BizSale Small Business Blog. Small businesses for sale.

We've been charting rock-bottom cafe prices and the recent rise in coffee bars for sale with interest here at Bizsale, and now we hear the sun could be setting on the "Starbuckisation" of London.

Various reasons are being singled out for the £47 million lost by the chain's UK cafes during the downturn, from soaring milk prices to sterling's collapse pushing up the cost of imported coffee.

There's also the small issue of the coffee chain "muscling in on top locations with sky-high rents" for its cafes, as the capital's Evening Standard puts it.

"Dozens of less successful branches are being shut or sold, with more closures to come next year – an extraordinary turnaround from the 50 or more openings a year during the boom," the paper notes.

Some of the "underperforming" sites shutting down include two outlets in the City and one in Fitzrovia, near the West End.

The coffee chain's people have admitted that such closures will keep happening throughout 2010 as part of "cost-saving initiatives" and their aim to create "a healthier store portfolio".

We'll leave the last word – for now – to Britain's official best barista, Gwilym Davies (he was crowned in March):

Starbucks has done "a fantastic job" for smaller cafes and coffee bars, he reckons, because the corporation has created a lot of coffee customers … but its prices simply do not tally with its products.

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Around half of the UK's small businesses are poised to expand over the next year and Barclays is laying on a raft of free seminars to help them, backed by ACCA and support service Business Link.

With more than 600 events lined up under the Let's Talk banner, the financial services giant is targeting anyone thinking about starting a business, as well as existing owners of small firms.

"Small firms depend on bank lending to fulfil their potential and any move like this by lenders to help businesses deal with new challenges is encouraging," said business secretary Lord Mandelson.

Citing a recent survey of over 3,000 small firms by Barclays Have Your Say, the bank's Steve Cooper confirmed that 49 per cent intend to expand in the coming 12 months.

"Expansion can be a positive move for a company, and there are always opportunities for growth, but the reality is that it's also difficult," he added.

Cooper pointed out that aspiring entrepreneurs and established business owners will have the chance to hear experts speak about successful growth during the seminars – as well as getting to pose any questions "they need to ask".

Nine upcoming Let's Talk Preparing for Growth seminars will focus on business development, while 17 Let's Talk Bright Marketing and More Profit sessions will outline strategies and processes focused on customers and profitability.

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Entrepreneurs and small business owners have been finding it tricky raising finance lately, that's no secret.

But the East of England Development Agency (EEDA) is putting its money where its mouth is and shelling out loans of up to £200,000 to give such individuals a foot up the business ladder.

Even if you've already been refused cash by your bank, you're still eligible – in fact, if that's the case, you've ticked the box you need to qualify for the Small Loans for Business programme.

The help for businesses across Essex, Cambridgeshire, Norfolk, Suffolk, Bedfordshire and Hertfordshire comes after the Federation for Small Businesses criticised UK banks' "monopoly of power" over small firms seeking finance.

It called for a bigger variety of affordable loans and overdrafts, particularly at a local level.

"Business owners often think they have nowhere to turn if they are refused credit from the banks, but that's not true," says Richard Ellis, chair of EEDA.

"Here at EEDA, we are offering loans with flexible repayment terms to businesses with viable business plans – businesses which may just be seen as too risky for banks to support in the current climate."

While the Small Loans for Business initiative offers between £500 and £50,000 to regional enterprises whose funding applications have been refused by banks, EEDA's Regional Growth Loans can provide up to £200,000 for small to medium-sized firms which have "a real potential for long-term growth" and a workable business proposition.

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Resolving any outstanding legal or environmental issues before selling a business will reassure interested parties they are making a sound investment, it has been suggested.

Associated Content's Richard Smith points out that potential buyers generally carry out background checks on businesses for sale, deeming their scepticism "only natural".

"Talk to your lawyer or other professional advisers to see what can be done about resolving any problems before selling a business," he recommends.

Harnessing the knowledge of professional brokers who are familiar with negotiating business sales is a further tip, as is ascertaining how much an enterprise's assets have depreciated before listing a business for sale.

"Potential buyers will definitely look into the market value of the business' assets [because] they will use these assets as loan collaterals," notes Smith.

He also advises taking location and owner expertise into account when selling a business, as a lower price should be expected if most of an organisation's revenue has depended on such expertise.

Firms which don't keep cash sales on their books will have a harder time selling a business, he concludes, emphasising that using a business for personal expenses will also "skew" its cash flow.

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Aspiring entrepreneurs take note: Britain faces a surge in corporate insolvencies as businesses' "time to pay" arrangements with HM Revenue & Customs (HMRC) begin to expire, the trade association for insolvency practitioners has claimed.

R3 says more than 200,000 companies signed up to the programme when it was introduced in last year's pre-Budget report, delaying payments totalling around £3.6 billion.

Governing national insurance contributions, VAT, corporation tax and other levies on firms, the initiative was designed to cut some slack for organisations feeling the brunt of the recession.

The deal was keenly taken up by small-business owners such as those buying pubs or coffee shops, which have particularly suffered due to taxation in recent years.

R3's president, Peter Sargent, says the trade body is expecting to see nearly 30,000 corporate insolvencies this year, up from 23,000 in 2008.

"Company directors must plan for the time when the deferral ends and make sure that they can pay the final bill," he states.

"Those that don't run a serious risk of adding to what we fear will be a glut of failures when the time-to-pay concession runs out and the recession continues."

R3 reckons a unique factor in the current recession is HMRC's "lenient stance" on business debt, with the provision of "extended breathing space" for firms to sort out their cash flow problems.

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If the upsurge in trade experienced by the nation’s coffee bar owners is anything to go by, the UK could soon be experiencing a surge in its economic fortunes.

Starbucks have reported a significant lift in July and August sales compared to the same period last year. This is a welcome turnaround in what has been described as the ‘toughest trading Starbucks has ever experienced’, according to UK chief, Darcy Willson-Rymes.

Starbucks has just announced that it will now only sell Fairtrade coffee at its UK coffee bars, in a single move that will lift the total market for Fairtrade coffee by 18%. Whether this is a PR/marketing move or a truly altruistic tactic is unknown, but a new pricing deal is likely to have been negotiated as the chain says it will not result in a hike in the cost to the cappuccino drinker.

At Bizsale, we have seen a marked increase in the number of coffee bars for sale over the past six months as owners struggle with covering their overheads in the downturn. However, with prices of cafes at rock-bottom lows, now is a perfect time for the cash-rich to pick, choose and negotiate favourable deals with vendors.

Certainly, those smart enough to develop small, profitable chains of cafes will find that even now there are buyers willing to pay multiples unheard of for single outlets. That multiple can only go up.

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