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Who do you know who wants to own a business returning up to 62% on investment? If it sounds too good to be true it probably is!But that really was the EBPIT (earnings before proprietors’ drawings, interest and tax) return on the purchase price of a café we sold last year. Even if we subtract notional wages / salaries for the owners of $100,000 p.a. the return was still a huge 44% on investment. Cafes and restaurants should be considered by all serious business buyers as they have so many other good features apart from great returns. It is a growth industry – more and more of the average Kiwi dollars is being spent on meals prepared outside the home with café and restaurant sales reported as up by 6.2% on the same month last year. They are cash-and-carry businesses – generally you are not extending credit to your customers and you do not have a lot of money tied up in inventory on your shelves. They are people businesses – the perfect blend of manufacture, service and retail and suit a large range of buyers. They can be fun businesses. Based on many years’ experience in selling hospitality businesses we expect this type of business to show profits of at least 15% on sales if they are operated efficiently. On our opportunities list this month we feature 6 cafes or restaurants with turnover ranging form $678,000 to $2.34 million per annum. Some are days only, some are franchises, some are in the city, others are in lifestyle locations. All are worth consideration. The Lost Art of Selling! At last month’s NZ Business Brokers’ Conference, Clyth spoke on the above topic and posed the question: “has technology improves productivity and profitability?" There is no argument that technology is a great tool for crunching numbers, contact management, database communication, and producing impressive documentation. But statistics show that the average number of sales per salesperson per year is down drastically in the last 25 years. (1981 saw the birth of the IBM PC) The danger is that we are losing the personal touch. While e-mails are efficient and convenient we fervently believe phones beat e-mail and face-to-face meetings beat phones. Your comments are welcome. Have mouth, will travel! As always, we have a busy schedule of speeches and seminars for various conferences, accountancy firms, franchises, industry groups, and education institutions. Both Glorianne and Clyth enjoy sharing their knowledge and experience and building relationships. We talk on business valuation, maximising business value, and succession planning. If we can help you please let us know. |
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