When you start to think about selling your business have a read below and the information will point you in the right direction so that you can decide on how and when to sell your business. In all cases there is a lot of information that you will need to get together to initially identify the value of your business and then provide to a potential purchaser. You may not have had that information when you bought the venue but you’ll need it to sell the venue and get a decent price.
- Lease: This needs to be signed by all parties. You also need to track down and include any transfer of lease and variation of lease documents. If your lease is less than ten years then approach the landlord and ask him to put it in writing that he will negotiate an extra term or do a new lease for the incoming tenant. A lease of over ten years is your target.
- Disclosure Statement: This comes with the lease and details the outgoings. If you cannot find it then ask your managing agent or your landlord for a copy.
- Planning permit: You need to be able to show that the liquor licence and also your use matches the planning permit. If you do not have one then ask your local council to do a search and find one for the venue. Depending on the location and age of the building there may not be one but you need to have that confirmed in writing from the council.
- Foot path trading permit. Keep a copy of the council invoice as well as the window permit as you will need to show that is paid and up to date.
- Food certificate. All venues will have one. Ensure that it is up to date.
- Certificate of registration of business name. This is required for the liquor licence transfer. If you can't find it go to the ASIC website.
- P&L . As a licensed venue you do not need to produce a Section 52. But it is advisable to have books prepared and ideally annual tax returns. You need to have as much on the books as possible and you will be looking at about two times your declared net profit. Don't forget add backs to get your net profit up. If the books show no profit or there just isn’t any then do not worry the sale will be presented as walk in walk out but now you will get a considerably reduced price for the venue.
- BAS. Go to your BAS portal and print off the last four BAS. Do not worry if they do not match the books.
- Last Rental invoice: This is needed to show what you are actually paying now in rent and outgoings.
- Fixture and fittings list. If it can be removed and sold on EBay then it needs to be included with a good description make and model number as well.
- Publicity photos: You need to show the venue in its best light with some high resolution photos without any people in them. If you have a video of the venue then upload it to Vimeo and the obtain the link so that it can be used for marketing.
- Rosters: Create a weeks rosters that show all hourly rates, total hours, job roles and whether staff are on or off the books.
- Red Line Drawing and Liquor licence. Those should be close to hand so just scan them in to get a copy.
Preparing the venue for sale.
- Rent: The most important thing that you must do is to be up to date with your rent. If you are behind then do what you can to get up to date because if the landlord locks you out then you have nothing to sell. Also if you are having difficulty paying the rent then get past the emotion that you will hang in there and trade through it. You will not survive , put the venue on the market and get out whilst you still can.
- Cleaning: Start outside and clean every single surface , piece of furniture and equipment. Get on a ladder and go high, change filters, empty grease traps. When you go through the venue if there is equipment or items that you have not touched or used for a year then dispose of them. Remove as much clutter as you can. Make sure the place smells nice and steam clean carpets so that they are no longer sticky.
- Maintenance: Replace all the globes that have blown, give all the walls and floors that have been dented or paint work scratched a touch up. Old furniture that is broken either replace or dispose of. Pay special attention to the toilets to get rid of graffiti , fix cisterns and make sure the door locks work.
- Internet: Google your venue. What is said about it on the all the review websites. Any negative comments get removed or answer them. Ensure your website, Facebook and Instagram accounts all function correctly.
Using a broker
- You can try and sell the venue yourself. You may succeed but unlikely, it is a false economy. The time and effort you spend dealing with buyers (tyre kickers) is better spent running the business and increasing sales. Brokers spend most of their time cultivating databases with buyers and sellers so that when you list your venue they go straight to a targeted crowd. It may be just one phone call that finds a buyer but it would have been years of research to identify that buyer.
- Get the broker in and find out what the broker knows about hospitality businesses, what they have sold recently and what is their view of the market. You’ll have a price in your head , can the broker achieve that and how? Many brokers will promise amazing prices just to get the listing. How much would you pay for the venue and that is probably close to what it will sell for. The venue may not be at the right point in time to sell so ask the broker what needs to be done to get the best price for the business. Ensure that the broker you use is a member of the Real Estate Institute of Victoria to give you legislative protection as there are many out there that are not because they are not the most reputable of brokers.
- Be careful of signing exclusive sales agreements. All brokers would prefer an exclusive but if they are any good will also accept a general sales listings. That means you can give it to a few brokers or even sell the venue yourself. If a broker states that they only work on exclusive listings then find another broker.
- Advertising. Many brokers charge huge advertising fees. Don’t pay anything up front. If you must pay advertising then pay it on completion of a sale. Some firms use advertising as a source of income and they have no real intention of selling the business. Make the broker work for you. If they do not sell your business then they do not get paid. That is a pretty good incentive.