Despite the relaxing nature of the travel and leisure industry it can be quite a challenge when it comes to selling a travel or leisure business.
Don’t let it stress you out though. With the following five golden rules selling a travel or leisure business in Australia can be greatly simplified and straight forward.
1. Know the Hard Cash Facts
When appraising a business it is common to hear there is another 10% profit to be had from undisclosed ‘cash’ sales. Don’t buy into the gimmick and accept that people won’t be paying goodwill for unverified profits. Note: Every undisclosed $1,000 amounts to a $4,000 sale price reduction!
2. Set a Selling Price Based on Reality
It is good to establish high goals for yourself but when it comes to setting a selling price for your luxury or travel business it’s important to make sure it is based on the current realistic state of the market. Do the necessary research and ask around and speak to experienced business brokers who specialise in motel or hotel sales. In Australia the average time for a motel to be sold is within one to three months from when the marketing commenced. The most common reasons for motels to not sale within this brief time frame is either they are overpriced or have been poorly marketed. If the business isn’t sold within these first three essential months it is likely potential purchasers will assume some unseen complications with it which has deterred previous buyers. Consider this when putting a price on your leisure or travel business and make sure it fits within the current state of the market.
3. Work One on One With Your Business Broker for an Allotted Time
Establishing an exclusive relationship with one business broker for a given period of time will help to ensure that the broker is working to for you to their best potential. The selling price of your business is driven up by a broker who is trying to get multiple contracts in place at the same time. There is the risk that this process will be hindered though if the broker knows you are working with his competitors and that his efforts will potentially be in vain.
4. Be Smart About Marketing
Good marketing is essential for a successful sale! Make sure you are advertising on the right mediums to be seen by your target audience. It is advisable to work with agencies that specialise in selling businesses to get coverage that will get you seen in the right places.
5. Fill Out Your Paper Work
Oh yes, the fun stuff… make sure all of the essential paperwork, such as your financial returns for the last three years is filled out and in good form. It is necessary to prepare all financial information for taxation purposes and determine where net profit excludes personal expenses, interest, tax, owner’s salary and depreciation. You can ask your accountant to redraft the necessary documents and have a business broker guide you.