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 Business Appraisals
Whether you are in a start up phase, taking over an existing restaurant or planning to sell your restaurant, it is important to
have an objective perspective of the business and to test it against a potential buyers perspective, identifying the strengths, weakness, opportunities and threats to the business.
It’s refreshing to verify your own thoughts against a prospective buyer; look at the strengths, weaknesses and the opportunities.
Things to consider:
- Are you increasing market share?
- Is your volume of business increasing but your profit margin slipping?
- Do you have viable turnover $12000 -$20,000?
- Is your rent more than 10% of turnover?
- Are you reliant on Key staff?
- Do you have systems in place ?
- Can the operation run with out you?
- Does your P&L show a Breakeven or a profit?
- What is
the value of your Goodwill
?
- Can you supplement your key business with supplementary Income?
- How do Industry benchmarks stand against your P&L?
- Are you keeping track of your Balance Sheet?
- Can you sell the systems as well as the business?
You will find a lot of hospitality operators are emotionally attached to their business, as it is something that they have worked hard to establish.
To be successful we need to ensure we receive the
rewards for the risk of developing the business, not just the turnover.
There are many rationales that can be applied to appraising a business, however first and foremost a business is an entity that is in place to produce a profit as a reward for taking risk. Some businesses may not produce a profit because they are run inefficiently, they do not have efficient reporting mechanisms in place, or have not achieved their maximum potential, and this is where the astute eye can see a bargain.
A bargain however could turn out to be a bonfire if planning, strategy and goals are not in place to achieve Business objectives…….
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