2. BCI Business Brokers
Information Night
1. The “Right Business for You”
2. The Investigation
3. Startup, Franchise or Non-
Franchise
4. How much to pay
3. BCI Business Brokers
Answer These Questions
What would be the main reason for you
going into business?
What are you most concerned about when
thinking about buying a business?
4. BCI Business Brokers
Reasons People buy a Franchise
3% 1%
16% 33.33%
33%
1.01%
3.03%
Lifestyle
Brand Security and Support
Self Direction
16.16% Income
Skills
Other
19% 27.27%
19.19%
27%
Reasons for Buying a Franchise
20. BCI Business Brokers
Questions to Ask the Vendor
Is the business making money?
Where is the proof?
How important is owner to business?
21. BCI Business Brokers
Questions to Ask the Vendor
Is the business making money?
Where is the proof?
How important is owner to business?
Will I be trained and supported?
22. BCI Business Brokers
Questions to Ask the Vendor
Is the business making money?
Where is the proof?
How important is owner to business?
Will I be trained and supported?
Does he own other businesses?
23. BCI Business Brokers
Questions to Ask the Vendor
Is the business making money?
Where is the proof?
How important is owner to business?
Will I be trained and supported?
Does he own other businesses?
What systems are there?
27. BCI Business Brokers
Questions to Ask Yourself
Will I like it?
Does it match my strengths?
When will I sell the business?
28. BCI Business Brokers
Questions to Ask Yourself
Will I like it?
Does it match my strengths?
When will I sell the business?
Are the stakeholders behind my decision?
29. BCI Business Brokers
Questions to Ask Yourself
Will I like it?
Does it match my strengths?
When will I sell the business?
Are the stakeholders behind my decision?
Will I be able to grow the business?
30. BCI Business Brokers
Questions to Ask Yourself
Will I like it?
Does it match my strengths?
When will I sell the business?
Are the stakeholders behind my decision?
Will I be able to grow the business?
Is the Return on Investment right?
34. Stocks are financial assets which provide a return through dividends and price
appreciation. Both dividends and price appreciation are generally driven by increases in
earnings. Earnings tend to increase at a similar rate to economic growth over time.
BCI Business Brokers
Historically (and based upon well-accepted financial and economic principles), the
valuation level of the stock market has cycled from levels below 10 times earnings to levels
above 20 times earnings. Except for bubble periods, the P/E tends to peak near 25 (the
The Timing
fundamental limitations to P/E are discussed in chapter 8 of Unexpected Returns). Figure
1 presents the historical values for all three versions of the P/E discussed in this report.
Figure 1. P/E Ratio: 1900-2Q2011E (2011 based upon EPS estimates from S&P)
Note the
significant
business cycle
divergence in
P/E.
P/E can send a
false signal of
overvaluation,
even when it is
undervalued or
fairly-valued.
EPS now
exceeds the
baseline trend,
reported P/Es is
distorted low
and likely to
distort further.
Page 5 of 19
35. BCI Business Brokers
Your Choice
Cost Support Systems Brand Freedom
Startup
√ X X X √
Franch
X √ √ √ X
Non
√ X X X √
Franch
36. BCI Business Brokers
Franchise or Non-Franchise
Franchise Buyers Non-Franch Buyers
Inexperienced Independent
Can Follow System Pro-risk
Risk averse Disciplined
Likes teamwork Free-Spirit
39. BCI Business Brokers
Risk and Return
Risk
Small
Business
Shares
Comm/Ind. Pty
Res. Pty
Bonds
Bank
% Return pa
3 5 8 10 20 30
40. BCI Business Brokers
Risk and Return by Business Type
ROI %
High Personal selling 50-90
Unfashionable
Reliant on owner
Easy entry by competitors
Little Infrastructure
30
Growth Industry
Larger businesses
Strong Brand
Protection by Law 15-20
Low
Ongoing Income
41. BCI Business Brokers
Risk and Return by Industry
ROI %
High Service Retail 50-90
Cleaning
Real Estate
Small Manuf.
30
Property Management
Caravan Park
Franchise
Mortgage Broker
Low Financial Planner 15-20
42. BCI Business Brokers
Thank You
Success in business requires training
and discipline and hard work. But if
you're not frightened by these things,
the opportunities are just as great
today as they ever were.
David Rockerfeller
48. BCI Business Brokers
Super Six Series
Financials Research Market
What to Pay & Industry
Balance
P and L Sheet
49. BCI Business Brokers
Super Six Series
Financials Research Market
What to Pay & Industry
Balance
P and L Sheet
Contract
50. BCI Business Brokers
Super Six Series
Financials Research Market
What to Pay & Industry
Balance
P and L Sheet
Contract
Lease
51. BCI Business Brokers
Super Six Series
Financials Research Market
What to Pay & Industry
Balance
P and L Sheet
Contract
Lease
Location
52. BCI Business Brokers
Super Six Series
Financials Research Market
What to Pay & Industry
Balance
P and L Sheet
Contract
Lease
Form Your Team
Location
53. BCI Business Brokers
Super Six Series
Financials Research Market
What to Pay & Industry
Balance
P and L Sheet
Contract
Lease Business
Plan
Form Your Team
Location
54. BCI Business Brokers
Super Six Series
Financials Research Market
What to Pay & Industry
Balance
P and L Sheet
Contract
Lease Business
Plan
Form Your Team
Location
55. BCI Business Brokers
Super Six Series
Financials Research Market
What to Pay & Industry
Balance
P and L Sheet
Contract
Lease Business
Plan
Form Your Team
Location
56. BCI Business Brokers
Super Six Series
Financials Research Market
What to Pay & Industry
Balance
P and L Sheet
Contract
Lease Business
Plan
Form Your Team
Location
57. BCI Business Brokers
Super Six Series
Financials Research Market
What to Pay & Industry
Balance
P and L Sheet
Contract
Lease Business
Plan
Form Your Team
Location
58. BCI Business Brokers
Super Six Series
Financials Research Market
What to Pay & Industry
Balance
P and L Sheet
Contract
Lease Business
Plan
Form Your Team
Location
