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What Is My Motel Worth?

How To Sell Your Motel

Don't underestimate this task. You will need to draw on the skills and talents of others to achieve the best result when selling your motel.

Listed below are the skills, talents and resources to help you.

At first the task of selling a motel may appear to be easy. You simply establish what you want, list your motel on a business-for-sale website, attend to the enquiries from prospective buyers, reach an agreement on the sale price and complete the deal.

The fact is, motel sales are complex undertakings that require the skills, experience and expertise of specialists.

Perhaps the most significant advantage of engaging expertise is being insulated and removed from the emotional aspects associated with dealing with your assets and buyers who are trying to acquire them for less than you expect.

The emotional toll associated with selling a business can be significant, an experienced specialist will create and manages emotional distance, and brings much-needed negotiation expertise to table, significantly reducing the time frame of the sale and achieving a better sale outcome.

The List

The mix of support specialists and intermediaries you require will be determined by the specific needs and circumstances of your sale. The following resources will improve your ability to achieve your goals during the sale of your motel.

1. Business/Motel Brokers

The availability of web-based business for sale sites has seen an increase in DIY business for sale sites. While some very small business owners have successfully sold their business on their own, many have not sold and eventually listed with an experienced business broker.

The good broker prepares, manages and coordinates the vast amount of documentation associated with the sale of your motel. In conjunction with you and your accountant a good broker will prepare the presentation of your motel the historical performance and the projected performance supported with the financial data provided by your accountant.

An experienced broker specialises in the confidential identification of prospective buyers, will manage the release of confidential information and negotiate favorable terms for their clients.

2. Accountants

Your accountant is usually the first resources you engage to prepare your financial statements and perform other finance functions including when required a Section 52 Statement as in the case of certain business sales in Victoria. This timely preparation eliminates the speed humps in the sale process. Your accountant will also provide you with tax advice and the best method of structuring the contract of sale or for taxation purposes.

3. Motel Valuation

Motel valuations and motel appraisals require a very specific skill set that most sellers and most brokers simply don't possess. In some cases your broker may recommend a valuation by a qualified valuer who regularly values motels, in other cases an appraisal by the broker will be all that is required.

There are good reasons to engage a qualified valuer, buyers will naturally want to buy your motel for less than the asking price. The valuation limits the reduction in offers as the value is documented evidence that qualifies the asking price.

The majority of motel sales depend upon finance. Banks in turn depend upon the report of a professional valuer.

In summary therefore, the best approach to selling many motels is to establish the value by either engaging a valuer or a business broker who uses the same methods as a professional valuer to determine the sale price of your motel.

4. Business-for-Sale Websites

In the motel for sale industry the Internet is now the most effective tools for connecting buyers and sellers in the motel-for-sale market. By listing a motel online, marketing reaches larger and more geographically diverse prospective buyers.

Not all motel-for-sale websites are equal; in fact there are huge differences in the enquiry results. Advertising on the lowest cost sites in many cases is equivalent to buying a tool that can’t do the job.

Most motel brokers place advertising on larger third party business-for-sale sites to increase the opportunity of reaching more potential buyers however some motel brokers who focus on constant search engine optimisation (SEO) development achieve Google page 1 search results for their listings, either way the selection of good motel-for-sale web sites is essential.

5. Solicitors

You need a solicitor when selling a motel. The legal details related to a motel sale are substantial, the risk of not protecting the seller from liability by not using a solicitor far outweighs the solicitors fees, so it's imperative for you to use a solicitor with relevant experience. You may use your regular solicitor to create the contract of sale, manage and finalise the transaction however we recommend you appoint a solicitor who specialises in business and motel-for-sale transactions. If you use a motel broker, they can usually help you find an appropriate solicitor to assist with the transaction.

Finally, it's important to thoroughly research and check all motel-for-sale specialists before you enter into contractual commitments. In addition to relevant industry experience, look for proven background experience. It may seem time-consuming but put the time in and make sure you have the best possible resources helping to sell your motel, that leads to the highest selling price in the shortest amount of time.

It's a big job owning a small business

You know what it's like … working long hours, no sick leave, minimal holidays and dealing with daily uncertainties. Then there can be the bad debts, chasing up money owed, bureaucratic red tape, and all whilst you try to lead a normal family life.

A small business owner is a superhuman, working when tired or unwell and often for as long as it takes. Even though it can be tough, it’s also a great job. The pride, satisfaction and reward of building a good business outweigh the negatives.

So when it comes time to sell, it is only reasonable to expect that the business is sold for what it is worth. Yet many businesses are sold for less.

It is vital that the same effort is applied to sell a business as has been applied to build the business. Your approach to putting together the information that presents your business in the best light is vital if you are to get just reward for all the years of hard work you have put in.

Remember the day you started your business. On that day you had a dream that you would take the risks and work hard because your efforts would one day pay off handsomely when you sold.

Now is the time to reflect on this and put the extra effort into the sale of your business.

Why do businesses sell for less than their worth?

In many cases, the owner or those who represented the owner did not put in the appropriate time and effort to prepare the business sale properly. Depending on the business, this can take as little as a few weeks, and that’s not very significant when compared with the time you have put in building the business. Applying the same effort to sell as you have done to build your business is very important. You must present your business in the best light if you are to get just reward.

What is a business worth?

The best price formula Low risk + profit = an attractive business = a better selling price So it is simple really we need to look at what we can do that shows the risk is low, we need to look at how we can make the business attractive and by doing so we can get the best price.

Value is dynamic

Small business values are not static nor do they constantly rise year after year. There is no static multiplier for a business like multiplying the net profit by 2 or 3 because for a range of variable circumstances the multiplier can be 1 in one location and 3 somewhere else, or 2 today and more or less in six months time due to interest rate movements or the value of the Australian Dollar.

So first and foremost an independent frank and realistic business evaluation needs to be done. You can pay for this or you can get a broker to estimate the market price for you. To get a true value you need your financials otherwise its simply guess work.

You need the truth and sometimes brokers over value businesses because they fear the truth will cost them a listing so be careful. Small business values behave just like big public listed companies, they rise and fall based on results or the economic environment and the ratio used to multiply profit to sale price is in a constant state of change. 

How do you get the best price?

Public listed companies use a corporate prospectus and in a small business we produce a story on your business it is called Your Business Story.

What is in a Business Story?

It includes your business history and all the positive reasons that will motivate people to buy your business. You may have had an employee working for you for 20 years. That's a great selling point.

Your Business Story may explain why you are selling and the reasons why you think the business will thrive with a new owner it can demonstrate in detail how they can benefit from your hard work.

Every Business Story is unique, they are written by our business consultants who with years of experience can identify aspects of a business and demonstrate the value. They provide potential buyers with a clear understanding of the business and include quality information.

The BizAus approach to a Business Story is one of the big differences between us and other business brokers. As to is the way that we conduct research not just on the business but research on the factors that enhance the business.

A business sale is also a numbers game

Buying a business always involves numbers and the preparation of these numbers can result in a good results or bad. This is not to say that numbers can be manipulated because strictly they can’t.

But numbers analyzed properly can reflect business trends and if presented skillfully will result in a higher selling price.

For example a business owner may show a buyer the last three trading statements over the last three years and the buyer bases an offer on these results to make an offer.

Another business owner provides the trading statements for the last three years but documents the future work that has been secured for the next twelve months. This owner has not manipulated the financials but added significant value to the business by offering the buyer a lower risk proposition.

The future estimates may be based on contractual agreements and the buyer sees the business in a whole new light, with low risk and the sale price increases accordingly.

The end result of properly prepared Facts and Figures is a better price.

Why doesn’t everyone do this?

We can’t speculate about this but we can say that it takes attitude to genuinely want to get the best result for the client. It also takes experience, knowledge and the willingness to concentrate on the best ways to get the best result, this involves extra work and a genuine level of care for the client.