With over 400 billion cups consumed per year, coffee is the world’s most sought after commodity (after crude oil).

Stereotypes may suggest that Brits only drink tea from cups and saucers with their little fingers extended, however, approximately 70 million cups are consumed each day in the UK.

As customer’s palates become more sophisticated, they are demanding ‘the best coffee experience … [and] coffee is fast becoming the reason why we visit certain places, something we plan our days around… the main ingredient according to The London Coffee Festival Magazine.

Industry insight

After 17 years of consecutive growth, the coffee shop industry remains as one of the most successful in the UK economy.

Estimated at 20,728 outlets, the coffee shop market in the UK is booming. Showing a significant sales growth of 10% and a total turnover of £7.9 billion since 2015, according to Allegra’s latest report.

There are currently three leading brands with 54% of the chain outlet share. Last year Costa Coffee held the greatest market share with 1,670 outlets, Starbucks came second with 790 followed by Café Nero with 560 shops.

The branded coffee shop segment is forecast to exceed £5.7 billion by 2020 and it is predicted that the UK coffee shop sector will exceed 30,000 outlets and produce a £15 billion turnover by 2025.

According to Allegra Strategies ‘Britain’s coffee shop sector remains one of the most successful in the UK economy’ and is set to keep expanding.

Café culture 

Coffee shops have become our preferred social hubs and meeting places. Where people once went to the pub to catch up, they are now turning to the more family friendly coffee shop.

And as café culture takes the UK by storm, our tea drinking nation is rapidly becoming a nation of coffee drinkers. It is now estimated that visitors drink an estimated 2.2 billion cups of coffee per year in coffee shops.

Chief executive of Whitbread (Costa) Andy Harrison hints at a recession-proof investment in The Telegraph: ‘The coffee shop market has grown at about 5pc per annum throughout the recession even in the most economically challenged parts of the UK’.

He also believes that the rise in internet shopping has greatly benefited the sector, as people no longer head to the shops for a day out; they’d rather meet up with their friends and spend a morning or afternoon in a coffee shop.

The market may be dominated by the well-known high street giants but there’s still plenty of room for independent contenders. Jeffrey Young, managing director of Allegra Strategies, claims:

‘There are still thousands and thousands of places in the UK that don’t yet have a decent coffee experience’.

Jeffrey Young, managing director of Allegra Strategies:

“The demand will continue to grow as more and more places cultivate their coffee scene – making buying a coffee shop lucrative Investment.

Independent artisan coffee is leading the way

In the same way that craft beers have become a popular trend reviving the brewing industry, artisan coffee has done the same for coffee culture. People are no longer content with a quick cup of instant coffee or a mediocre chain cappuccino.”

According to The London Coffee Festival Magazine, independent coffee is a booming industry in the UK. The publication places the capital at the top for indie coffee destinations, specifically ‘beyond zone 1’ where ‘you find yourself in the domain of the venerable neighbourhood café’.

Specialising in ‘hand crafted coffee with community spirit’, these little independent shops often have an edge on the cloned chain store.

Their success stems from a real effort to stand out from the crowd. Here’s how they do it:

Supporting local talent

Of course great coffee is number one on the agenda but the savvy independent coffee shop owner will source locally make cakes and provide an interesting breakfast and lunch menu (ideally made with local produce) in order to engender that all important ‘community spirit’.

It is this sense of belonging that will keep the locals coming back. Many coffee shops also opt to hang the works of local artists on the walls, provide a ‘book swap’ space and host community events.

Aesthetic

It works in any coffee shop owner’s favour to cater to different customer demographics. Some larger venues provide an out of office workspace, tapping into to the lifestyle of an emerging freelance workforce. Free WI-FI is a must.

Many people go to a coffee shop for a home from home experience (with undeniably better coffee) so creating a cosy atmosphere with sofas, cushions and soft lighting will draw in the crowds.

Minimalist coffee shops are also becoming a big trend. With focus on design, ultra-chic factory style interiors are becoming a popular choice – allowing people to feel part of the process behind the making of their caffeine fix.

Approach

Coffee shops often rely on repeat custom. People will sample a few before they choose their regular shop, so make sure yours stands out.

Small talk and service with a smile go a long way. Building up a rapport with the baristas is a perk for the customer and is certainly a way to encourage repeat custom. As an independent, you will have more time than the frenetic staff of a busy coffee chain to build up a relationship with your customers. Make the most of it.

Trends in the sector:

If you’re considering starting or buying a coffee shop, keeping up with the latest coffee trends is essential:

Quality roasts  

Stocking a range of roasts, from full-bodied blends, to crisp and citrusy, to sweet and mellow – allows you to cater to the customer’s differing palates and establish what’s popular.

Nowadays people care more about where their coffee comes from now than ever before. Try out sustainably sourced beans form different locations and provide information about them. You with thus create a sense of intimacy from source to mug.

Short and strong

Following European trends, people now want their coffee smaller and stronger, with intense roasts becoming the latest craze.

Cold Brew

Popular in the warmer months, this alternative to the iced coffee uses time instead of heat. The coffee is brewed over a 12-20 hour period at room temperature, then served over ice.

Milk substitutes

More and more coffee shops are expanding their dairy free range.  Soy is no longer the singular option; the latest milk free options include almond and coconut milk.

The coffee ‘movement’

Typically a nation of tea drinkers, we’re battling the stereotype – and last year Brits spent £730 million on coffee.

You could even go as far as calling it an obsession or a ‘movement’ heralded by the rapidly growing coffee culture fanatics.

The first wave of the movement was all all about consumption – based on the regular ‘grab and go’ ‘anything will do as long as it’s got caffeine in it’ mentality.

The second wave was about enjoyment – why not spend that extra 30p on adding syrup to your latte?

The third is the epitome of coffee appreciation, centred on the origins, process and methods behind what’s in the cup.

Many consumers are riding the third wave without even realising it, so when running a coffee shop it’s important to remember these three and endeavour to cater to them all.

The competition is warming up

Coffee shops ‘now have far more criteria driving destination choice than ever before. Branded chains are having to work hard to maintain consumer share’ according to Jeffrey Young.

With the growing consciousness of the coffee connoisseur and with artisan at the vanguard of the coffee revolution, owning a coffee shop will likely prove to be a lucrative investment.

The post Want to own a coffee shop? What you need to know appeared first on Global Business Brokers.

The hotel sector’s fortunes ebb and flow depending on several factors. Here are arguably the biggest threats to the industry and how to reduce your exposure.

The hospitality industry employs more than 15 million people in the United States alone, so the health of the hotel sector is of huge importance for the wider economy. Even a relatively small downturn in the industry can result in thousands of lost jobs.

So what are the most pressing threats to the hotel sector? And what can hoteliers do to protect their investments?

Economic downturns

More than many industries, hospitality is greatly affected by economic downturns. This is because essentially – when you get right down to it – most paid-for accommodation is nonessential.

Vacations are a luxury spend and even in the business world, video conferencing has made face-to-face meetings less necessary.

So when the economy struggles, hotels are among the very first casualties of the ensuing belt-tightening among businesses and consumers.

This was dramatically illustrated during the recession in 2008-2010 when hotels’ average daily rate fell 18.5%, while net operating income for all hotels plummeted 37.4%. The luxury sector fared the worst, with a 23.6% fall in revenue per available room and a 37% drop in gross operating profit.

While the American economy is currently flying high, one thing the last recession – and indeed other economic fluctuations – taught us, is that no one can be sure what the future will bring economically. So the threat of an economic downturn must remain on a savvy hotelier’s radar.

What can hotels do to protect themselves?

Beyond maintaining a significant emergency fund of liquid capital to offset unexpected and extended losses, hoteliers can also prioritize effective marketing and resist pulling the plug on successful campaigns at the first hint of trouble.

A study published by the Cornell University School of Hotel Administration in 2015 examined the hotels that were most successful in riding out the recession and its long, slow recovery. Their conclusion?

“Winners were found to spend significantly more on marketing than losers. The relationship between marketing expenditures and performance is significantly positive, with franchise expenses and other sales expenses emerging as the most important determinants […] these results highlight the importance of personal sales efforts, including promotions, familiarization trips, trade shows, and the training of sales personnel, personal sales visits to clients, and use of outside sales representatives to help hotels thrive in a recession.

“These data lead to the conclusion that firms that ‘invest’ in marketing, especially in tough times, can achieve a payoff via various revenue drivers and will realize gains beyond just the short term.”

Political unrest, terror and ‘acts of God’

The tourism industry generally and hotels specifically are hugely vulnerable to events beyond their control like extreme weather events, political unrest, terror attacks and other events that deter tourists.

These negative impacts can last just days – for example violent protests in a particular city in an otherwise politically stable country like the US – or for months or years on end, with tourist sectors in Tunisia, Egypt and Turkey decimated by political unrest and terror attacks.

What can hotels do to protect themselves?

This is a difficult question to answer since the average hotel owner exerts no influence over political developments and the public’s reaction to unrest is highly unpredictable.

However, maintaining a reserve fund of liquid capital at least offers some insurance against adverse political conditions. In most cases, the situation is brief, localized and quickly resolved, resulting in just a few days or weeks of poor business.

Hoteliers with sufficient capital to expand could also spread their risk by diversifying across a wider geographic area. So if inclement weather dampens profits at your hotels in one state, then your properties in another state could help offset your losses.

Industry disruptors

With the Great Recession behind us and US hotels invariably operating in a benign political environment with usually clement weather, our third and final threat is one that strikes the most fear into the hearts of hoteliers: industry disruptors.

More specifically, we’re talking about Airbnb and its copycats.

Allowing homeowners all over the world to turn their guest bedrooms, apartments or entire homes into holiday accommodation, Airbnb has sent shockwaves around the hotel industry.

The peer-to-peer platform offers a diverse array of accommodation, often with catering facilities and a homely feel. And since these properties are not officially hotels, they’re not subject to the same hospitality taxes and legal requirements like fire safety regulations, making it difficult for hotels to compete on price.

Despite efforts by the hotel industry to level this playing field, Airbnb has only continued its explosive growth, spawning numerous copycat apps along the way. A recently published Boston University study concluded “competition from peer-to-peer platforms (like Airbnb) has several unique features that differentiate it from competition with other hotel firms.”

Among those unique features are facts that “Airbnb can scale supply in a near frictionless manner to meet demand, even on short timescales. By contrast, increasing hotel room supply involves build-out, causing significant marginal costs for the hotel chain.”

And “Airbnb offers a much wider range of products and services than hotels,” since users can rent anything from a luxury high-rise apartment in Manhattan to a houseboat on the Mississippi.

The study estimates that Airbnb’s entry into the Austin, Texas market – where Airbnb has the greatest concentration of listed properties – has put a dent in hotel revenues to the tune of 8-10% of annual revenues.

What can hotels do to protect themselves?

Channelled through their representative trade associations, hotels in some cities have lobbied successfully for outright bans on the services provided by Airbnb and similar platforms.

Generally speaking, however, surviving and thriving amid disruptive new technologies is all about embracing change and recognizing what it says about consumer preferences.

Airbnb is popular and it’s important to recognize why. How are these peer-to-peer platforms wooing your customers away and how can you woo them back?

• Is it lower prices? Not always. In fact, many Airbnb rentals cost the same or more than average hotel rooms in the vicinity
• Is it unique accommodation? Consider redecorating your hotel to a style less ordinary, more in vogue and more in tune with the tastes of your target demographic
• Is it a headier combination of amenities and privacy? Consider adjusting procedures and training around guest interactions to offer your guests a more peaceful, private experience that feels less like staying in a hotel and more like borrowing a friend’s apartment for the night – perhaps becoming a ‘boutique hotel’ in the process

The fortunes of the hotel industry will always ebb and flow depending on these and countless other factors. But individual hotels can flourish, through good and bad times, if they keep abreast of challenges on the horizon, and are prepared to adapt their business model as required by economic conditions and the changing tastes of both tourists and business travellers.

The post How to Sustain a Hotel Business appeared first on Global Business Brokers.

•  2018 is expected to be the 6th year in a row that restaurant revenue has gone up in the United States – it’s projected to be $709.2 billion by year end.
  •  Half of all US adults have worked in the restaurant industry at some point in their lives.
  •  About 10% of the US working population (about 14 million people) will work in a restaurant in 2018.
  •  47% of the money Americans spend on food goes to restaurants.
  •  The total number of restaurant locations in the US has surpassed 1 million, with 70% of them being single-unit operations as opposed to large scale franchises.

As you can tell from the stats listed above, the restaurant industry is in the midst of a long and steady upswing in the United States. And unlike some other business undertakings, experts and in-the-trenches employees agree that opening a restaurant is a realistic and achievable way to manufacture business success.

But, it’s also going to be a tremendous amount of work, and a very costly undertaking.

Can an entrepreneur succeed in the restaurant industry? Absolutely.

Is it going to be easy? Not at all.

But it’s not as hard as you think.

“90% of new restaurants fail in their first year.”

While that scary statistic makes for great eye-catching headlines, it simply isn’t true.
Instead, the facts show that failure rates when starting a restaurant hover between 50-60% in the first year, which is no riskier than starting any other small business.

Also like other business ventures, realistic and strategic planning is key to long-term success when opening a restaurant. Everything from the initial concept and name to the design of the menu and the color of your tablecloths needs to be planned out in advance if you want to avoid costly future headaches.

Coming up with the cool, unique restaurant concept is the fun part. But there are other practical issues that some restaurant owners overlook, costing themselves a lot of money and hardship.

Financing

The fact is, starting a restaurant is going to require some significant funding up front, to the tune of $200,000 to $500,000 or more. The start-up costs include:

• The initial purchase – or, more commonly, lease – of an appropriate location
  •  Any necessary renovations or upgrades
  •  The purchase of supplies
  •  Operating expenses
  •  Food purchases
  •  Payroll
  •  And the inevitable unexpected expenses during the first several months after your grand opening.

Putting together a smart business plan ahead of time with an eye on intelligent cost savings and realistic revenue expectations can do wonders in keeping the start-up cost under control. Hiring an accountant with restaurant experience can also be a huge help.

But remember, you don’t want your restaurant to start off on the wrong foot just because you wanted to save a few dollars. Spend where you need to in order to create an appealing, welcoming, and enjoyable atmosphere with great food and service, or the whole effort will be worthless.

Marketing

The most incredibly unique concept and the highest-quality food can mean nothing at all if the marketing isn’t there to make it known. Really, it’s the dining public that you need to convince, not the critics or the investors.

Here are some questions to consider as you add marketing to your business plan:

• What does the dining public actually want or need in the area? And what are they tired of?
  •  How are you going to differentiate yourself from all the other restaurants in the area?
  •  How are you going to entice drive-bys or pedestrians to choose your restaurant when they’re wandering around looking for someplace to go?
  •  How will you encourage first-time customers to become regular patrons?
  •  Will you have ready access to locally-produced food? (Pro chefs believe offering locally-produced meats, sea-foods, and produce will make up the single biggest trend in restaurant popularity in 2015 and 2017.)
  Workload

One of the items that nearly every successful restaurant owner has been forced to realize is that it’s not a simple 9:00-5:00 job.

Few, if any, first-time restaurant owners expected to work as long and hard as their opening months or years required. 70-100 hour weeks are very common, especially for chefs who own their own restaurants and need to wear multiple hats throughout the day. While hiring plays an important role in spreading the work around, you should expect to be working from sunup to sundown to get your restaurant off the ground at the beginning.

None of this should be seen as a reason to give up your restaurant-owning dreams. While it is a lot of work and a significant expense, it’s also an extremely popular and profitable business that tens of thousands of entrepreneurs have enjoyed over the years. With good planning and a strong work ethic, it can be a deliciously successful venture.

The post Sector Spotlight: Restaurants appeared first on Global Business Brokers.

Check out this primer to see if buying a filling station it’s the right move for you

The 2017 Motor Vehicle Census (MVC) stated that there were 233.6 million motor vehicles registered in the US, according to the American Bureau of Statistics.

With such a fertile market, it could be the perfect time to buy a petrol station. Take a look at this primer to see if it’s the right business for you.

What is a gas station?

Sometimes known as a service station – gas stations offer a range of fuel products to motorists including petrol, diesel and liquid petroleum gas (or LPG as it is more commonly known) and now even electricity hook-ups.

Gas stations often have between two and six pumps, and 20-30 hoses. Turnover of petrol varies however a moderately sized station will pump between 325-350,000 litres per month of fuel.

Gas stations increasingly offer more than just the pump, with an added convenience store element retailing confectionery, cigarettes, auto accessories, frozen foods, magazines, phone cards, drinks, ice-cream, cakes, and coffee. Niche add-on businesses are also on the rise including lawn mower hire and motel services. Doubling up is a key facet of business success, as any modern petrol station owner is also a forecourt retailer.

This sector is almost 100% defined by location. Motorists low on gas on long road journeys don’t have the luxury of choosing an independent over a Shell or BP garage. A well-located accessible station on a busy highway will turn over high revenues.

As they say, it’s a captive market. 

The most secure owners own all of their pumps and tanks themselves – but this is not conventional, leases are much more common. Every petrol station is unique, but they all need to provide a reliable service, especially ensuring that the petrol tanks are filled on a regular basis.

A service station will also be governed by legal requirements and the owner should purchase liability insurance. This can be a highly individual business to run, but adhering to health and safety policies is a must.

Who does it suit?

There are many skills needed to run a successful petrol station, but they don’t all need to be held by the same person. The greatest skill for a station owner to master is the ability to hire the best, most conscientious staff.

Unfortunately running a petrol station is not a 9-5 job – in fact the busiest hours are when travellers are getting to and from work, although drivers can be on the road 24 hours a day. Most petrol stations are open seven days a week and involve early starts – usually 5.00 am to 12.00 pm.

This business cannot run itself, so having enough staff for ample coverage at all times is essential. Stations that are more out of the way often have dwellings attached, making the business easier to run.

It’s a business that serves both locals and passing trade, so providing good customer service is imperative. It’s also a high-turnover business so a head for sums – or a good accountant – are vital to running this business profitably.

Those with organisation skills will be well-suited to this sector, as an owner will work on retail product revenues and stock ordering on a weekly basis – and an understanding of customers, from what cigarettes they like, to when the large lottery draws are will help maintain a sense of reliability in a competitive field.

Placing regular stock orders for inventory is key, as is maintaining supplier relationships – an owner must consider their vendors’ processing time and delivery methods when preparing orders, plus fuel deliveries should be checked for accuracy when they arrive. Those good people skills will come in handy when reporting delivery inaccuracies to vendors and placating customers who desperately need fuel, when there is a shortage.

Being good with money will also be helpful. The owner will need to keep up with the money side of the business and not be phased by dealing with large sums, most deposit cash takings on a daily basis.

How much does it cost?

A gas station is not a cheap business to buy, but the most lucrative businesses rarely are. There are a few businesses for sale that are around the $200,000 mark, however the majority retail from $500,000 up to prices in the millions of dollars.

Many current owners do not expect individual new owners to stump up all of the asking price at once, and a combination of part of the fee, a bank loan and an earn-out deal can help a buyer secure an acquisition.

Gas stations are larger than the average small business – and the land and buildings are often leased – an additional cost that needs to be factored in to the cost price. A one to three-month bond for the station lease may also be required by the seller. Note the length of the lease as when leases are renegotiated they almost always go up in price!

When looking for a gas station to buy, businesses with ready-installed shatter-proof glass windows, security systems and security cameras will be a good investment, providing peace of mind on the safety of employees and customers, and electronic door systems for 24-hour gas stations are worth considering. These factors may be less expensive if they’re already part of the going concern.

How much can I earn?

Getting the fuel margins right can make all the difference to the financial health of a petrol station. As stated above, staff with petrol stations having a manager and full timers and their salaries need to be factored in (the average gas station manager salary is $40,000pa).

A common way to measure earnings is to look at annual sales revenue – the amount realised from selling services in the normal operations of a petrol station – a petrol station is likely to generate more than four or five times its asking price annually – although taxes and overheads – that annoyingly fluctuating cost of fuel – must be deducted from this amount. Some owners posted earnings of more than $1million in the last year.

One of the great things about this sector is that with new investment and smart ideas an owner-operator can grow a business to increase the profits. Current trends in add-on businesses for buyers include a car wash facility and a coffee shop.

For any business, the way to sustain a money-making venture is to entice customers into purchasing. Unfortunately petrol is a bigger money spinner for the government and the large oil companies than a petrol retailer. But concentrating on small frequent petrol mark-ups and revenues from retail products can make this a lucrative business.

The post An introduction to buying a gas station appeared first on Global Business Brokers.

An RV park can be a stable and lucrative investment with plenty of scope for growth. Find out why, and how to make a success of this recession-proof sector:

The recreational vehicle (RV) park is a uniquely American institution (although the trend has gone international in recent years). Ranging from campgrounds for vacationers to parks where owners of single-wide and double-wide mobile homes set up permanent residence, there are more than 38,000 of these locations across the United States.

From a resident’s perspective, an RV park offers the perfect marriage of value and convenience: inexpensive home ownership or rental in an environment where they can rely on others to maintain the surroundings and improve the neighbourhood.

For seniors who wish to travel during retirement or ‘snowbirds’ who head south when the weather turns cold, RVs make many dreams a reality.

Of course, not all RV parks are managed well. Many are allowed to fall into disrepair and give the industry an unfortunate reputation.

But, properly maintained and managed, an RV park can be a satisfyingly tranquil lifestyle for residents and owners alike.

Have you ever considered buying an RV park? Here are the benefits of owning one, the main types of business model and how to maximize your chances of success.

Resilient, recession-proof income

Unlike some other forms of real estate, RV parks are well insulated from economic downturns. This is because they offer low-cost housing, demand for which only grows if wages stagnate or unemployment rises.

Permanent mobile homes also offer an excellent opportunity for young couples and first-time home buyers of modest means to rent or purchase a home at a much lower cost than other options.

And the traditional American road trip isn’t going to disappear from our culture anytime soon. RVing remains a popular means of travelling for young and old alike and RV owners will always need a clean, safe and reliable place to park their home on wheels.

Business models: the effort-profit trade-off.

There are two main business models in this sector, entailing a trade-off between responsibility and moneymaking potential.

The easiest and least expensive option is to purchase the land on which mobile home or RV plots already exist and rent the plots to individuals who own an RV or mobile home. Your responsibility is limited to the upkeep of the property itself, general security and utilities such as water, sewers and electric.

You have no responsibility for repairing, maintaining or replacing the homes themselves or anything in them, which relieves you of most potential headaches that come with being a landlord.

However, taking on greater responsibility by buying and renting out mobile homes on your property brings with it a much higher income potential as well as more control over tenancy and rent. Of course, it means you’re responsible for the homes as well, from clogged toilets to leaky roofs and everything in between.

Finally, we then approach the upper echelon of RV parks – the luxury standard. These types of park cater for the customer with a higher level of income, and significantly more discerning taste. They may include well kitted out recreation centres, hot tubs, bars and even fine restaurants. Along with this, they’ll generally limit the types of RV that are allowed on the park. These types of park require more investment, more staff, and more of your time, but they come with significantly higher rewards than a simple plot of land.

Which of these vastly different business models do you think you could work from?

Top tips for successful RV park management

The key to controlling operating expenses and maintaining adequate profit – no matter how deeply you get involved – is to be rigorous in dispensing your duties as both a landlord and business owner. Here are some essential tips:

• Maintain clear and thorough financial and legal records
• Choose tenants and employees carefully
• Get help from experienced advisors such as a real estate agent, attorney and accountant familiar with buying, selling and running RV parks and mobile home parks
• Focus your efforts on maintaining curbside appeal, quality customer (tenant) service and a comfortable, pleasant atmosphere

Do these things and you can count on occupied plots, happy tenants, and long-term contracts and/or lots of repeat customers?

Still interested in getting into this sector? Check out our RV parks for sale and campgrounds for sale .

The post Running an RV Park: Tips, benefits and business models appeared first on Global Business Brokers.

An independent drugstore owner shares the secrets of his success and how his six drugstores became a key part of the small-town economy in two Midwest states

While the tech sector seems to attract all the media coverage, there are still many ways to achieve the American Dream that don’t involve developing an app or building a self-driving car.

For example, while huge chains like CVS Pharmacy and Walgreens dominate the market in many areas, there are still plenty of ways in which a well-placed independent drugstore can carve out a place in its local economy.

One encouraging success story comes from Arvid Liebe. A pharmacist and drugstore entrepreneur who helped build a chain of six stores in South Dakota and Minnesota over more than 45 years, he built his success on these core principles:

● The customer is always right
● Keep learning
● Be fair

Background on Liebe Drugs

As a freshman in college, Arvid Liebe decided to pursue something in the chemical field and settled on pharmacy school. He attended South Dakota State University after completing Evangel College in Missouri, completing his five-year program in 1965.

Liebe spent two years as an intern at Joan’s Drugs in Aberdeen and two as pharmacy officer for the Armed Forces in Okinawa, overseeing a medical warehouse providing supplies for soldiers and support staff during the Vietnam War.

“In 1969, I came back home. The owner of the drug store in Milbank called me the first day I was back and asked me if I was interested in owning the drugstore and I said yes,” Liebe recalls.
“The military wanted me to stay, but I came home and he gave me a wonderful buy and a great beginning. He wanted me to be successful.”

Liebe says growth over the decades has been gradual, steady and organic. “Every 4-5 years, there were other opportunities.

“We ended up with six drug stores, [including] a Hallmark Gold Crown Store and a small café in a Milbank, SD location. I ran those for 45 years. I sold them in 2014.”

The customer is always right

Maintaining and growing a small business in the increasingly competitive pharmacy market is an impressive accomplishment. With all his stores in small towns, Liebe realized early on that maintaining excellent customer relationships was a key to success.

“We did whatever was needed for our customers,” he says. “Delivery, mail, go to their home, careful packaging for older people – all of those things you do in the independent pharmacy that the Walmart doesn’t do.

“I was always of the opinion that in the small town, we don’t have a mass number of customers. So you cannot offend anyone. If you do, that one tells 20 others – then you have a problem.
“We ate a lot of crow through the years; the customer is always right.”

Keep learning

As in nearly every sector, the pharmacy industry is constantly evolving and a successful business needs to evolve with it. Liebe’s approach to this need for adaptation was to get involved in the industry and empower his employees to do the same.

“I practiced pharmacy very actively the first half of my career, then I spent more time in administration. I kept up with the industry and what was going on in pharmacy, but my gift was in the business side.

“I’ve helped many people buy pharmacies from an advice standpoint. Whenever I had pharmacists work for me, I told them to let me know when they were ready to go into business for themselves and provided advice when they were buying.

“I was on the Board of Pharmacy (regulatory board in South Dakota) for 12 years and president for about half that time. I stayed active in everything, and in going to national meetings you could see trends coming.

“For the guys not involved, they would get blindsided. Stay involved in the whole political arena so you can see what’s coming.

“We had many students work as interns for us and often hired them. I had 12 pharmacists on staff.
“Whenever I had a new graduate come in, I looked at them as a resource. They had all the new information on drugs and the industry. That’s how I kept learning.

Empower people you work with

Liebe says he “really enjoyed empowering people as well. We had a woman who came to work for us many years ago and she really enjoyed greeting cards. So when we ended up with a little extra space, we separated the greeting cards off the drugstore space, we called it Judy’s Hallmark and she ran it for 40 years.”

Liebe really is big on empowerment. “If you can have people feel empowered, feeling successful in their work, appreciated, it’s not about money,” he says. “It’s about feeling empowered.”

Be fair

While some entrepreneurs facing difficult circumstances may look for any angle to secure profit or market share, Liebe made a point to maintain ethical and fair business practices, which he believes also fuelled his success over the years.

“About 40 years ago, a gentleman came to work for me and we got along very well and thought very similarly,” he recalls. “I sold him some of my shares about 35 years ago.

“Then we had another woman, a pharmacist who worked for us, who also bought a few shares. When we expanded, we had to determine how to purchase the properties.

“I could have owned it all, but I thought: ‘What’s fair?’ So, they bought a few properties in their names. And because that was fair, they stayed all those years.”

Fairness inspires customer loyalty too.

“As far as competing, there are a lot of things that the Walmarts and Walgreens cannot do. Personalized service is lacking. Everything is based on price.

“Early on, we found out they’re very competitive on other things. They took things that were not price-sensitive and priced it up.

There are plenty of “things you” can “do in the independent pharmacy that the Walmart doesn’t do. You don’t always have to be the cheapest. People just want you to be fair.”

The principles applied to the sale of the business

In 2014, Liebe Drugs was bought by a larger chain called Lewis Drug in what Liebe described as “a win-win for buyer and seller”. The same basic principles of fairness and a desire to help the customer proved invaluable during the business-sale process too.

“I always made sure we had good, accurate books and never played games,” he says. “The buyers could see our pattern many years back.

“A lot of people run their business shady: they want to dip into the till and take money home. Then they’re penalized whenever they want to grow or expand because the bank wants them to prove that they’re making money.”

Getting the right advice was imperative too.

“We valued the business every year,” he says. “From an accounting standpoint, we were set up well.
“I always said the most important person to find is the right CPA when you start. Anytime I wanted to do something, I called them and got good advice and I appreciated that.

“I wanted to stay ethical and do things right. Finding the right attorney was also very important.
Remarkably, insists Liebe, his small drugstore actually outshone his larger, chain-store acquirer in terms of technology.

“We were more tech-savvy than Lewis when they bought us,” he recalls. “We had point of sale, multi-store software, monitoring every day and every hour.

“So we were actually a little ahead of them. We knew it was important.

“That’s a compliment to the young pharmacists. We quizzed them as a resource and stayed on top of it that way.”

He was also keen to ensure his employees and the local community were looked after he departed. “I asked two questions when it came to selling: ‘What about the people? What about the other locations?’

“They bought the business, but didn’t want to buy the property, so we settled on a 10-year lease on the buildings. By doing that, I was able to make sure that these small towns would have a local pharmacy for at least 10 more years.

“With all those pieces in place, selling was not a difficult process at all,” he continues. “We had a total of three meetings. In the first meeting, we had an overview, talked about the employees and locations.

“In the second meeting, they made an offer.”

“Paying so much per prescription is very common when valuing a pharmacy business. I told them how many we filled, the total in all locations. The numbers supported it.

“I’m always of the opinion that the buyer has to buy it at a number where they will be successful, because I’ve done that a number of times, but not so much so that it leaves the buyer impaired in their success. It has to be a win for both the buyer and the seller.”

By approaching the sale of his business in the same way he ran it, Liebe was able to earn a more-than-fair return on investment for himself and his partners, while setting up Lewis Drug to succeed – and in turn ensuring a good deal for both employees and customers.

This inspiring story underlines the point that the US economy still offers untold opportunities to smart, business-savvy entrepreneurs willing to put the effort and time into building a company to be proud of.

The post How to run a drugstore – and sell it for a strong return appeared first on Global Business Brokers.

Boutique hotels have risen dramatically in popularity in recent years

Boutique hotels have risen dramatically in popularity in recent years, as consumers are increasingly seeking something outside of cookie-cutter chain hotels when planning their trips for business or pleasure.

The dream of designing a trendy boutique hotel catering to the wealthy and discerning, and loaded with amenities has tremendous appeal. But there are significant realities that could affect that dream, and must be considered by a wise owner or investor.

Location

As with any real estate investment, location is of prime importance.

In the case of starting a boutique hotel, the matter of location involves not just generally being in an area where your target customers are likely to be, but also fitting your design aesthetic and concept into the local surroundings.

For example, downtown and midtown Manhattan have long been a popular location for successful boutique hotels.  However, a rustic cabin-in-the-woods concept with stripped down technology and a focus on solitude and serenity is unlikely to do well in the city that never sleeps.

Financing

Whether you are considering a brand new construction, a remodel of an existing non-hospitality location, or a purchase and remodel of an existing hotel, significant expense will be involved.

As you plan things out, consider all of the factors that will affect the overall start-up expense and operating costs as the hotel gets off the ground:

• Lease/purchase price
• Construction/re-modelling costs
• Permits/licensing
• Furnishings/decor
• Marketing/advertising (especially important prior to and during grand opening and first year.)

In addition, if your boutique concept includes special services and amenities (which most boutique guests expect,) additional costs will be associated with all of the following:

• Food service (no different from starting a restaurant in addition to the hotel)
• Bar/lounge
• Spa/massage
• Concierge services

The amount and diversity of amenities and services you will offer your guests can only be limited by your imagination and, of course, your wallet.  Your investors may agree that your spectacular ideas are interesting and fun, but if you can’t convince them that they will also be profitable, they are unlikely to fund the additional expense.

Profit Turnaround

In direct relation to funding is a realistic view of how quickly your new boutique hotel will be able to turn a profit.

If you are purchasing an existing hotel and it can remain functional as you remodel to suit your concept, you will at least have some positive cash flow immediately.  However, if you are considering a new construction or a major remodel that precludes doing business from the start, there may be months or even years between when financing is raised and when you begin to see a return on the investment.

As you consider your options in the planning stages, be sure that the financing you obtain, and/or your personal financial situation allows for expenses to be covered during that entire period.

Competition

Even the most exotic, unique, or trendy boutique concept will suffer and eventually fail if not positioned effectively against its competition.

If you are entering an urban area that has already attracted a large number of boutique hotels that are doing well, and it shows evidence of being able to support another location, explore the local competition and see what they are doing that is contributing to their success.

What do their guests expect of them?  At what cost?  What makes your hotel different?  What makes it better?

Unless you can answer all those questions satisfactorily, you’ll find it difficult to compete with the established players in the area.  Your choices at that point are to locate yourself in a different area where competition is not as close, or adjust one or more aspects of your business plan so you can be sure to answer those important questions before you undertake the startup.

This just underlines the overall point being made here: Starting a boutique hotel can be an incredible adventure, and a fulfilling dream come true.  But keen planning and a realistic outlook are the keys to making it a success.

Boutique Bits

• The global hotel industry generated approximately $457 billion in 2011, with 1/3 of that total coming from hotels within the United States.
• Nearly 5 million rooms are available for occupancy every day in the United States.
• 1/3 of the U.S. hotel market is made up of privately owned or independent locations, including boutique hotels.
• On average, about 63% of available rooms are occupied daily across the country.
• The average daily rate for these rooms was $106.15 in 2012.

The post Boutique Hotels appeared first on Global Business Brokers.

We explain why commercial mortgages often represent the most affordable, effective way to secure a pub – especially when it comes to freeholds.

Running a pub as a tenant or leaseholder is where most people start in the pub trade, but many soon start to think about buying a freehold.

Around a third of UK pubs are ‘freehouses’, as freehold pubs are called. Being an independent business with no brewery tie or pub company (pubco) dictating how to run things can bring some exciting opportunities.

Even if running a restaurant or letting rooms are not part of your plans, simply being able to run your pub as you want means you have more control in other ways too – as well as more of the profits.

1. A commercial mortgage could help you buy a more profitable business

Of course, buying a freehouse requires a greater investment than a leasehold because you’re buying a property as well as the business.

According to agents specialising in pub sales, freehold pubs are often sold at twice the pub’s actual turnover, so raising finance can be difficult and time-consuming. Some freeholders have found that the best funding solution is a commercial mortgage.

2. A commercial mortgage could be easy to arrange

A commercial mortgage is similar to a homeowner’s mortgage, but is secured on business property. It can provide the funding to buy a hotel, either as a building or an operational business, in which case the purchase price includes the property, fixtures, fittings and the goodwill of the business.

Most lenders will consider loans for between 60-70% of the value of the business, although it may be possible to advance more if you have other property, such as your home, to use as collateral security.

A business finance specialist could make that easy to arrange.

3. A commercial mortgage could be very affordable

Unlike homeowner mortgages, commercial mortgages do not have standard rates of interest. A lending manager will look at each application to assess risk and set the rate accordingly.

They will want to see the books of the business you want to buy and probably your own trading figures.

Lenders take the property you are buying as security for the loan, which is typically 70% of the property value, and ask for a cash deposit for the balance of the purchase price.

A couple holidaying in a coastal town in Norfolk fell in love with the area – and with a pub that had seen better days.

“The location was good with plenty of tourist business, but the owners were getting on and felt they should be taking things a little easier,” said Joe Berry. “We saw the potential and felt it was the perfect place to make a home as well as a business.”

Joe and Jean had been tenants in the past and knew the work involved. “We would have to do a fair amount of work to turn the place round,” Joe explained.

“But the main obstacle was buying the freehold. The Norfolk coast is not as cheap as many people imagine.”

The couple used our online funding finder to raise some cash. Having experience in the industry and being able to put down a large deposit, they borrowed £220,000 on a 15-year commercial mortgage.

You can see what the service could do for you by using the online form below. It covers all types of business funding, helping you to find the most appropriate type of loan and the most competitive rates.

The post 3 Reasons to Buy a Pub appeared first on Global Business Brokers.

Benefiting from burgeoning global demand for meat, ranching nevertheless demands a certain degree of thrift in the good times and patience in the bad times.

Few images capture the spirit of America in the mid-to-late 19th century like a vast herd of cattle being guided slowly but surely toward the sunset by a team of tough-as-nails cowboys on horseback.

While the American rancher has been romanticized and Old West stereotypes rely more on dime store fiction than accurate history, there’s no denying that ranchers played a defining role in the development of this nation. In fact, the traditional American ranch formed a solid foundation for our social and cultural landscape throughout the 19th and early 20th centuries, as well as a vital economic engine.

But what about today? Agriculture has changed dramatically. A cowboy from 1875 wouldn’t quite recognize, much less understand, the modern American ranch.

Before exploring the sector and its challenges and opportunities, let’s be clear on exactly what industry we’re discussing. A ranch does not grow crops; it is a livestock farm and uses the land for grazing – one of several differences between farms and ranches.

Skills needed by a successful rancher

If you’re interested in starting or buying an agricultural business, it’s important to recognize whether your strengths and preferences are suited to the ranch lifestyle.

Ranchers raise livestock for meat, dairy products, leather and other goods on land they own or manage on the owner’s behalf. They spend the bulk of their time maintaining pastures and breeding, feeding, housing and administering medicines to their livestock.

The work is pretty strenuous, and there’s an element of danger that comes with working with large animals and farm machinery.

Advanced degrees are not generally necessary, but many professional ranchers complete two- or four-year programs in agriculture, animal husbandry or something similar. Likewise, most ranchers will work on one or more ranches as a ranch hand or hired labourer before starting their own operation.

Ranchers should be able to care for the basic health and welfare needs of their stock, and know how to maintain and repair the equipment and buildings on their ranch. Otherwise they’ll have to sacrifice profit margin to hire employees who can handle these fundamentals.

Here are some other attributes a rancher should possess:

People skills

While ranching might seem a good pursuit for someone who enjoys their own company, believe it or not there are plenty of interactions with humans as well as animals: employees, lenders, suppliers, customers, your accountant and more.

Financial/business acumen

Forget romanticized notions of a rugged loner taming the wild frontier: you’ll quickly learn that a ranch is a business like any other. Not understanding, or ignoring, the business basics like tax, accounting and regulations is a sure route to failure, whatever your skills as a rancher.

Hunger to improve

While this can be a lucrative business, plenty of ranches struggle financially because they lose ground to rivals either in terms of price or quality. It’s vital, therefore, to stay abreast of innovative new ranching methods to maximize productivity, profit margins and the quality of your produce.

Persistence

Like any farming business, ranches have good years and bad years. A bovine epidemic or natural disaster can throw a monkey wrench into even the best laid plans, so it’s wise to keep some cash in the bank in fruitful years so you can absorb losses in the bad ones. True success is often as much a sign of persistence and thriftiness as it is of skill or intelligence.

State of the sector

Like most agricultural businesses, ranches are subject to the constant fluctuations of international commodity markets. Although fickle weather is less of a problem than it is for crop farmers, the rancher still runs the risk of diseases, accidents or even wild predators taking a bite (pun totally intended) out of their profits.

One thing we can say for sure is that food is as recession-proof as industries come. With meat and poultry accounting for the biggest share of US agriculture, Americans’ appetite for ranch produce shows no signs of abating.

The U.S. Farm Income Outlook, published in December 2017, contains the following insights on key trends in this sector:

• Overall income and asset values have been falling since 2014 and that trend is expected to continue through 2018, although the decline is relatively slow and overall levels are still respectable.
• The cost of operating a farm or ranch has been declining slowly in recent years as technology improves efficiency and the cost of fuel and other basic supplies remains historically low.
• Although many commodities experienced record or near-record highs between 2011-2013, commodity prices have since plummeted. Although a bumper crop in 2017 helped offset the drop in prices for commodity crops, livestock farmers felt the fall in 2017 and will again in 2018.
• Still falling since the record high posted in 2013, US agricultural exports are expected to still account for more than 30% of the sector’s entire value in 2018, so ranchers can and should still be going after foreign markets if practical.

Diversification

The report raises an interesting counterpoint to falling prices: “At the farm-household level, average farm household incomes have been well ahead of average U.S. household incomes since the late 1990s. In 2015 (the last year for which comparable data were available), the average farm household income (including off-farm income sources) of $119,880 was about 51% higher than the average U.S. household income of $79,263.”

So ranching is clearly still lucrative under the right circumstances. The inclusion of ‘off-farm income sources’ helps to explain the sector’s resilience amid low prices.

Farmers and ranchers have diversified in the following ways:

• Into different breeds or species, thus spreading their risk (like a diversified stock portfolio, the chances of downturns hitting all commodities at once are slim).
• Into niche markets with higher-than-average profit margins, such as grass-fed beef or locally-sourced ranch products.
• Opening land and properties to other uses such as the growing agri-tourism business, fairgrounds or athletic fields.
• Redeploying staff and equipment to activities, such as junk-hauling or excavation, that can make use of trucks and heavy machinery.

The post How to Buy a Ranch appeared first on Global Business Brokers.

It’s a sector with a lengthy history, as the first documented newsagency began trading in London in 1855. There are now more than 135,000 owner-operated units in the UK alone and they can be independent or belong to a large franchise group.

The role of a newsagency differs depending on where they’re based and are rapidly becoming akin to mini-markets, opening a little later than 9-5, whereas metropolitan versions are often known as ‘two-fours’ as they open 24/7. Traditional newsagencies keep regular hours (opening 9am-2pm at the weekend), and although some newsagents sell groceries, not all do.

City newsagencies are almost always situated on a main road in a prime position, as part of the strip shops close to schools and large industrial areas capitalising on foot traffic. And most have a computerised point of sale (POS) management system to help balance customer accounts and stock control.

A newsagency usually forms a strong connection with their community and many sponsor sports groups and local charities.

Lotto is a large revenue source, as are stationery sales, both products that customers are keen to get from smaller independents instead of queuing at big retailers.

All types of newsagency have high traffic volumes for new and existing customers, yet changes in demand mean the traditional retail model of stocking the same products every week is no longer the most profitable option.

Diversification

Selling print products can be challenging, although stocking a wide variety of periodicals for regular customers still makes strong sales, with those customers often buying other products such as bus tickets, confectionery, drinks, cigarettes, telecommunications, lotto and scratch cards and books.

Many newsagents are diversifying their offering, expanding into higher-turnover products like gifts and greetings cards as well as offering items you may usually find in a convenience store such as baby products, cosmetics and food.

An IBISWorld report from 2015 states that from the £2.1bn in revenue that newsagencies produce, 25% is attributed to cards, gifts and party items, 20% to lottery products and magazines, 15% to other items and 10% to newspapers and stationary.

Additionally, there’s a rise in newsagencies becoming independent food stores offering everything from local, organic and/or ethical products to supplying hot food to hungry customers after a night out.

A newer trend is to branch out into other services, from business services like printing, photocopying and operating as a click and collect point.

Others are moving towards home delivery services, delivering the essentials such as bread and milk alongside the daily paper.

Who does it suit?

A newsagent is often both the manager and the owner of the shop, and they’ll run a both a retail and a distribution business.

It is an ideal family or husband-and-wife business, and although working with a partner sounds stressful many newsagents wouldn’t have it any other way.

The secret is to sort out responsibility for workload – often one partner will run the back office ordering and the other will deal with customers – which means that couples are not working side by side.

It should be noted that running this business limits holiday opportunities and is likely to be the only family income stream. Newsagencies cannot be run alone, so mind-set and work ethic are key, like in any working relationship.

A head for figures helps, but is not essential – a newsagent must manage staff, pay their wages, run the Lotto systems and carry out basic accounting.

Plenty of people go into this business after former careers, maybe to escape a heavy city-job workload. Frequently new owners come in and revamp tired-looking businesses, bringing in artisan produce, sprucing up interiors and exteriors and ensuring that the shelves are filled.

At the moment, newsagency owners can only trade for designated periods, however, the government is considering deregulating shopping hours. This could mean independents will need to open for longer to compete with supermarkets.

How much does it cost?

Depending on how close to a capital city you are you may need a minimum of £60,000-£70,000. However many newsagencies currently on sale maintain additional business streams, higher turnovers and large floor space and are thus priced much higher. The largest city newsagencies are on the market for just under £1million, but buyers with access to £150,000 upwards will be spoilt for choice.

Buyers who don’t have all the funds to hand at once should not despair, it is now frequently possible to agree an earn-out deal with the buyer. Although some newsagencies are freehold, many are leasehold so check for the years left on the lease.

Purchasers should check the cash flow – the movement of money into or out of a business to check its liquidity and profits – to assess the health of the business before completing the sale.

The post An introduction to buying a newsagent appeared first on Global Business Brokers.