Press Articles

Feel Good Factor Returns at Last
By Stephen Fear

First published in ‘Business and Premises For Sale" magazine - 1997.

General Elections often influence the business market in ways that at first might not appear obvious. For many business agents, 1997 has started well with a considerable increase of enquiries being recorded over January/February. But I expect to see these ‘drop off’ as the Election gets nearer, there will inevitably be people who want to wait and see before plunging in at the deep end.

A real hot potato for many businesses at the moment is the possibility of a minimum wage. This will affect most small businesses to some extent with the most obvious being nursing homes, pubs and hotels. Many of these businesses will not be able to afford to pay the amount being suggested and jobs may well be lost because of it.

If the opinion polls are correct and Labour are elected, the market may slow up again for a short while afterwards, as business people wait and see if any immediate radical changes take place.

Whoever is elected, I can only see confidence improving overall as the recovery hardens and people realise at last that we have laid strong foundations on which to build the future.

Certain categories are proving popular with people wanting a home and an income. Day nurseries are one such business where both can be accommodated. However, many people wanting to enter this market should be aware of the pitfalls. Many leading agents consider it advisable for first time buyers to purchase an existing business of this type, rather than attempting to buy a building and then obtain all the permissions relevant to running a nursery. Cashflow is all important especially in the early days and empty buildings can become white elephants to the uninitiated.

However, this said, the nursery sector continues to strengthen - particularly for businesses with registrations of 30 - plus children.

Seven Eleven Concept

Care homes have had their problems in 1996 especially with many lenders not wishing to finance or refinance homes with less than 25 beds.

Many corporates' are reining back on site acquisition with some starting to reconsider older stock again, providing there is scope for development and additions. As funding pressure increases on local amenities, and therefore on fee levels, more and more purchasers are looking for homes in good locations where private residents can be attracted. Clearly the directive from the EEC regarding minimum wage levels will affect the lower end of the market, particularly with some owners not being able to afford the increase.

Britain has finally woken up to the "Seven-Eleven" concept with convenience stores in busy locations in good demand. Dillon’s and Alldays among others have led the field in creating the modern day version of "open all hours". The UK has always had its fair share of convenience stores, but it has never before been subject to such a corporate approach - even Asda stayed open all hours Christmas.

To compete, of course, requires good management and enthusiastic staff. However, it is still possible to be a successful independent, providing you have a good busy location. We wait with interest, though, to see how the minimum wage will affect this sector.

Another area often considered by husband-and-wife teams is boarding kennels and catteries. The attraction of an old farmhouse, with land and the ability to create both cashflow and a lifestyle from a hobby, often proves irresistible to many couples seeking a life away from the rat race.

Most kennels tend to be located on the fringe of towns and cities for obvious reasons and with the huge volume of dogs and cats as pets; the market is certainly there to create a viable business. Sales of kennels are usually freehold with owners specialising in either breeding or boarding - although most do a bit of both. Sales have held up well in 1996 and expect to see an improvement in 1997.

One valuation factor to take into account, though, is how any change in quarantine laws will affect kennels and catteries with these facilities. There is a suggestion that animals which have had an anti-rabies jab are safer than those under present arrangements. Dogs and cats would also have an "animal" passport and a microchip identity tag.

Popular Areas

The last 12 months has seen the continuing development of food pubs/restaurants and a further reduction in old boozers. Drink driving laws, which are likely to become even more draconian in future years, have pretty much put paid to country boozers altogether. Village pubs with log fires, good food and a few letting bedrooms, have proved popular throughout the UK. Particular areas of interest among buyers are as ever the Cotswolds, Devon and the Lake District. But all regions have their following and sales have held up well in Norfolk, Suffolk and Warwickshire throughout the year.

Typically, £350,000 should buy you a profitable period pub with living accommodation, log fires and all the trimmings in one of the areas mentioned. Funding is usually available from any number of sources but I would always advise starting with your own bank if you have a good relationship with them. Clearing banks often like these types of businesses, as the inevitably get the day-to-day banking business and insurance to go with the loan.

Theme pubs have obviously gone from strength to strength with Bristol's famous West End seeing a huge increase in eateries in the last two years.

Trade sources call this area the golden mile and a night time visit will show you why. Henry Africa's, the Fraternity House, Hullabaloos, Henry J Bean's, Tequila Worm and the Whiteladies cinema complex dominate what has become a sought-after place to spend an evening eating, drinking and film watching. This strip leads down towards the City Centre and Docks, which are about to have over £100M spent on them and will include further leisure facilities. Rents in the Whiteladies Road area of Bristol have escalated over the past year with any premises designated for A3 use being snapped up.

Many other cities throughout the UK are seeing a return of the feel good factor. Long may in continue......."

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