Winter runs hot at industry awards
- Adelaide-based business broker, Simon Winter of Raine & Horne Corporate Business Sales, scores sixth REISA award
- Mr Winter believes tight credit conditions are hampering the small business sector with just 30% of business sales involving bank lending
- Building revenues and strategic planning are critical to the successful sale of a business
Simon Winter, Principal of Raine & Horne Corporate Business Sales, has scored an impressive sixth win in the business broking category at the Real Estate Institute of South Australia’s (REISA) Awards for Excellence, held at the Adelaide Entertainment Centre on Friday 3rd October.
The broking ace was also elevated into the REISA’s Hall of Fame in recognition of his contribution to business broking in South Australia. Since 2005, Mr Winter has been a finalist in the business broking category ten times, and was named Australia’s leading business broker in 2013 by industry peak body, the Real Estate Institute of Australia.
“Simon’s success can be attributed to his commitment to educating owners and the aspiring buyers about the pros and cons of selling and buying a business,” said Michael McDonald, CEO of Raine & Horne SA.
A Certified Practicing Accountant with an MBA, Mr Winter is well-qualified to dissect and analyse businesses and has the experience and empathy to understand them, according to Mr McDonald.
“Simon has maintained a very accurate customer database, and as a qualified valuer, is always in regular contact with owners, especially those he has helped into a business over the past 20 years.”
Mr Winter attributes his award-winning ways to hard work and to his experience as a business owner.
“In 1996, I came into the business broking industry. Before that I owned my own business in the office products industry which started with a staff of 3 and ended up with 130 staff,” said Mr Winter.
“This experience means that I know what it takes to own a small business and a much larger business, and it enables me to empathise with owners at any point in the cycle and understand the challenges they are going through.”
Tight lending conditions are the biggest challenge to small business sales in 2014, according to Mr Winter.
“The banks aren’t lending because low interest rates mean that margins are slim. Skinny margins obstruct the bank’s propensity to take risk and therefore the pool of credit available to small business has dried up,” said Mr Winter.
“Where 80% of our business transactions would involve bank lending, it’d be closer to 30% now. The market is very difficult.”
That’s not to say that the capacity to sell businesses is non-existent, although owners need to understand the valuation process.
“It’s erroneous to think that the valuation of the business takes into account its size, location, turnover and so on,” said Mr Winter.
“The value of a business is a direct function of how much money you make, as it is the measure of everything you do, and in this environment you have to be creative to generate more revenue, while there’s no escaping the need for hard work.”
It’s also essential that business owners continue to work in the business.
“Time and again you see business owners who have had enough try and remove themselves from a business and put a manager in place,” said Mr Winter.
“These businesses really struggle, as small businesses are not designed to be run by a manager but by an owner-manager who puts in the hard yards.”
Planning a business sale about two years before an exit is also critical.
“Bizarrely with many businesses that come to market, the decision to sell has been taken over a weekend. Owners then ring me on the Monday and there is no strategy. Yet you should be planning an exit at least a couple of years before you plan to move on,” said Mr Winter.
“The strategy usually means ripping less money out of the business and working hard.”
Mr Winter also advises aspiring business owners that they must be prepared to work harder than they have ever worked before.
“Also, don’t go in undercapitalised, and understand all the costs involved in buying a business, such as conveyancing, stamp duty, bank application fees and so on,” he said.
“Also seeking advice from an accountant is a common move. But be aware that many accountants don’t understand risk and if you don’t understand operating risk, it can therefore be very difficult for them to accurately value a small business.”
Simon Winter’s tips for selling a small business
- Revenue not turnover is the key to the successful sale of a small business
- Don’t outsource management – small businesses aren’t designed to be overseen by a manager
- Plan a sale at least two years before intended exit date
For further media information contact:
Michael McDonald, CEO, Raine & Horne SA on 0488 667 710
Simon Winter, Principal, Raine & Horne Corporate Business Sales on 0419 828 689
Andrew Harrington, National Communications Manager, Raine & Horne on 02 9258 5400