Street entices the punters through the door with attractive displays of products from around the world. Beyond the retail space is a high-end salon with three basins and seven chairs. The business employs an efficient team of local and international stylists, and when required, the working owner mans the reception desk.

The franchisee owner is not a qualified hairdresser and yet has achieved impressive growth over the past couple of years earning a substantial six figure income annually. He has new opportunities abroad and in Auckland and is now looking to sell the business.

If you'd like the opportunity to own a thriving business, and the only salon with a shop front on the Golden Mile, then call me today.

Belinda Wotton - 027 276 9029.

Price $290,000

11/03/2020

Chipmunks Playland and Cafe

$600,000 - Wellington

ABC Business Sales is privileged to be partnered with Chipmunks Playland & Cafe to assist in finding suitable people to become franchisees in new, never marketed before, strategic locations throughout New Zealand.
Chipmunks is a NZ based, family-owned, success story, now operating for over 25 years they have over 45 premium playground sites spread over the wider Asia Pacific region. They position themselves at the higher end of the indoor playground sector. They have a proven, well recognised and an established business model where working franchisees are rewarded handsomely. Franchisees enjoy multiple revenue generating activities, all being guided by a comprehensive and full-service Franchisor support system. A Chipmunks Playland & Cafe offers a diverse range of services including:
-Indoor Pay for Play facilities
-Full-service on-site cafe
-Kids parties
-Private venue hire
-Merchandise sales
-School holiday programs
-And before and after school care, for children up to 11 years old.

So, ABC is on the lookout for new franchisees with:
-The ability, passion and determination for success
-An owner-operator who wants to work in the business
-Adequate financial resources
-A passion for working with children and providing amazing experiences
-And a desire to uphold world-class customer service

Areas available immediately include:
Whangarei, Auckland, Napier, Palmerston North, Lower Hutt, Nelson and New Plymouth. Full development and set up costs start in the vicinity of $550,000, depending on the site's size and area.

Chipmunks Playland & Cafe is a fun franchised business with excellent franchisor support. Be part of its success story and contact one of our nominated Business Brokers who will guide you through the next steps towards owning your own Chipmunks franchise.

10/02/2020

Baby Boomer Businesses - The Truth Behind The Tidal Wave

For the last ten years I have heard about the tidal wave of baby boomer businesses required to be sold, with the unprecedented volumes predicted to cause structural shifts to the NZ economy; I can tell you first hand these statements are actually not dissimilar to the Year2k phenomena, where the media pumped up an issue and caused panic when in reality the issue was less material than had been first thought by all the stakeholders.

There are a number of reasons behind my opinion and I have some key statistics that support my thoughts:

The number of registered companies in New Zealand is 546,735 and you would have heard many commentators state that 97% of the business community are SMEs. Hence we have ~530,333 SME’s with a high proportion of them owned by baby boomers needing to be transitioned in the next 10 years.



When you dig deeper into the statistics and aren’t hunting for headlines, the actual number of registered companies with more than 6 employees and less than 100 employees is 55,077. (388,323 registered companies have no employees). 55,077 is still a material number, and our internal research suggests 25% of these SME business are owned by boomers which translates to 13,770 of which will need to be transitioned over the next ten years (1,370 per year). 1,370 of business transitions per year is very manageable and not something I would call a structural shift or a material issue for the New Zealand economy.



**Above information is as per Stats NZ 2019 business report



So what does this information all mean for any seller or buyer of SME businesses;

· If you’re a buyer and you find a business that meets your criteria, go for it and don’t wait round for the perfect business as there is not a plethora of businesses coming to market in the next ten years like you have been previously told.

· For sellers, the key requirements for maximising value haven’t changed. Be appropriately prepared and make sure you use a professional to sell your business to insure you reach every possible buyer who may want to purchase your business, as this will give you the highest probability of achieving an optimal result.

22/01/2020

The hiss of the Expresso, the sound of glasses clinking… people enjoying a delicious meal. If the buzz of a busy cafe, restaurant or hospitality venue excites you, then you’ve arrived at the right place.

ABC Hospo is a specialist business brokerage that serves up only the best opportunities. Whether you’re looking to buy or sell a business, we have an experienced team that understands the dynamics of the New Zealand hospitality industry. Buying an existing business means you can tap into immediate benefits. Use your entrepreneurial talent to build customer loyalty, cash flow and drive growth. If you’re considering selling a business, then we have a network of buyers ready to invest.

Why procrastinate? Make the positive move to claiming your independent future. Talk to us today and we’ll help shape your plans into a reality.

A specialist hospitality business brokerage that serves up only the best opportunities.

12/01/2020

Lunch time reading for the business owners on this page

Selling or contemplating selling your business? How about a quick Audit?

08/01/2020

Moms and pops can keep our best SMEs in local ownership

Opinion: privately owned businesses changing their exit strategies, creating opportunity.

New Zealand's low yield investment environment and the cannibalisation of quality, privately owned NZ companies by overseas private equity firms are two trends driving an increase in inquiries from mom and pop investors who want to invest their money in privately owned businesses.

In my position as one of the country’s biggest sellers of small and medium enterprises, I am often moved to despair at the pace this country’s most promising companies are being hoovered up by overseas equity forms. But one positive outcome of it all is that it is also creating an awareness of privately-owned companies as an investment category for locals with a bit of cash to invest.

I suspect it is because so many traditional investment options like property, shares and cash are not offering Kiwis the returns they once did – particularly for those who have to live off the interest of their capital.

On the other hand, buying a shareholding in a private company at a multiple of three-five times profits, generates a return of 20%-35% on capital invested when it’s done right.

Consortia on the rise
We're seeing an increase in consortia of investors, where mom and pop investors get together to put their money in a business. Some of these we put together, while others happen organically - where people come together to buy into a managed business. And the structures vary - for example, a consortium of investors might buy a business for $3 million which comes with a manager and a governing board to which the GM reports.

This consortium approach option reduces risk in the eyes of many, though the model can also have some difficulties – including agreeing when the right time is to liquidate the investment and what an appropriate dividend policy should be. All these issues can be remedied with a well-prepared shareholder agreement which stipulates all the rules and policies prior to entering this type of investment.

One-way risk can be mitigated to a large extent is for investors to avoid companies that are not currently profitable. This might seem like an obvious one, but it’s surprising how many people will jump in on the promise of over exaggerated returns and treat their investment like a lotto ticket. If a company is not currently making a profit the chances are it will take twice as much capital and twice as long as you think to get it into a state of making a consistent profit. That is why we always suggest to our investor base the best companies to buy are those that have made consistent profits for a long period of time.

Private companies changing their exit strategies
The proliferation of overseas private equity funds buying up quality privately owned companies, such as the recent purchase of Hellers by an Australian private equity firm, is indicative of a shift in how privately-owned businesses are changing their exit strategy.

Small goods and sausage makers Hellers was sold to Australian private equity firm Adamantem Capital

Listing on the share market comes with a whole lot of cumbersome disclosure requirements which are fairly onerous and expensive. Selling to an offshore private equity firm is less complex, but it does mean that control and profits go offshore.

Locals are noting these movements and responding with enthusiasm from what we see – with some $500m worth of small and medium businesses sold in the past year, most of those in the wholesale distribution, professional services, childcare, hospitality, accommodation, agriculture and hospitality sectors.

But smaller investors considering investing in privately owned companies should take on board the following tips:

Buyers should look for companies that have been trading for at least 35 years.

The company should be able to demonstrate a history of maintainable earnings, and consistent profit over time.

If possible, select as an investment a company that has recurring and contractual revenue – something like Xero has a great revenue model which is recurring and contractual because it is subscription based. Obviously, the more solid and robust the revenue is the better for the buyer – consistent earnings pay the significant dividends.

A high growth company is one that is growing, not necessarily providing consistent earnings. High growth means they will be doubling staff and doubling debtors and that is doubling the risk. Opt for a company that supplies necessities rather that discretionary goods and services. Get quality advice

Importance of SMEs
SME businesses make up 97% of the total companies in NZ, the local economy has been built around SME companies which has always been a material contributor to total employment in NZ. The prominence of the SME sector has been a huge contributor to NZ business culture and psyche, as the freedom and flexibility of working for a SME provides the perfect breeding ground to learn and develop entrepreneurial skills and forces NZ employees to think outside the square and take a more holistic approach to business.

Many of the foreign workforces have been institutionalised by the dominance of big corporate employers where they are not given the chance to use or develop entrepreneurial skills.

Keeping NZ’s best performing private companies under NZ ownership is a huge positive for the country’s economic growth; it maintains and increases the government tax revenue as well as keeping local employment stimulated with highly skilled and well-paid jobs. The current risk for NZ is if the trend of our top private companies being sold to foreign investors continues, it starts to become the norm and quite quickly, we will be at the mercy of foreign corporates in regards to maintaining jobs and corporate earnings.

The goal for NZ business should be to start and grow a truly global business that does not get sold off to foreign investors half way through its life cycle; imagine if Auckland was headquarters to a Facebook or Google which had started off as a NZ company and this was maintained through to its full maturity; the benefits for the NZ economy would be colossal!.

The year for SMEs
2019 was a year of slow and cautious decision making for SME business owners and investors alike. These behaviours were largely driven by two key issues,: reduced business confidence, and an uncertain outlook for the global economy. Both these 2019 issues are expected to recover in 2020 which will provide positive investment & trading conditions for SME businesses.

Hot sectors for SME businesses in 2020 are accounting firms (we have numerous buyers for every fee book that comes to market as the intangible value of a recurring client base is now becoming a very desirable asset), regional infrastructure and contracting companies (the committed government spend on roading and infrastructure is expected to drive extraordinary profits in the short to medium term for these businesses and this is further supported by a number of private companies looking to consolidate this sector across NZ), and import/distribution companies with exclusive agencies are all achieving above-average multiples with a queue of buyers for these types of businesses.



By: Chris Small; managing director of ABC Business Sales

06/01/2020

FIVE THINGS TO CONSIDER WHEN BUYING A CAFE

1. Location

Research the area where the café is situated, is it in a busy town centre, close to a university or near an industrial or business park where there is a lot of footfall? Cafés are reliant mostly on walk-in trade, or one with plenty of street parking, so you need to ensure that you are in an area that sees a lot of people pass by on a daily basis. A good location is going to be key to the success of the café. Your business needs to be visible to passing trade so that your customers are drawn in as they pass by, if you are not on the main walkway, you need to look at boards and signage to draw in your customers. The wrong location could be the difference between success and failure.



2. Design & size

With a café there is no specific design that you need to work with, a café can be run from a tiny area to a 200 square metre shop quite successfully. What you need to look at is if you can cater to your customers’ needs, whether it is a takeaway coffee shop or a much larger sit-down cafe for upmarket customers. If you are offering a catering service, you will need much larger premises than if you are looking for a small kiosk to dispense coffee and sandwiches. Look at the type of service you are offering, the area you are in before deciding on the size and design of the café. In an existing café, you may want to renovate to change the current design and décor, which is often possible, but it is not always possible to expand the premises should the business require it.



3. Equipment

Whether you are buying an existing café or starting up a new one, you will need to look at the equipment required. Small appliances such as coffee makers, microwaves to large appliances such as refrigerators, ovens, and dishwashers may need to form part of your inventory list. In an existing business, you may need to replace or add on more equipment, so you would need to investigate this thoroughly as it can be quite expensive. A new business would need to cater adequately for the appliances and equipment. Check on warranties on the products so that you can allow for a future replacement if necessary. In an existing café, you also need to ensure that all equipment is fully owned and part of the café sale. Items on a hire purchase agreement may not be sold. Check on whether you need to insure items and the costs for this as well. You also need to take in to account storage containers, cutlery, crockery and so forth depending on the size and type of café.



4. Lease

Are you buying the premises with the café (freehold going concern) or is the café in a rented premise? Most cafés are operated from rented premises and you would need to check that you will have permission to rent the premises when you take over the business, usually during a period of Landlord Consent. Cafés that are on a rented property should be sold with the right to lease the premises already arranged. Check on the length of the lease and if you would be taking a NEW lease or being assigned over the current one in place. A longer lease period is preferable, usually 8+ years in New Zealand, especially if you are purchasing the business using a bank loan, as it shows long term commitment.



5. Profit & Loss

When it comes down to the crunch, the bottom line is what matters when looking at buying a café. You want to know how much profit the business is likely to make. You cannot always go on the information given in the business for sale advertisement and best practice would be to examine at least 2-3 years of figures for the business to ensure that you know what you are getting. If the books do not appear to be legitimate, make sure you ask detailed questions, perhaps watch the business in operation for a period of time and other ways of determining whether the figures presented are authentic.



There are many other aspects that you would need to look in to, such as ensuring that all permissions and licenses are in place, that the business is in good standing with their suppliers and customers (check online reviews), that the premises is registered correctly, does the business utilise and embrace online marketing and so forth before taking ownership. Ask as many questions as you can and bring in professionals if required to ensure you get exactly what you are paying for. Once you have taken ownership, the success or failure of the business becomes your responsibility, so ensure you are buying a thriving operation and not a sinking ship.

31/12/2019

A new decade, a new year, now is the time to invest in your future

29/12/2019

2019 was a year of success for our business professionals.

Looking forward to helping more businesses in 2020.

28/12/2019

Christmas is now over and we are heading into a new decade.

What are your plans for the new decade?

Is buying a business on the list?