Having personal experience in buying, selling, and starting businesses can be a valuable asset for a business broker to have. Justin Bunt from MMJ Real Estate has a wealth of experience as an entrepreneur, creating multiple startups to now advising owners as a business broker.
Bsale recently spoke to Justin about his business journey and his advice for entrepreneurs on growing faster. Many owners think a startup is the only way to be successful; his professional experience in business sales has more to tell.
Justin studied commerce and hospitality at university and worked for Tricon Restaurants, now known as KFC. It was here that Justin met his first business partner, and they embarked on a journey in the hospitality industry.
“I started my first business when I was 23. I decided I wasn’t made to work for somebody else. I wanted to start my own business. I started a business called That Wicked Sandwich shop. [We] both quit our jobs at KFC at the time and built our shop at Meadowbank in Sydney. We built that up from scratch and lasted in that together for about six years.” Justin said.
As many business owners and entrepreneurs can appreciate, those early years were a learning curve for both Justin and his business partner. They worked second jobs to cover expenses, and the business partners soon discovered there was money to be made in catering, which transpired in their following business path.
“The shop transformed into a corporate catering company and was renamed Wicked Foods after a couple of years. We sold it to a competitor, who I ended up working with to grow the business. We actually bought another CBD-based catering company as part of that growth.”
“Wicked Foods started in 1993. I sold it in 2000 (and) I went back to work for the guys that bought it, and with them, I started up another business called Ezy Fridge. It was leading into the GFC, and it just didn’t take off because of that. The timing was a big problem with that one. So we had experience in buying an existing business, and we also set up a couple of start-ups along the way with mixed results.” Justin said.
Justin’s experience as a business owner was not solely focused on operating one business. As a true entrepreneur, while working with Wicked Foods, Justin had multiple start-ups and other business ventures on the side. He also went to work for the Department of Health and found he still had that desire of owning a business so he went back to Wicked Foods.
In 2009, the new owners of Wicked Foods gave Justin a share of the business. “I did that for a couple of years, working back at Wicked Foods, growing that business in a marketing capacity.”
“During this time, startup was called ‘Pigeon House 150’ and funnily enough, that was with Martin Lo Surdo, who is now my boss at MMJ. We played soccer together and it was my idea to have a local food wholesaler, we had all products from the South Coast. There is a mountain down here called Pigeon House Mountain and that was kind of the centre of the area where we were getting the food from.”
Justin was with Pigeon House for approximately 4 years while still working with Wicked Foods and when Pigeon House 150 closed down, he took on a more substantial role at Wicked Foods before selling it again in 2019, right before Covid hit.
“I sold Wicked Foods again in 2019 to one of the staff members and when Covid hit, Wicked Foods being in mostly corporate catering at this stage, the business went from turning over $35,000 a week in sales to $1,000 a week overnight.”
“I was still working for them doing their marketing, but even with the subsidies, the business couldn’t find a new way of getting revenue, so that folded pretty quickly actually, which is rather sad because that was a 25-year-old business with 20 staff that lasted not even 2 months after Covid hit,” Justin said.
With Wicked Foods officially shut down and with more time for opportunities on Justin’s hands, Martin encouraged Justin to join him at MMJ real estate and work in business sales. So Justin came across to MMJ in September of 2020. The transition to business sales for Justin was smooth thanks to his varied background in business.
Image: Wicked Foods
“I had to do the real estate training, which took a bit over a year to do on top of working. I think the main thing with business sales is understanding business owners, with which I had enough personal experience.”
“I understood how the business owner’s mind works. I know how to look at a business and kind of see what is going on there pretty easily.”
After working in and adjacent to food industries for the majority of his professional career, Justin said that learning a new business every couple of weeks is the best part of the job as a business broker.
“There is a lot to learn in terms of the technical side with agency agreements, contracts, that kind of legal. When I had sold my businesses before, I did my own contracts so I knew a bit about that process, but in most business sales now, you have a buyers lawyer and a sellers lawyer doing a lot of that, and we are just helping make sure it all goes smoothly.” Justin said.
As an experienced entrepreneur, Justin understands what it takes to build and successfully own a business. As a broker, he has met many business owners and understands their journeys. Buyers' motives are changing post covid, with many new potential business owners coming from varied backgrounds.
“It actually is possible to have a career, or even your entire career could be in your own business and sell it when you’re ready to retire or step back.”
Whilst professionals such as accountants, lawyers, and architects see the benefits of owning their practice or firm. There is an entire section of business ownership that is about management and operations. Whether it's selling a product or service, it can be an effective career move.
“There are plenty of people that have done it for 10 or 20 years. You achieve that dream of being your own boss, that does happen, it isn’t an illusion.”
Often people don't see owning a business as a career move, it is seen more as the chance to be in control of your lifestyle and to make decisions. There is so much variety in the businesses for sale that a buyer needs to have a plan.
“It’s important to consider as a business owner how involved you want to be at the start and then make a plan around that from day one. When you buy a business, it would be pretty scary to jump in there when you’re learning everything but if you’ve got a plan in mind to get to the point you want to be, that legendary work-life balance and it is possible.” Justin said.
“It’s not easy to get to that level where you’ve got a business which is flexible, there is that real small business mindset which is that they ‘can’t step back’ but you can, most of the time you can, it’s just hard to do and when they sell the business, the buyer will come in and run it differently.”
“Actually working out why you want to own a business, there are all sorts of reasons for that, controlling your own destiny is a big part of that.”
Business sales are not just a simple process of finding a buyer and having a conversation:
“There really are two big mountains. One is finding a buyer which can be years of working through hundreds of leads, and dozens of inspections, it’s very different to a house sale. Then once you find them and you think you’re done, then you have the second mountain to climb.”
“The next phase, I call them the 3 ‘L’s the Lawyers, Lenders and Landlords. It all starts again basically once you’re in that second phase and that's where, as a broker, you kind of prove your worth. It’s so easy for things to go off course and no one is objective aside from the broker. We’re not totally objective but we’re more objective than the buyer-seller, lawyer or landlord because we’re always focused on getting the deal done.” Justin said.
Buying an existing business as an entryway to building a startup can be a really cost-effective approach for the right business person. Justin says the key is knowing when and what to compromise on.
“There are usually two types of buyers we see like in a couple for example or business partners, one is the person that sees the potential and one sees the problem. They could be the right buyer, I don’t write off somebody because they see the problem, it’s just about knowing that different approach to those two types of people.”
“Someone seeing the problems, for example, that the business is on the wrong street or the kitchen isn’t big enough or whatever [it may be] that is obviously harder as a broker to work with. You want to try to make them see that the chances of them finding what they’re looking for exactly is almost zero and that goes back to a start-up point of view. “
Sometimes you will have a potential buyer, who constantly sees problems and wants to start a business from scratch to try and get exactly the vision they are after.
“Theoretically, with a start-up, you can do that, you can build it exactly how you want it to be, but it’s certainly going to cost a lot more than you think and it is something that needs a location and obviously finding a space to rent in the right area can be impossible and if it’s an area that has a good chance of having a successful business then there is a good chance there is already leased out to someone.”
“So you might need to buy a business just to set up in the space you want.”
Justin recently sold a business in Berry, a small busy tourist town on the South Coast of NSW, to a buyer who wanted to run a business on the busy main strip in town where there were no retail vacancies.
“We had a guy who had a cafe there, he didn’t reopen his cafe after the last lockdown, but he was doing a lot of catering on properties so he kept using the kitchen. We sold the business in the end to someone who turned the cafe into a bar, totally different and was happy to pay a fair amount of money to access the fit-out and the space.”
“Buying an existing business and then making a start-up, I think if that buyer had built that business from scratch, she would have paid a lot more money and at least she knew it was in a spot where there would be a lot of customers. It wasn’t a lucky dip, she knew it was going to work.”
You can make better decisions when you understand the business you want to build. It's not always about starting from scratch to achieve your business goals.
“There are just so many more variables [when starting up a business] and getting to the point where you’re cashflow positive, it is
so hard to predict that when you’re a start-up, you just don’t have the data, you don’t know.”
“Thinking back to that very first sandwich business I set up, I still remember that very first day, 29 years ago, we had no idea when we opened the doors what was going to happen and I think we got about $120 of sales and we were hoping to pay two guys wages. I don’t know what we were hoping for but it was nowhere near what we were going to get.” Justin said.
Return on investment (ROI) is hard to pinpoint when you start your own business, and there is no certainty in your sales and future earnings. But when you look at buying a business, you have a sales history and the ability to predict your ROI.
“Return of investment, the general kind of rule is if the ROI is less than 30%, it’s hard to sell a business and that’s after you’ve paid a reasonable wage, that is the actual profit of the business.”
“After you’ve paid your own wages is there enough there to get a 30% return?”
“With buying a business versus a start-up, it’s tough to project that ROI in a start-up whereas at least when you buy a business you know you can keep everything as it is, and if that business is returning 30%, that should be a good investment for you.”
A buyer is in a different mindset than the person selling the business. They are excited and passionate about the opportunity they are buying, and can potentially drive profits and achieve their returns faster.
If you require a loan for your business, it is easier to obtain finance when the business has established figures versus trying to get capital for a new venture or startup. There is often a misconception, even amongst accountants, about the level of finance needed to secure and run a business.
“I have someone buying a business and an accountant has told them ‘you need $100k working capital to buy the business’ which is not true. If this business is turning over $30k a week, that profit is coming in week one of ownership, if there is positive cash flow now you don’t need that much working capital and it is surprising that accountants are giving their clients that advice as if they’re doing a startup. “
“Yes, if you’re doing a start-up, you need working capital but for an existing business you clearly demonstrate it has positive cash flow, you don’t need that much working capital.”
“This was a hospitality business turning over that much money ($30,000 a week). You don’t pay suppliers for a month and you don’t pay your staff for 2 weeks, so for the first 2 weeks the only expense they had to pay was their rent upfront, so by the end of those first 2 weeks they have around $50,000 in the bank. They can pay their wages easily and away you go, this you cannot get from a start-up.” Justin said.
Of the choice between buying an existing business or starting one from scratch, Justin appreciates that it is a real genuine choice that the buyer has to make. Justin suggests buying a business that, perhaps isn’t exactly what you want, but turning it into what you wanted, can be the best approach for most buyers.
Image: Justin Bunt, MMJ Real Estate
Selling a business isn’t as easy as placing a for sale sign, signing a contract and handing over the keys. As a business owner, you know the complexities within your business. What needs to be established is an exit plan, whether it's 6 months, 5 years or 2 decades. A plan must be in place, especially if a business has multiple owners.
“You definitely need to have an exit strategy in place, especially if you have a partnership. Most of my businesses have been partnerships and while none of them has ended horribly, it’s definitely better if you know how it is going to work if say one person wants to get out, and even better if you’ve got an idea of what point you want to get out.”
“You might have that set up to be at 5 years or x turnover or x profit or if we’re not making x much in 3 years we’ll move out of the business.”16
“If there's not a partnership, why wouldn’t you start with an exit plan? Even if you want to run the business for 40 years, that’s still an exit plan, to build it up over 40 years is different to 3 years in and out.”
“I’ve seen a few business sales recently that have been like that, where a person has gone ‘I’m doing this for 3 years’ and they have a plan to tidy it up and that’s quite effective. They want to keep keen and they don't want to get jaded by hanging on for too long. You need a good plan.” Justin said.
An exit strategy is like a contingency plan, so if something happens, be it good or bad, you know what to do next. If your goal is to sell the business for as much as possible, you may sell it once a certain turnover is reached. If your goal is to have a business to support you until retirement, your plan may be to sell when you're 68 years old.
“An exit strategy is not essential but it’s definitely important for a partnership, if you’re running the business yourself this exit can be more of a target.”
“I think it’s always great to have some destination in mind, to have potential Plan A and Plan B and it probably won’t end up exactly like that but at least it keeps you on track.”
When asked about what his current buyers and sellers are like and if he has noticed any trends, Justin said there is a little bit of everything.
“It’s actually really strong on both sides at the moment, at the end of last year we definitely had a big uptick in people looking to sell and I think there was a lot of ‘Covid lag’. People didn’t want to sell during Covid, nothing wrong with the businesses as such but then they came through Covid and went ‘okay it’s time now’.”
“We went from 5 to 10 enquiries to 20 to 30 from November  and every month has been up at that level. Really strong on that side, to the point where we’re almost at capacity, we should get another broker on board!” Justin laughed.
“On the buyer side, I was a bit nervous in November last year that this volume of seller enquiry was going to be an oversupply, but there has been a new lot of buyers coming through.”
Justin suggested that a lot of these new buyers were looking to buy as a result of stress and burnout from Covid. For example, he has seen a lot of teachers and nurses who are in the final stages of getting out of their careers after experiencing “burnout from working in tough sectors and now they’re buying restaurants and ceramic studios and stuff like that. An interesting little churn is happening.” Justin said.
“There is still definitely acquisition type buying as well, in some industries, it’s not across the board but we’ve seen a bit of that. Because we’re regional as well, we’re definitely getting that ‘Sydney refugee tree changer’ type of buyer this year, that has been really strong. Last year we were waiting for it and it didn’t happen but this year it has.”
Going on to say that he has also received a lot of enquiries and interest from Canberra, but that
“At least a third of businesses sold this year have been to Sydney buyers that are moving down.”
Covid and the subsequent lockdowns, and now rising interest rates, have forced a lot of people to reevaluate and contemplate their careers and buying an existing business can be a great way to change careers.
Owning a business doesn’t need to always be about starting from scratch. An established business has a sales history and a forecast. The opportunity to be successful can occur faster when you have something to work with, like an established business.
Justin's entrepreneurial journey, and experience as a business broker, guide many Wollongong and South Coast NSW owners into their dreams of owning a business. He understands what it takes to own and sell a business so that he can guide his clients through their transitional journey.
To find out more about Justin and the team at MMJ Real Estate, please reach out to them and discuss your circumstances.
Caitlin has a background in media and communications, studying journalism at University and doing various freelance writing and production work over ...