31 Oct 2013
Words
Tim Admin
Try before you buy
Whether you are considering buying or have recently bought an accommodation business, or you’re simply unhappy with growth rates, there are tools available to help ensure you are fully informed and equipped to unlock potential and minimise risk. REVPAR Advisory Group has appointed former CEO of Best Western NZL, James Shearer, as Senior Consultant in charge of our Management Advisory Services division. James and I recently visited a small coastal resort in northern NSW – 25 units operated by a hard-working but inexperienced team.It was a little awkward when, referring to his recent purchase of the management rights, the owner asked: “Have I just thrown away my life savings on this?” Truth is he went into it blinded by his dream of a coastal escape, not considering how he would add value so he could later sell at a higher price.Changes in leisure patterns were eroding peak season income and he didn’t have plans in place to boost his low season business. A local competitor was dropping rates and the commissionable bookings had evaporated. Like most buyers, he had his accountant look over the books to identify problems – but that’s as far as he went. It still astounds me that this gentlemen isn’t alone in his situation. All individuals and companies looking to acquire a freehold business or management rights can and should “try before you buy”. No, I don’t mean spend the night in the property and canvas guests. What I’m suggesting is an expert “Shadow Forensic Business Review”. Unlike a Strategic Review, which is performed from the inside out – having full access to financials and operational details – a “Shadow Forensic Business Review” is performed by experts when little or no information is available (i.e. non acquired property or competitor).It provides a solid platform for the potential buyer/ competitor to understand how the business is performing and how value could be added and/or extracted. A “Shadow Forensic Business Review” will highlight potential problems and provide the owners with risk management strategies should their revenue-building or cost-cutting plans fail to generate value. Our panel of experts provides fully independent advice to help you grow your business.
