Government has Announced: Rent Relief Must be Given!

Author Archive for Reza Honarvar

Government has Announced: Rent Relief Must be Given!

Commercial property tenants have been awaiting the government’s decision to help them find relief for their current situations. Yesterday, the Government announced Landlords will now be legally required to enter negotiations with their tenants and provide relief if they meet the criteria. 

Over the past 10 days, key industry leaders and the treasurers of the states and territories have met to review the Commercial Tenancy code and offer a solution to struggling tenants and landlords. 

“Now, as you know, a key part of our Government’s strategy at a federal level, working with the states and territories, is what has been called the hibernation strategy. And what that means is being able to preserve as much of the foundations and pillars of our economy through this time to enable the economy to rebuild and grow on the other side.” Scott Morrison. 

As a result of these meetings, a mandatory code will be legislated and regulated.

The code will apply to retail, office and industrial tenancies where the tenant or landlord is eligible for the JobKeeper Program and has a turnover less than $50 million. The code is designed to support SME’s, be they a tenant or landlord. 

“Landlords will be required to reduce rent proportionate to the trading reduction in the tenant’s business, through a combination – over the course of the pandemic period – through a combination of waivers of rent and deferrals of rent”

“Waivers of rent must account for 50 per cent at least, of the reduction in the rental provided to the tenant during that period and deferrals must be covered over the balance of the lease term and in no less period than 12 months” For example, if there is 3 years remaining on the lease, the tenant can cover the costs of the deferrals over the 3 year period. If there is only 6 months remaining on a lease, the tenant has 12 months to cover the deferred payments. 

There will be a binding mediation process between the tenant and the landlord, that is overseen by the states and territory governments. 

“Banks also must come to the table here and provide the support to the landlords” Scott Morrison

“What this does is it preserves the lease, it preserves the relationship, it keeps the tenant in their property and it keeps a tenant on the lease, which is also good for the landlord, and it preserves the lease that is in place that underpins the value of those assets. And so, this is seen as a proactive, a constructive and cooperative mechanism for landlords and tenants to see this through together.” Scott Morrison

What happens if a landlord is refusing to engage in negotiations with a tenant?

“They are legally required to do it. So in not following the legal requirement, they would be forfeiting their rights under the lease.” Scott Morrison. 

So what should a tenant do now?

If you meet these criteria:

  • Eligible for JobKeeper Payments
  • Turnover less than $50 Million

You need to set up a negotiation with your landlord, to decide on rent waivers or referrals. Remembering:

  • Waivers of rent must account for 50 per cent at least, of the reduction in the rental provided to the tenant during that period
  • Deferrals must be covered over the balance of the lease term if over 12 months. 

Landlords are legally required to entered negotiations with tenants. 

Passionate About The Florist Industry?

People looking to buy a florist for sale may be doing so for a number of reasons. Perhaps they see a calm and peaceful business environment to work in, they’re a plant enthusiast, they like to make people smile with gifts, the hours are appealing, they envision making money or perhaps they just like pretty things!

Florists for sale are often seen as a charming business idea. They provide flowers for weddings, birthday, as gifts of thanks, get well wishes, in remembrance, good luck and for many other occasions. They are the gift that makes people smile.

The florist business is very seasonal and depends on many holidays and there is the expectation for certain flowers to be in the store at specific times of the year. On Valentine’s Day roses are in order, Mother’s Day is chrysanthemums and for Christmas it’s the Christmas bush.

Customers have expectations of what flowers should be in stock. To be a successful florist you need to have good contact with the growers or markets to meet clients demands. You will also need a good team of temporary staff to help with the busy seasons, as it can get quite hectic at certain times of the year and be quiet at other times.

To work in a florist, it is very important to be creative, to have displays that make you ‘stand out’ from other florists in the area. Do you offer something different? Will you create a bunch quickly? Do you have interesting flowers not in season (e.g. from another state or grower)? Do you have other gifts (e.g. teddy bears, chocolates, candles) that can be added to create a package? Do you do deliveries? Do you have a trendy and inviting storefront?

There are a number of businesses on the market that can also help coordinate deliveries of flowers or set you up as part of their recommended florist. It’s just a matter of coordinating and working out your costs.

Florists can work long hours, be up early in the morning at the market, making deliveries, coordinating bridal bouquets, designing funeral arrangements and marketing their products. It is an industry where you need to be passionate about plants to make sure they are fresh and healthy (no one wants wilting flowers!) and have a bubbly personality to make people smile. People will always be looking for a gift to give, and it could be one from your business!

Choosing a Business Broker

Finding the right business broker when selling a business may help you receive the best possible price. If you don’t have the time to negotiate the business sale privately then a business broker may be the right choice for you. Business brokers are the experts in selling businesses, it is what they do every day. Similar to real estate agents, accountants, lawyers – they provide a service – which is to help you sell your business.

There are a number of roles a business broker performs during the business sale process. A business broker is trained to provide a valuation of your business by reviewing the businesses circumstances and comparing it to current market conditions. They will deal with buyer enquiries and if they find a ‘genuine’ enquiry will put you in contact and begin the process of due diligence – which is where the interested buyer reviews your business and if it is a viable purchase for them. The business broker will also work with the interested buyer during the sale and negotiate terms and conditions and help with the necessary paperwork.

A good business broker will be in contact with you regularly. Providing updates on the marketing strategy, if enquiries are coming through and what the next steps are. You should request a list of all the locations your business is advertised and do your research to make sure it is there.

When choosing a business broker, be sure to meet with at least 3 to compare. The ideal business broker should have experience selling businesses in your area, at least 3 years’ experience and a like-able personality. If you don’t feel comfortable with the business broker, you will have problems speaking your mind and making requests further down the track. Most business brokers charge between 8-10% commission for their services, sometimes with additional costs for marketing the business for sale. You should always try to get a referral for the business broker, ask if they have sold any businesses lately and if you can speak with the owner. We hear a lot of horror stories of brokers taking money upfront and sitting on a business for over a year with no enquiries. The idea of going with a broker is to sell your business, not to be stuck in the same situation 12 months later, minus what you paid upfront.

Remember, when choosing a business broker that you are paying for THEIR services, not the other way around. You are hiring them to market and sell your business, with the notion that they will get you the best possible price and save you time. If they are not fulfilling that service you need to question why, don’t always agree blindly with what is suggested. Always engage a ‘team’ when selling your business that includes an accountant, lawyer and any family members/business associates that you trust.

Small Business Loans

Small business loans are a common method for sourcing funds in starting or buying a business for sale. But with all business decisions taking out a loan should be done with proper planning and investigation. Before applying for a small business loan, you need to have a developed business plan and determine if the business you are buying is feasible then ask yourself:

  • How much money do I need to purchase the business?
  • What other initial costs will I have? Marketing, staff, equipment, buying stock, repairs, upgrades. Do these costs need to be part of the loan, or can the business income cover these in the future?
  • What is the expected income of the business? How do I intend to repay the loan, how long will it take to make the repayments?

The next question is which type of small business loan would best suit your needs. This can always be discussed with your financial advisor or bank representative. Going into a small business lender with a clear business plan, and an outline of your costs will allow them to better assess what loan would best suit your business needs. Be sure to compare the loans offered, speak with your accountant and have a clear understanding of the terms before signing.

Today, we are also seeing a lot of ‘vendor financing’ where the individual selling the business offers a loan to be repaid based on the income of the business with interest attached. Normally a % of the business is paid upfront and the remainder in a loan repayment form. Though, this can get tricky if payments are not made as set out in the loan agreement, which has implications for the previous owner as well as the current. But it is another method to selling a business and closing the deal, sometimes with advantages to both the buyer and seller.

Should I Buy a Restaurant Business For Sale?

Are you looking at investing in a Restaurant for Sale? Who doesn’t love good food! Maybe you’re a chef, an entertainer, a cook, a BBQ whizz, a waiter, a wine connoisseur or you simply like good, yummy food! The restaurant business has become so publicized in Australia lately with shows like ‘My Kitchen Rules’, ‘Master Chef’ and ‘Come Dine With Me’ that grace our TV screens every day. Australians love to watch cooking shows, they love to cook and love to go out and try new restaurants.

The restaurant business seems appealing for so many people because its fast paced in the kitchen, you can be creative with the food and with the décor, you can feed people amazing meals that they rave about, and you can make money!

If you are looking to buy a restaurant, I would suggest you do your research. Read the restaurant’s reviews and see what customers are saying about the restaurant. Is it getting good reviews? If not, are there things you could change about the restaurant to increase the customers satisfaction. Restaurants, like tourism rely heavily on customer opinions and referrals. If someone comes into your restaurant once and doesn’t like it, they probably won’t come back again, and probably will tell friends about their “bad experience” or worse yet, publicize it on one the of the sights above. Make sure you are monitoring these sights, and if possible, reply to comments and keeping up good customer relations.

I would also suggest you go ‘under cover’ and eat in the restaurant, ask staff for their recommendations. What is the food like? What are the staff like? Is it busy? What types of customers are visiting? Don’t be fooled by smoke and mirrors, do your research and be sure you know what obstacles it may face before you buy a restaurant for sale. Also, if you buy a restaurant that was failing before – make sure you have a ‘grand re-opening’ or ‘under new management’ sign so customers know it has changed hands. It would be a good idea on opening night to have some of the local media and food critics come and see the ‘new restaurant’ it will do your business wonders – if it’s a good review.

When buying a business for sale, you have to make sure you look over the numbers. With a restaurant there can be a lot of different facets that could be affecting its profitability. A restaurants product is based on what the chef feels it is worth. This is influenced by the produce used, the presentation of the meal, the skills of the chef, the creativity of the food, time taken to prepare, the ambience of the restaurant, the friendliness of the staff and its location. So make sure you analyse the numbers, there could be anything in these sectors affecting profitability. Perhaps their paying too much for produce, or wasting too much food, the staff are being paid too much, the ambience is tacky, the dishes are too simple, they’re not charging enough. It’s a complex matter of working out restaurant pricing, and something that may be is shown in the restaurant’s turnover. Restaurants that are profitable are because they have worked out how to manage these different facets. So, before you buy a restaurant for sale speak with your accountant or business advisor and have them review the details with you.

Make sure you have a plan. What do you envision for this restaurant? How long is the lease, will you stay there? Is it profitable at the moment? What capital do you need to make any upgrades? Is everything in working order? Make sure you have enough money and a plan to buy and manage the restaurant successfully.

Should I Buy a Bakery Business For Sale?

So if you’re thinking about buying a bakery, you may also be wondering what does it take? Well to start with it would help if you’re a morning person. Bakers are up early in the morning, sometimes before the sun, cooking away. You would need to be passionate about cooking and making delicious treats, to become that ‘best bakery in town’. Creativity is important in coming up with new ideas – new breads, cakes, pies to entice customers into your store. You mornings will be busy with all the baking, customers coming in and out the store, and you normally finish the day around 3pm.

What to assess when buying a bakery? There are quite a few franchises for sale on the market such as Bakers Delight and Brumby’s which might be the ideal option for new business owner looking to make a start and wanting some guidance from an established brand. If you are looking to buy an already established bakery business for sale here are a few items, you should consider:

  • How busy is the bakery? Be sure to ‘stake out’ the shop and watch how many customers are coming and going. It takes a lot of $3 loaves of bread to sell before you start making some money.
  • Review the bakery’s profits over the last few years.
  • Have a look at what they are selling? Could you expand upon this? Are there too many items which affect cooking times and quality? Do they offer ‘extras’ such as coffee and specialty cakes for birthdays.
  • Is their ample seating? Does it have charm? If your bakery is in a prime tourist location, it’s important it has ‘charm’ so people are enticed to come in then buy some food and coffee. Bakery’s have been around for hundreds of years, they have an old-world charm, that is important to harness.
  • Is the equipment all in working order? Do all the ovens, mixers, fridges work? When were they last serviced? How old are they?

If you are selling your bakery business, it’s important to have it presentable. Make sure that it is clean and the potential buyers have access to all the business, including the cooking facilities and preparation tables. Be sure to have your finances in order and books available for the potential buyer to review.

How to choose a franchise business that suits you?

Franchising is one of the safest and fastest ways to run a successful business using proven ideas, brands and systems. But which franchise should you choose? Above all else, the most important factor in choosing the right franchise is finding one that you will enjoy. Loving what you do raises your chances of success significantly. Passionate franchise owners naturally invest the time and energy into enhancing products, services, customers and markets, eventually becoming experts in their area of business. 

The best way to choose the right franchise is to examine your goals, likes, dislikes and expectations. Owning any business requires you to sell a product or service and buying a franchise gives you a game plan but not customers. Using profit projections when selecting a franchise is not always the best indicator. What is profitable for one franchisee, may not be for the next depending on location but also on their passion for what they do, personality, natural abilities, strengths and weaknesses. There are hundreds of different franchises, and there will usually be more than one in your chosen business area. Find a franchise that fits most with your business style and lifestyle. Do you like dealing with members of the public or would you prefer selling business to business? Do you primarily prefer to work on weekends or Monday to Friday? Are you happier working on your own or would you be good at recruiting, training and managing employees? Have you identified your strengths? 

Some franchisors will empower these skills more than others. Do you also understand any business skills that you may need to develop? Certain franchisors may offer more support in these areas and this should also become part of your selection criteria. As with any new business venture, you need to carefully consider whether you have got the right skills and attitude to run a successful franchise. Once you sign up, you are committed! It’s important to find a specialist franchise broker that can first help you to be clear about the lifestyle you want to lead, your financial and career goals as well as your expectations of yourself and your potential franchisor. Once you have your selection criteria defined, look at all of the opportunities that meet your guidelines, even if it’s something you hadn’t previously envisioned. Don’t be afraid to think outside the box and to make sure that your new business will facilitate a lifestyle that you will love and deserve.