New lease offered with experienced childcare operator as your tenant. Rent adjusted annually to CPI  and market reviews at the end of each term.

Excellent buying in a desirable location on theSunshineCoast

Call me today for further information.

Price $1,100,000 (Plus GST if Applicable)

Linda Harley

0488103310

Confidentiality assured.

Linda Harley

0488103310

Most childcare business sales will be completed “subject to Due Diligence”.

The scope of the due diligence investigation will vary and to some degree depend on the information provided by the seller and Business Broker prior to any offer being made. It genuinely pays to get the right information from the right people for a smooth sale to proceed.

Preparation of the business sale will help achieve a successful due diligence process. By planning for the information a buyer is likely to request, it can be prepared and presented in such a manner that the questions are answered accurately and promptly. For example, having Profit and Loss information, BAS statements, Occupancy reports, staff details and inventory lists prepared will ensure all parties can move through the sale process with confidence.

The key to a successful sale is preparation, presentation and providing the information required by a buyer and their stakeholders such as banks, solicitors and accountants in a professional and timely manner.

This is not always the case. To achieve a sale “it takes Two “ ; a willing buyer and a willing seller.

In a recent sale I have been involved with the buyer and their solicitor were placing a number of demands on the sellers during the due diligence process , expecting them to agree without hesitation to achieve a sale.

Believing the Buyer had control, they negotiated hard on terms that in retrospect were not really that important to them anyway.

In doing this the Sellers lost trust with the Buyers and their ability to take over the business they had taken so long to build. As a result the Sellers waited for the first opportunity available to them and cancelled the contract. This was an expensive exercise for both parties.

While it is rare for the Seller to cancel a contract, it is important for Buyers to consider that this is a possibility when negotiating and working through the due diligence process. Make sure the points of negotiation are worth the risk , because without a willing buyer and willing seller, a sale will not be achieved.

As a Childcare Business Broker I get to see a lot of businesses each month and a broad range of financial success between them. First impressions are important and do impact on the success of the business. One area that does vary between centres is whether staff wear uniforms and how much pride they take in their presentation.

I often experience family owned centres that have no staff uniforms yet for a relatively small investment I believe it can make a significant difference.

Often seen as a cost, there are some tangible benefits that should not be overlooked, including:

Professional Image

Research has shown employees wearing uniforms gives a professional image which can lead to a sense of trust, confidence and recognition.

Providing staff with uniforms that will take the wear and tear from their daily work is important especially for childcare service. Commercial uniforms are built to handle the “rough and tumble” of a working day  that street wear just wont cope with.

Part of a Team

Uniforms make your staff feel part of a team, which can foster a sense of pride in their jobs and for your company. The pride they take will reflect in their presentation and in turn the confidence of your customers.

Additional Advertising

As soon as your staff leave the centre they promote the name and branding of your business which will help to grow your client base and attract new enquiry, ultimately growing your business.

Staff Appreciation

Providing staff with uniforms that will take the wear and tear of childs’ play is something they will appreciate for the convenience each day when preparing for work and the cost saving.

Any owner who sees uniforms as a cost should investigate further, you may be surprised by the return on your investment.

By acquiring an existing centre you increase your revenue and client base and potentially save on administration with economy of scale. Other benefits include trained staff who understand the business and its customers, systems, and potentially a new culture that may evolve.

I work with many buyers wanting to acquire existing centres and currently demand is outstripping supply. When the opportunity is presented it is important that your strategy for acquiring a new business is clear and you are able to move relatively quickly to secure the business if it is the right fit.

When looking to purchase an existing business it is prudent to pull together an “acquisition team”. This team should include your childcare specialist, banker, accountant and lawyer. These advisors are important in helping get a good strategic fit and in reviewing and verifying all the relevant information about the business you are considering.

Often there is reluctance to invest in “Goodwill” for an existing centre. I have many buyers asking for “something with more potential and upside”. While this is a good strategy, it should also be balanced with the upside a higher quality business can provide. After all, as Warren Buffet says “It makes more sense to buy a great business at a fair price than to buy a fair business at a great price”.

When appraising the market value of childcare businesses and presenting the business to a buyer, one of the first things focussed on are the numbers to determine the value and desirability of one business compared to another.  How well do you know your numbers ?

There are many key performance indicators that you can measure in your business but those of greatest interest to an owner and buyer are Net Profit, Occupancy, Labour Costs, Rent Cost and the Lease. These all impact on the market value and management of the business.

If you are unsure how your business compares to others the Australian Taxation Office publish Benchmarks (www.ato.gov.au) annually which provide an overview of expense to revenue ratios. This is an excellent starting point for setting your own targets and knowing what might be possible. For example for a business with more than $600,000 annual turnover the labour/ turnover ratio is 47% to 54%.

When appraising a childcare business it is not uncommon to see businesses well above the 54% labour ratio and the owners not recognising they are outside the benchmark levels or the reasons why.  By knowing your numbers and setting your own targets you will be in a better position to make timely changes to continually improve your business and its future value.

Once you have the benchmark targets you may need to adjust these to suit your own management style. Some for example are happy to operate with higher staff costs as it provides flexibility with rosters and client satisfaction. At least if you know your numbers you can measure it and make changes needed to ensure you are working on the business rather than just in it.
If you would like to know more about this topic I would welcome a call for further discussion.

While it can be a little cliché “your business is worth what someone will pay for it” .

There are number of rules of thumb to value a business, and everyone will have an opinion, however’ when it comes down to actually achieving a sale of your business it will be dictated by Price, Presentation, Promotion and the negotiation through the sale process.

Here I will outline the influence of each of these

Price

The final price paid for the business will be dictated by a willing seller and willing buyer. Regardless of opinion, if the price does not represent fair value for both parties a sale will not proceed.  Fair value is in turn influenced by Presentation and Promotion .Without all three working together the final price achievable may be compromised.

Presentation

The presentation of your business will influence the final sale price and in fact whether it sells at all.The more time you take in preparing for your future sale the better the outcome will be. Your exit plan should start well before you want to sell and be done in consultation with your professional advisors.A well planned exit ensures the sales negotiation will achieve you the best possible sale price based on the overall presentation of the business from the first meeting with your Business Broker through to all inspections of your business by buyers.

An investment in thorough preparation and presentation will reward you on settlement day.

Promotion

The sale of your business may be the most important sale of your life. The last thing you should be considering when selling is to try and “save money” on promotion.Promotion will bring the buyers. Having more than one buyer will drive up competition, desire for your business. Having multiple buyers competing reduces a buyer’s ability to negotiate which in turn will optimize the sale price and terms and conditions that your Business Broker is able to achieve on your behalf.

A successful sale will only be made under the right conditions, at the price and terms that are acceptable to both parties.  Don’t leave the sale of your business to chance; get your plan in place to achieve the best outcome by aligning the three “P” s !

Linda Harley

Phone 04 88103310

Vendor finance is where the seller agrees to allow a buyer to pay part of the purchase price on completion of the contract and the balance payable afterwards, based on pre agreed terms and conditions. 

What are the benefits to the Seller?

Widens the pool of buyers

Shows you have confidence in your business performance

Your business stands out from competing businesses on the market

The interest rate is reflective of the level of risk .

The terms and conditions are contracted and transparent

Can be the difference between selling the business or not. 

The biggest advantage to the seller is making the business more affordable to more buyers.  By widening the pool of buyers you vastly increase your chance of achieving a sale and based on the principles of supply and demand, negotiating a better price.    

What are the benefits for the Buyer? 

It solves the difficulties of obtaining finance from a bank

Buyers and sellers can make their own arrangements without the involvement of the bank

It is relatively quick and easy

Provides confidence in the business performance 

The conditions around vendor finance are detailed and agreed in the business sale contract and associated documentation prepared by the solicitor.

Some of the usual terms to be considered in this documentation includes;

            How much is to be borrowed by way of Vendor Finance;

            The interest rate to be charged;

            Over what period is it to be repaid;

            What frequency the payments are to be made

            What security is to be provided to the seller e.g mortgage over property

            What reporting is required for the seller to monitor the capacity to pay back.

            What happens if the buyer misses a payment

            Who pays the legal costs associated with it (eg the buyer) 

In my opinion Vendor finance is an excellent business exit strategy that all business sellers should consider. So when it is time to sell or if you have been on the market without achieving a sale make sure you investigate this option. It may make your sale more successful and not only profitable, but also quicker and easier. 

Feedback from owners has shown the most effective handover is one that occurs quickly after the announcement and introduction of the change. This would usually be no more than one month from the sale being declared unconditional to settlement occurring.

For more information on how this approach is best managed feel free to call me for a confidential chat.