Business advice from the Business Doctor at Link Point Legal and Business Services
Firstly let me introduce myself, my name is Chris Spence and I am the Director and Business Management Consultant at Link Point Legal and Business services. Each month I will be putting together different articles relating to Business development. These will range from setting up a new business to helping an existing business grow and all aspects this entails. During my many years in this field I have given advice to many people in all areas of business all who have had one key aim, to make money and help the business grow. Let’s face it when you go into business on your own one of the main motivations has to be to earn a good living whilst at the same time having a good time working for yourself. If you are one of the few people who go into business to lose money then I have a suggestion that may help, simply send me all the money you want to lose and I will happily get rid of it for you!! . All joking aside running your own business is hard work and can be very rewarding if it is approached in the right manner. For many people buying and setting up in business for the first time is one of the most exciting things that you can do, HOWEVER, if this is undertaken without being properly researched it can turn into one the of the biggest nightmares ever.

This month we will look at Traspaso. A “traspaso” is the act of selling on a business which is being carried out in a property that is rented and not owned by the current business owner. In the LAU (Urban Rental Law) the traspaso was never really contemplated and so was substituted by “cesion de contrato” (ceeding of contract) or a sublet. Previously the owner of the premises would be obligatorily compensated when a traspaso was made. However, modifications made to the law have tried to do away with this although it is still common practice to compensate the landlord in order for the traspaso to go ahead. In most contracts it will be stated that on a Traspaso the Landlord will ask for 10% of the sale price plus an increase in the rent being paid. When you buy an existing business you must ensure that you know exactly what you are buying, for example are you buying all the fixtures and fittings or do they belong to the Landlord and not the person selling the business? The latter can cause major problems for the new owner should there be a clause in the contract stating that at the end of the lease all equipment must be replaced as new. When looking at the books for an existing business it is good practice to ask to see the IVA returns as this will show the true declared income for the business rather than what the seller wants you to believe. It is common practice to under declare earnings within a cash based business. So, in short, the old adage “Let the Buyer beware” was never so important as to when it comes to buying an existing business. At link Point we can offer you independent advice and whilst we cannot guarantee that your new venture will be the dream that you hope it will be we can guarantee that you will not find any nasty surprises lurking around the corner after you sign on the dotted line.

For more information or to speak with the Business Doctor please contact us at Link Point Legal and Business Services, 96 626 0500, or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it This e-mail address is being protected from spambots. You need JavaScript enabled to view it .