What Type of Business Should you Buy? | Small Business Blog
May 31st, 2010 | PostAuthorIcon Author: admin
No two people will have exactly the same skills, aims, ambitions or financial resources, so it is impossible to provide a single solution for everyone. However, this article presents the key issues that need to be thought about, and will assist you in thinking it through in depth before embarking on your search for the right opportunity.
What are your skills?
All of us have skills in one area or another, and obviously your particular skills need to be taken into account when deciding on a business to buy. At the most simplistic, if you have worked in a certain type of business for someone else, say a hairdresser’s or confectioner’s for example, you probably have most of the skills needed to run a similar business yourself. If, on the other hand, you have worked in a job that has not provided you with particular skills relevant to running a small business, you will need to consider businesses that do not require skills only acquired after years of training. Consider what skills you would have the capability and aptitude to acquire quickly.
What skills and aptitudes are required?
Some businesses require only generalised skills, and others more specialised ones. It is impossible to give a comprehensive list, but here are some examples to illustrate the point. Running a small sandwich bar or ‘greasy spoon’ is very much like running an overgrown family kitchen. That’s not to say that it is easy, but learning to scale-up what you already do at home would be relatively straightforward. On the other hand, running and la carte restaurant is a totally different ball game. If you have been a chef, then fine. However, if you will have to rely on employing a chef, then you are taking a huge risk. What happens if the chef leaves overnight without warning? It would take years, if ever, for you to be able to step in and take over the kitchen at short notice.
Running a small convenience store is generally straightforward, but like the a la carte restaurant, you could not consider buying a specialist butcher’s shop unless you are trained.
Slightly less obvious is accounting requirements. A retail business, where the customer pays at the point of sale, is fairly easy to run with a simple cash book. However, if you are running a business-to-business trade, where your customers expect trade credit, then you are going to need to run ledgers with your customers’ accounts, send out statements and follow up by phone, letter and in person to chase late payment.
If it is the type of business where it is necessary to submit detailed quotations, is your English good, your maths OK and are your fingers quick on the keyboard?
In summary, when you consider types of businesses, think about how you will need to be spending your day, and whether you can manage or learn all the tasks you will have to undertake. Possibly your partner will be able to cover your weak areas.
What are the physical demands?
One factor which is easily overlooked is the physical demands that many businesses place on their owners/operators. If you have been working in an office, sitting at a desk all your working life, when you run a shop standing on your feet all day you may find that you have terrible back pains.
In the pub, when you had planned that your husband would be responsible for changing the beer barrels, if a regular is waiting for a bitter and hubby is at the bank, you are going to have to do it yourself.
All retail and restaurant/cafe type businesses, as well as many others, involve a considerable amount of physical work. Man or woman, you need to consider whether you are ready for this and whether you are going to be able to cope with the physical demands that may be involved over a sustained period.
How much risk is involved?
All businesses involve a certain degree of risk. However, some businesses are more inherently risky than others. You need to decide:
• What risks can you handle, given your aptitudes and skills?
• How much risk are you willing to take?
For the purposes of this discussion, risks can be broadly categorised as external risks and internal risks.
External risks
External risks refer to risks external to the business itself. These risks are largely outside your control once you have bought the business, and can include all or some of the following;
Location
Some businesses are very sensitive to location (hotels or general retail, for example). You can obviously check what you think of the location before you buy, but there can always be environmental changes after you have bought the business that you could not have anticipated, and which fundamentally affect the business. Your hotel, which was nicely situated on a busy road, is now in a back street due to the new bypass. The handy public car park next to your convenience store has been sold to big supermarket. It could be even simpler – the council decides to put double yellow lines in front of your parade of shops,
Technology
Changes and enhancements to existing technology could affect your business. Many small garages are unable to service some of the latest cars which have sophisticated computer and electronic systems.
New gizmos may appear and reduce the demand for your services. Digital cameras are increasingly reducing the demand for photograph development and printing, for example.
Competition
Apart from the increasing trend towards out-of-town major outlets, maybe someone will just decide to open up in competition just down the road.
Fashion
Some things just simply fade.
Customer loyalty
Sometimes customer loyalty is lost when a business changes hands.
Internal risks
Internal risks are essentially within your control, provided you have the aptitude and attention to detail to exercise it. Such risks could include:
Stock
Do you have the intuition to stock the right items, the hot sellers, or might you end up with shelves of unwanted items?
Financial control
Sometimes staff can think up the most ingenious ways of slipping cash out of the till or stock into their handbags. You need to consider which are the risks involved in the type of business you are considering, and which of these risks, given your circumstances, you are prepared to take.
Remember – if you are to be a businessperson you have to be prepared to take some risk. Why not? It could be that you are actually taking more risk by being an employee. Hundreds of people are losing jobs through no fault of their own every day of the week!
How much will the business cost?
To take the extreme, if you have a maximum of $10,000 in ready funds to invest, it is hardly worth looking at nursing homes or hotels, for example. On the other hand, a leasehold flower shop may be a realistic possibility.
Trade publications
Most businesses have trade publications. Find out which are the best ones for the types of businesses you are thinking about buying. Read a few issues. They are generally a good source of information, not only for commentary on the major concerns currently affecting that business sector, but will also contain advertisements for specialists in stocktaking, financing and so on.
Talk to business owners
It is a good idea to talk to business owners in the sectors you are targeting for their thoughts. Do not be shy about this; most business people are only too happy to talk about their business to prospective owners, as long as you make it clear that you are not about to open up nearby and put them out of business, of course! However, most business transfer agents (agents who act for owners wishing to sell their business, accountants, bank managers or solicitors can give you contacts if you prefer.
Having read this article, sit down and consider all the issues. This should give you the ideas and questions to put to them, and, as the conversation develops, the least you will gain will be confirmation that your expectations are correct. But, more likely, you will learn a lot of new aspects to running that type of business that you would have never thought about on your own.
Ask them what key factors there are to making the business successful or not. All businesses, without exception, have a few key factors that you have to get right for the business to, do well. For example, some of the key factors in the success of Pizza Hut are:
• Consistent product quality and price.
• Speed of service.
• Easy parking.
• Clean environment.
This sounds obvious, but a considerable degree of skill goes into ensuring that your pizza and chips are exactly the same whichever restaurant you go to. However, it is the knowledge that you can be assured of this that encourages you to go to Pizza Hut time and again, so it is vital for them to get this right. Other examples are:
• Pubs: (Keeping the beer in good condition; Keeping sticky fingers out of the till.)
• Convenience stores: ( Keeping the food fresh and presentation good.)
• Flower shops: (Avoiding undue wastage.)
The key factors in your particular business could concern presentation to the public or more internal factors, like financial control or avoiding undue stock losses, for example. By speaking with existing owners you should gain a good feel for what these critical factors are, and be able to assess whether you have the ability or willingness to make sure that you get them right.
Consultancies
Businesses such as insurance brokers, advertising agencies, graphic designers, IT consultants are often built up through personal relationships that go back over a long time. The same applies to hairdressers. As such there is often a real risk that once the current business owner leaves, a significant number of clients will decide it might be a good time to look around at alternatives.
In many such businesses there is a similar risk in relation to key employees. Instances where employees leave, either to start on their own or to join a competitor, and take clients with them, are commonplace. Practices such as graphic designers or advertising agencies, for example, where the employee works very closely with the clients and has an in-depth knowledge of their likes and dislikes, are particularly vulnerable in this respect. Often if you lose the employee you lose the client, even if the employee doesn’t take the client with him, because it was solely for the skill or imagination of that employee that the client used this firm.
If you are thinking of buying a business of this nature, you will need to consider these risks very carefully and, if necessary, consider ways in which you can reduce them. You may need to contract the vendor to stay on in an advisory capacity for a period after take-over, and/or incentives key employees. You could also consider negotiating to defer part of the purchase price, making it only payable if sales meet projected targets over, say, the first two years after takeover.
It is never possible to eliminate the risks entirely and for that reason these types of business rarely sell for high prices unless they are large practices where the risks are widely spread over a large client base and workforce.
Unless you are experienced, you should obtain specialist advice about valuing such businesses and negotiating contractual terms. The relevant professional institute should be able to offer help in this respect.
Monday, May 31, 2010
What Do I Need To Buy A Business In The Online Business World? | Business Information
What Do I Need To Buy A Business In The Online Business World? | Business Information
May 31st, 2010 | PostAuthorIcon Author:
When you think of buying a business do you think of a brick and mortar business? If you are thinking of buying an existing brick and mortar company or beginning one from scratch and building the company from the ground up it defiantly presents some distinct disadvantages over buying a business in the online world, including costs, marketing, the customer base, employees and establishing a cash flow…all while you are trying to establishing procedures, systems and policies. Now, if you are buying a established brick and mortar these things may already be in place but you will find yourself making changes to not only find a successful formula for running the business but to add your own personality.
So, what do I need to buy a business in the online world, you ask, well here goes.
You will require nowhere near the investment needed for most traditional businesses. You will not need employees, or a location other than a home office a computer and a phone to build your business. When you buy a business in the online world a reputable one will have a proven system, a support team and an educational platform that will teach you how to make your business a success. You don’t have to reinvent the wheel, setting up new procedures, systems and policies, since a success formula for running the business has already been put in place.
People are moving away from brick and mortar businesses as many are failing due to the economy. Many people have also lost jobs and they need to start making money now. People used to think that MLM was a good way to make money; however you do need to sponsor a predetermined number of people who each sell or use a predetermined number of products to raise your level. Many such companies are now being referred to as scams because people join them, can’t get others to join their team and can’t sell the products they are required to buy and/or stock up on so they don’t make money. These kinds of company’s have an extremely high dropout rate. They are attractive because of the low cost to buy into them.
What do I need to buy a business in the online world, one that has merit and I can do?
You need to find a reputable online business. Many people are moving towards direct sales or get paid today online businesses; it is helping them create massive income streams. Entrepreneurs are starting to make money in their business sooner. Finding a good direct sales business is the same as finding any good business. They should have a quality product; it needs to be a legal, ethical business. They need to offer you the education to help you build your business the right way and your customers should have easy access to the products and services.
You need to have some money to invest into your online business; the cost of buying a legitimate online business is considerably less than a brick and mortar business; however a trustworthy, ethical online home business is not free.
You need to have the time and the commitment to learn from the education provided and grow your business to the limits of your imagination. Where does your imagination end?
Barb Hauge is an online business owner who offers new and experienced entrepreneurs the secrets of how to succeed and a comprehensive online marketing education. If you are serious about starting or growing your online business and you want to work with some one who cares and a team willing to support you apply directly to become part of Barb’s entrepreneurial team at http://barbarahauge.net. Learn more about Barb and how she can help you. http://barbarahauge.com.
May 31st, 2010 | PostAuthorIcon Author:
When you think of buying a business do you think of a brick and mortar business? If you are thinking of buying an existing brick and mortar company or beginning one from scratch and building the company from the ground up it defiantly presents some distinct disadvantages over buying a business in the online world, including costs, marketing, the customer base, employees and establishing a cash flow…all while you are trying to establishing procedures, systems and policies. Now, if you are buying a established brick and mortar these things may already be in place but you will find yourself making changes to not only find a successful formula for running the business but to add your own personality.
So, what do I need to buy a business in the online world, you ask, well here goes.
You will require nowhere near the investment needed for most traditional businesses. You will not need employees, or a location other than a home office a computer and a phone to build your business. When you buy a business in the online world a reputable one will have a proven system, a support team and an educational platform that will teach you how to make your business a success. You don’t have to reinvent the wheel, setting up new procedures, systems and policies, since a success formula for running the business has already been put in place.
People are moving away from brick and mortar businesses as many are failing due to the economy. Many people have also lost jobs and they need to start making money now. People used to think that MLM was a good way to make money; however you do need to sponsor a predetermined number of people who each sell or use a predetermined number of products to raise your level. Many such companies are now being referred to as scams because people join them, can’t get others to join their team and can’t sell the products they are required to buy and/or stock up on so they don’t make money. These kinds of company’s have an extremely high dropout rate. They are attractive because of the low cost to buy into them.
What do I need to buy a business in the online world, one that has merit and I can do?
You need to find a reputable online business. Many people are moving towards direct sales or get paid today online businesses; it is helping them create massive income streams. Entrepreneurs are starting to make money in their business sooner. Finding a good direct sales business is the same as finding any good business. They should have a quality product; it needs to be a legal, ethical business. They need to offer you the education to help you build your business the right way and your customers should have easy access to the products and services.
You need to have some money to invest into your online business; the cost of buying a legitimate online business is considerably less than a brick and mortar business; however a trustworthy, ethical online home business is not free.
You need to have the time and the commitment to learn from the education provided and grow your business to the limits of your imagination. Where does your imagination end?
Barb Hauge is an online business owner who offers new and experienced entrepreneurs the secrets of how to succeed and a comprehensive online marketing education. If you are serious about starting or growing your online business and you want to work with some one who cares and a team willing to support you apply directly to become part of Barb’s entrepreneurial team at http://barbarahauge.net. Learn more about Barb and how she can help you. http://barbarahauge.com.
Sell Your Business – The Number One Value Driver » Buying a business
Sell Your Business – The Number One Value Driver » Buying a business
When helping our clients sell their businesses, we get to witness buyer behavior first hand. The most important behavior is their economic vote – how much they are willing to pay for a business. Many factors go into their assessment of value, but a contractually recurring revenue stream is consistently the number one value driver.
Why is this so important? The first answer is risk. Buying a business is risky. Any factor that reduces this risk is rewarded with transaction value. Forecasted sales, for example are at the high end of the risk scale and are heavily discounted in value. Historical time and materials revenues that are ” most likely to be at about the same level” next year are somewhere in the middle of the risk scale and are valued accordingly.
The owner and key employees may leave after the acquisition and may take their customer relationships and accounts with them. Those customers locked into contracts are less likely to leave. The acquisition can temporarily inject uncertainty into the marketplace and cause disruption or delays in pending sales situations. The integration efforts will introduce execution risk into previously routine revenue generating activities.
The acquiring company wants the existing customers to stay put long enough to get comfortable with the new company. Contracts with plenty of time remaining are their security.
How can you use this knowledge to your advantage? Go on a mission to convert each time you enter and materials can be in a contract year. If you are a software company, for example, and you have customers who do not receive a 18% – 20% annual maintenance agreement, the customer implemented. A strategy could be a long "Get actual sale" in exchange for signing an annual contract maintenance. Service companies should review their T & M Records with their regular customers and develop programs that convert these annual programs at a fixed price.Equipment dealers come up with your own extended warranty programs. Services firms devise a concept where you provide departmental or functional outsourcing for your clients.
On a value scale, contractually recurring revenue is a 10, expected historical revenue is a 6 and a sales pipeline is a 3. Move your 3’s and 6’s to 10’s and recognize a big boost in your business selling price.
When helping our clients sell their businesses, we get to witness buyer behavior first hand. The most important behavior is their economic vote – how much they are willing to pay for a business. Many factors go into their assessment of value, but a contractually recurring revenue stream is consistently the number one value driver.
Why is this so important? The first answer is risk. Buying a business is risky. Any factor that reduces this risk is rewarded with transaction value. Forecasted sales, for example are at the high end of the risk scale and are heavily discounted in value. Historical time and materials revenues that are ” most likely to be at about the same level” next year are somewhere in the middle of the risk scale and are valued accordingly.
The owner and key employees may leave after the acquisition and may take their customer relationships and accounts with them. Those customers locked into contracts are less likely to leave. The acquisition can temporarily inject uncertainty into the marketplace and cause disruption or delays in pending sales situations. The integration efforts will introduce execution risk into previously routine revenue generating activities.
The acquiring company wants the existing customers to stay put long enough to get comfortable with the new company. Contracts with plenty of time remaining are their security.
How can you use this knowledge to your advantage? Go on a mission to convert each time you enter and materials can be in a contract year. If you are a software company, for example, and you have customers who do not receive a 18% – 20% annual maintenance agreement, the customer implemented. A strategy could be a long "Get actual sale" in exchange for signing an annual contract maintenance. Service companies should review their T & M Records with their regular customers and develop programs that convert these annual programs at a fixed price.Equipment dealers come up with your own extended warranty programs. Services firms devise a concept where you provide departmental or functional outsourcing for your clients.
On a value scale, contractually recurring revenue is a 10, expected historical revenue is a 6 and a sales pipeline is a 3. Move your 3’s and 6’s to 10’s and recognize a big boost in your business selling price.
Do you sell your business quickly if you believe that you may be impacted by the BP oil leak? | Businesses for Sale - The Business Place
Do you sell your business quickly if you believe that you may be impacted by the BP oil leak? | Businesses for Sale - The Business Place
May 31st, 2010
Everyone has been hearing that the oil leak in the Gulf of Mexico is huge and could take several months to be plugged. Hurricane season is officially about to start. What happens if there is a major storm? No only will that affect the shoreline, any storm surge could carry oil inland. I am not a meteorologist however if a storm surge hits the coast of Florida or even goes up by the Gulf Stream up the east coast of United States, the impact could be devastating.
If you are thinking of retiring and your business is based on tourism, or access to a port, what happens if you are impacted by a tropical storm or hurricane? Do you have business interruption insurance? Would it cover you for oil spills?
If you are thinking of selling your business in 6 months and you could be impacted by the oil spill directly or indirectly, wouldn’t you be able to maximize the value of your business by selling now instead of waiting until it is too late? What happens if you are impacted by the oil spill. You could sue BP and take years before you get a settlement but will your business survive? If your business is based on tourism and the area is coated with oil, do you think that anyone would buy your business after the oil spill?
If you tried to sell your business before an oil spill impacted your business will that help or hurt any claim that you may have with BP or your insurance company?
Now you need to plan and possibly talk to your lawyer and insurance company, are you better to sell quickly if you believe that you may be impacted by an oil spill if a tropical storm or hurricane caused oil to devastate your area or are you better to make an insurance claim or lawsuit against BP if you are impacted? Should you buy insurance to protect yourself in case your business is closed? Will the insurance coverage be sufficient to cover this type of disasters?
Plan your actions regarding your business before it is too late to make a decision. This may include talking to lawyers and insurance companies in advance to create a contingency plan of action.
Filed under: Selling a business — Gary Landa @ 11:01 am
May 31st, 2010
Everyone has been hearing that the oil leak in the Gulf of Mexico is huge and could take several months to be plugged. Hurricane season is officially about to start. What happens if there is a major storm? No only will that affect the shoreline, any storm surge could carry oil inland. I am not a meteorologist however if a storm surge hits the coast of Florida or even goes up by the Gulf Stream up the east coast of United States, the impact could be devastating.
If you are thinking of retiring and your business is based on tourism, or access to a port, what happens if you are impacted by a tropical storm or hurricane? Do you have business interruption insurance? Would it cover you for oil spills?
If you are thinking of selling your business in 6 months and you could be impacted by the oil spill directly or indirectly, wouldn’t you be able to maximize the value of your business by selling now instead of waiting until it is too late? What happens if you are impacted by the oil spill. You could sue BP and take years before you get a settlement but will your business survive? If your business is based on tourism and the area is coated with oil, do you think that anyone would buy your business after the oil spill?
If you tried to sell your business before an oil spill impacted your business will that help or hurt any claim that you may have with BP or your insurance company?
Now you need to plan and possibly talk to your lawyer and insurance company, are you better to sell quickly if you believe that you may be impacted by an oil spill if a tropical storm or hurricane caused oil to devastate your area or are you better to make an insurance claim or lawsuit against BP if you are impacted? Should you buy insurance to protect yourself in case your business is closed? Will the insurance coverage be sufficient to cover this type of disasters?
Plan your actions regarding your business before it is too late to make a decision. This may include talking to lawyers and insurance companies in advance to create a contingency plan of action.
Filed under: Selling a business — Gary Landa @ 11:01 am
Vested Business Brokers | Business
Vested Business Brokers | Business
Hiring the expertise of a vested business broker is a good strategy, especially when doing business. If you are thinking of buying or selling your business, the foremost thought on your mind is, of course, how you will be able to optimize your sale or purchase. Getting the services of a reliable and knowledgeable vested business broker can make a huge difference.
Vested business brokers act as the middlemen between buyers and sellers. They may have ready resources, such as a long list of clientele who are ready to make purchases or people who are itching to sell businesses or properties. Vested business brokers may also be in contact with a wider network that, in turn, can put you in touch with more possible buyers and sellers.
Aside from these perks, the services of vested business brokers usually include some form of promotion, like advertisements and publicity, which can speed up the sale or purchase of your item.
Business deals, such as the buying and selling of a business or property, usually includes a fair amount of paper work and can take up a lot of your time. If you do not want to be bothered by the technical details, then you can hire a professional to address your needs. Vested business brokers can take care of everything from setting up meetings, making credit inquiries and even doing your paperwork. With these people at the helm, all you need to worry about is getting a fair deal.
The buying and selling process can be complicated. Many of the business dealings involving buying and selling can be taxing. That is why you need someone reliable who will take care of your assets and your money. You want someone who is smart enough to know a good deal when he stumbles upon one and turns away from a bad deal as soon as the warning signs flash.
Hiring the expertise of a vested business broker is a good strategy, especially when doing business. If you are thinking of buying or selling your business, the foremost thought on your mind is, of course, how you will be able to optimize your sale or purchase. Getting the services of a reliable and knowledgeable vested business broker can make a huge difference.
Vested business brokers act as the middlemen between buyers and sellers. They may have ready resources, such as a long list of clientele who are ready to make purchases or people who are itching to sell businesses or properties. Vested business brokers may also be in contact with a wider network that, in turn, can put you in touch with more possible buyers and sellers.
Aside from these perks, the services of vested business brokers usually include some form of promotion, like advertisements and publicity, which can speed up the sale or purchase of your item.
Business deals, such as the buying and selling of a business or property, usually includes a fair amount of paper work and can take up a lot of your time. If you do not want to be bothered by the technical details, then you can hire a professional to address your needs. Vested business brokers can take care of everything from setting up meetings, making credit inquiries and even doing your paperwork. With these people at the helm, all you need to worry about is getting a fair deal.
The buying and selling process can be complicated. Many of the business dealings involving buying and selling can be taxing. That is why you need someone reliable who will take care of your assets and your money. You want someone who is smart enough to know a good deal when he stumbles upon one and turns away from a bad deal as soon as the warning signs flash.
Why Business Brokers May Not List Your Business for Sale « Increase-Traffic.org
Why Business Brokers May Not List Your Business for Sale « Increase-Traffic.org
05.31.2010 · Posted in Web Site Traffic
Business brokers typically work very hard to attract business for sale listings. The business brokerage profession is quite demanding and brokers, accordingly, need to be somewhat discerning in the business listings they take on.
The following is an examination of some of the reasons why a business broker may not take you on as a client if you are looking to sell a business.
Price the business is to be listed at
A business broker will only take on a business listing if he or she thinks that they have a reasonable chance of selling it. If the price is too high and the broker feels that that the company is overpriced, they may not take you on as a client to sell the business.
Geographic location of the business for sale
Suppose you live in Niagara Falls, Ontario or Kitchener or Guelph then perhaps a Toronto business broker may not work with you simply for geographic reasons. It may be too far to travel to show the business to buyers or perhaps business brokers in Toronto might not be as familiar with other markets further out of the GTA.
Conversely, if you are thinking of selling a business in Toronto then working with a business broker that operates out of the GTA may be a wise choice.
Conflict of interest
Suppose you want to sell a manufacturing business and the business broker you would like to deal with has a relative or associate that is a direct competitor. This would be reasonable grounds for the broker to take on the listing.
No financial statements
Business brokers use financial statements to demonstrate a company’s financial viability to potential buyers. If a business is a cash-only business or has very poor financial records then the business intermediary may decide that this venture may be too difficult to sell.
Unethical seller
Sometimes, a business owner may give the impression of being unethical or willing to push boundaries in their business dealings. A reputable business broker would most certainly stay away from dealing with such business people.
A business that is too small
Some micro-businesses are simply not cost-effective enough to justify engaging the services of a business broker. If you are thinking of selling a home-based business such as a small gift basket enterprise, then this is probably the type of business that a broker may not list.
Unrealistic time expectations
If a business owner expects to sell a business in a very short period of time, then a business broker may decide not to list it rather than not meet unrealistic expectations. Many clients approach a business brokerage with a need to sell a business, sometimes very urgently. This being said, businesses are typically sold in a matter of months and not weeks.
Selling a business can be a process that takes time and certainly a good amount of patience. Qualified business brokers are professionals that can advise a business owner on what it takes to get a company sold. Work with a reputable (and qualified) business brokerage professional to discuss what it would take to properly sell your company.
05.31.2010 · Posted in Web Site Traffic
Business brokers typically work very hard to attract business for sale listings. The business brokerage profession is quite demanding and brokers, accordingly, need to be somewhat discerning in the business listings they take on.
The following is an examination of some of the reasons why a business broker may not take you on as a client if you are looking to sell a business.
Price the business is to be listed at
A business broker will only take on a business listing if he or she thinks that they have a reasonable chance of selling it. If the price is too high and the broker feels that that the company is overpriced, they may not take you on as a client to sell the business.
Geographic location of the business for sale
Suppose you live in Niagara Falls, Ontario or Kitchener or Guelph then perhaps a Toronto business broker may not work with you simply for geographic reasons. It may be too far to travel to show the business to buyers or perhaps business brokers in Toronto might not be as familiar with other markets further out of the GTA.
Conversely, if you are thinking of selling a business in Toronto then working with a business broker that operates out of the GTA may be a wise choice.
Conflict of interest
Suppose you want to sell a manufacturing business and the business broker you would like to deal with has a relative or associate that is a direct competitor. This would be reasonable grounds for the broker to take on the listing.
No financial statements
Business brokers use financial statements to demonstrate a company’s financial viability to potential buyers. If a business is a cash-only business or has very poor financial records then the business intermediary may decide that this venture may be too difficult to sell.
Unethical seller
Sometimes, a business owner may give the impression of being unethical or willing to push boundaries in their business dealings. A reputable business broker would most certainly stay away from dealing with such business people.
A business that is too small
Some micro-businesses are simply not cost-effective enough to justify engaging the services of a business broker. If you are thinking of selling a home-based business such as a small gift basket enterprise, then this is probably the type of business that a broker may not list.
Unrealistic time expectations
If a business owner expects to sell a business in a very short period of time, then a business broker may decide not to list it rather than not meet unrealistic expectations. Many clients approach a business brokerage with a need to sell a business, sometimes very urgently. This being said, businesses are typically sold in a matter of months and not weeks.
Selling a business can be a process that takes time and certainly a good amount of patience. Qualified business brokers are professionals that can advise a business owner on what it takes to get a company sold. Work with a reputable (and qualified) business brokerage professional to discuss what it would take to properly sell your company.
Is business ownership right for you? | jobs pro
Is business ownership right for you? | jobs pro
May 30, 2010 by admin
Filed under Uncategorized
The reality of the current downturn in the economy is that many companies will need to restructure to create the private sector jobs President Obama is talking about. At the time of writing this article there is 7.2% unemployment or the good news, 92.8% full employment. That’s good news if you’re one of the 92.8% but bad news if you’re one of the 7.2%. And these are national figures so if you live in some States in the US the unemployment rate is higher.
Regardless of your local unemployment statistics, if you have lost your job or are concerned your company may downsize but you need to make some money to put a roof over your head, feed the family, buy the gas to get around plus all the other things you need to do in life, perhaps you are thinking it’s time to get off the employment rollercoaster. This means putting yourself in control so you can work the hours you want, work in an industry you want to be part of and ultimately be in control of your own destiny. If that makes sense, what are your options?
The three options of business ownership
If you think business ownership may be an option for you, there are basically three choices. Option one is to start your own business. This means you have to come up with a creative new idea, test it to make sure there is a commercial market for your idea, and then once you get enough feedback, build and execute a business plan. This plan not only needs to ensure you make enough money to pay the costs of running your business and personal needs but also cover any debt you’ve incurred while you created, tested and deployed your idea.
Option two is to buy an existing business that has any of the following three goals. Your first goal could be to find a business that’s not doing well, determine the reason it is underperforming and then put in place the changes to have the business head in a positive direction. Your second goal could be to look for a business that’s holding its own and simply take the place of the existing owner with the expectation of enjoying the life style of this business owner. The third goal could be to look for a business that’s growing well but bring your skill set, new energy and capital and either continue the growth of the business or considerably add to it.
The third and final option is to buy the rights to a new franchise. Just so I am clear, you could always buy an existing franchise and continue its current ownership but this is really a variation of option two above. New franchises are appearing on the market all the time in a diverse range of industries and formats. At last count I had franchises in 84 different industries such as accounting, automotive, animals/pets, beauty care, building materials, children’s education, clothing, transportation, travel, upholstery and wholesale etc while the formats range from Business to Business (B2B), Retail, Home based etc to name a few. The option of buying a new franchise tends to appeal to those who have worked in Corporate America but decide to look elsewhere for their future. The best advantage of a franchise for a new business owner is that it brings a system or business model that has had the wrinkles ironed out; similar to the model used in Corporate America. The franchisor has proven the business model, fine tuned the systems, built the training for the franchisee, knows what accounting systems to use and has these up and running and is looking to re-create these business models across the US and often into Canada and Mexico, and around the world.
Understanding risk
The bottom line is that you have many options with the final option you choose to make based on your risk tolerance. When deciding whether to start your own business, buy an existing business or buy the rights to a franchise, the level of risk will be one of the major decisions you need to evaluate. Your comfort with which option to choose will also depend on a number of variables. These include how much money you have to invest, the skill set the business requires and how closely this matches yours. Another major factor includes your financial status. Do you need to borrow, what is the condition of your credit score and, is your credit report acceptable to a lender? It may also ensure your background doesn’t preclude you from business ownership due to a criminal record or other circumstance.
What’s the next step?
If you’ve read the above and think business ownership is right for you or you would like to know more, your next steps are to become more educated so when you get to make that final decision whether you will or will not go into business ownership, you have as much information as possible. For this reason I have written three guides to help those considering business ownership. These guides are respectively called – Successfully Start Your Business, Successfully Buy Your Business and Successfully Buy Your Franchise: Expert Advice from a Business Broker. I’ve personally been in business ownership for 25 + years having owned and operated 5 businesses; two in my native Australia and now three in California. I still remember the fear and sleepless nights deciding whether to buy my first business and relocate to a new city with my 6 months pregnant wife. But as I look back, business ownership provides a wonderful set of experiences and skills I would never have known if I didn’t recognize and manage the risk that comes with business ownership. There is no question; business ownership is not for everybody. But business ownership is a skill to acquire and once it’s acquired brings about opportunities those working a job never see. Plus one of the rewards to it all is that it puts you in control so when you go through recessions you have the capacity to succeed.
Importance of your Buyer Profile
Before you start looking at business ownership, know your Buyer Profile so it reduces your chance of failure or giving up because you are burnt out from the process. For most new business owners, naturally enough their goal is to find the perfect business. This makes sense but it only makes sense if you know what you want but I also think “perfect” is too high a standard. Businesses are dynamic and constantly changing. This is because it is primarily dealing with people, whether they are owners, family members, customers, employees, lenders, landlords or government agencies. Look for what you want, but make sure your criteria is not too high.
So how do you know what business to look for? The answer to this question is by building and creating your personal Buyer Profile. Most buyers are not sure where to start the process. From my experience from buying and looking at many businesses and working with a large number of new or potential business owners the first step is to start with yourself. Most buyers don’t do it because they don’t know what they are looking for and expect it will reveal itself to them as they start their search process. If this is what you choose to do it will increase your chances of failure as there is no such thing as the perfect business plus each buyers profile is unique. It is unique because there are so many variables. The variables include levels of education, amount of downpayment to buy a business, credit scores, credit report, business and life experiences, management experience, family support, personal situation such as being single or married with 4 children to support and most important of all, the location where you live and the opportunities available. If you come to your decision to look at business ownership and you are fresh out of college your frame of reference is really the subjects you studied in college and your life and business experiences. If you’re a 40 year old executive who has worked in Corporate America in the technology field for the last 10 years as a sales manager, but in your earlier years worked in retail books and the travel industry, you have much more diversity to pull from.
Your Buyer Profile is a critical starting point for you. I normally spend about two hours with each client before introducing any business opportunities to them as I want to get a basic level of understanding of the industries of interest to them and their preferred format such as whether they like retail, Business to Business (B2B), Food, Automotive or, Children’s services etc plus an extensive range of other questions. If the buyer knows what they do and don’t like it allows them to focus and thereby greatly increase their chances of finding the business they want.
If you would like more information about each of the books mentioned above, please visit the following website http://www.successfullybuyyourbusiness.com where you will find a brief description of each of the guides. If you would like some free tools to work with, please visit my website: http://www.andrew-rogerson.com/samples.htm. On this page there are some Excel and Word files such as a Business Plan, Sales and Marketing plan, Startup Budget planner and Cash flow projection etc. Download and use these free tools as much as you need.
The rewards to business ownership for each person are unique and real. If you think business ownership right now with the economy in recession is not a good option, I would disagree. The economy is constantly changing and looking for new ways to invest capital and provide a return on investment. Some areas of the economy are about to explode such as health care, businesses in energy efficiency, the “green” industry and, new technology innovations to name a few. It will take time to research, create and execute a plan and then explore any other options available to you. Making the decision to take the risk is the hardest part. Once that is done, the rest takes care of itself. If you think business ownership is part of your future, learn as much as you can, accept it comes with risk and get on with it as the rest will be up to you. Whether you stay in your current job, find a different job because you aren’t enjoying what you are doing or move into business ownership, at the end of the day it’s still all up to you and how you manage the risks that come from each decision you make.
May 30, 2010 by admin
Filed under Uncategorized
The reality of the current downturn in the economy is that many companies will need to restructure to create the private sector jobs President Obama is talking about. At the time of writing this article there is 7.2% unemployment or the good news, 92.8% full employment. That’s good news if you’re one of the 92.8% but bad news if you’re one of the 7.2%. And these are national figures so if you live in some States in the US the unemployment rate is higher.
Regardless of your local unemployment statistics, if you have lost your job or are concerned your company may downsize but you need to make some money to put a roof over your head, feed the family, buy the gas to get around plus all the other things you need to do in life, perhaps you are thinking it’s time to get off the employment rollercoaster. This means putting yourself in control so you can work the hours you want, work in an industry you want to be part of and ultimately be in control of your own destiny. If that makes sense, what are your options?
The three options of business ownership
If you think business ownership may be an option for you, there are basically three choices. Option one is to start your own business. This means you have to come up with a creative new idea, test it to make sure there is a commercial market for your idea, and then once you get enough feedback, build and execute a business plan. This plan not only needs to ensure you make enough money to pay the costs of running your business and personal needs but also cover any debt you’ve incurred while you created, tested and deployed your idea.
Option two is to buy an existing business that has any of the following three goals. Your first goal could be to find a business that’s not doing well, determine the reason it is underperforming and then put in place the changes to have the business head in a positive direction. Your second goal could be to look for a business that’s holding its own and simply take the place of the existing owner with the expectation of enjoying the life style of this business owner. The third goal could be to look for a business that’s growing well but bring your skill set, new energy and capital and either continue the growth of the business or considerably add to it.
The third and final option is to buy the rights to a new franchise. Just so I am clear, you could always buy an existing franchise and continue its current ownership but this is really a variation of option two above. New franchises are appearing on the market all the time in a diverse range of industries and formats. At last count I had franchises in 84 different industries such as accounting, automotive, animals/pets, beauty care, building materials, children’s education, clothing, transportation, travel, upholstery and wholesale etc while the formats range from Business to Business (B2B), Retail, Home based etc to name a few. The option of buying a new franchise tends to appeal to those who have worked in Corporate America but decide to look elsewhere for their future. The best advantage of a franchise for a new business owner is that it brings a system or business model that has had the wrinkles ironed out; similar to the model used in Corporate America. The franchisor has proven the business model, fine tuned the systems, built the training for the franchisee, knows what accounting systems to use and has these up and running and is looking to re-create these business models across the US and often into Canada and Mexico, and around the world.
Understanding risk
The bottom line is that you have many options with the final option you choose to make based on your risk tolerance. When deciding whether to start your own business, buy an existing business or buy the rights to a franchise, the level of risk will be one of the major decisions you need to evaluate. Your comfort with which option to choose will also depend on a number of variables. These include how much money you have to invest, the skill set the business requires and how closely this matches yours. Another major factor includes your financial status. Do you need to borrow, what is the condition of your credit score and, is your credit report acceptable to a lender? It may also ensure your background doesn’t preclude you from business ownership due to a criminal record or other circumstance.
What’s the next step?
If you’ve read the above and think business ownership is right for you or you would like to know more, your next steps are to become more educated so when you get to make that final decision whether you will or will not go into business ownership, you have as much information as possible. For this reason I have written three guides to help those considering business ownership. These guides are respectively called – Successfully Start Your Business, Successfully Buy Your Business and Successfully Buy Your Franchise: Expert Advice from a Business Broker. I’ve personally been in business ownership for 25 + years having owned and operated 5 businesses; two in my native Australia and now three in California. I still remember the fear and sleepless nights deciding whether to buy my first business and relocate to a new city with my 6 months pregnant wife. But as I look back, business ownership provides a wonderful set of experiences and skills I would never have known if I didn’t recognize and manage the risk that comes with business ownership. There is no question; business ownership is not for everybody. But business ownership is a skill to acquire and once it’s acquired brings about opportunities those working a job never see. Plus one of the rewards to it all is that it puts you in control so when you go through recessions you have the capacity to succeed.
Importance of your Buyer Profile
Before you start looking at business ownership, know your Buyer Profile so it reduces your chance of failure or giving up because you are burnt out from the process. For most new business owners, naturally enough their goal is to find the perfect business. This makes sense but it only makes sense if you know what you want but I also think “perfect” is too high a standard. Businesses are dynamic and constantly changing. This is because it is primarily dealing with people, whether they are owners, family members, customers, employees, lenders, landlords or government agencies. Look for what you want, but make sure your criteria is not too high.
So how do you know what business to look for? The answer to this question is by building and creating your personal Buyer Profile. Most buyers are not sure where to start the process. From my experience from buying and looking at many businesses and working with a large number of new or potential business owners the first step is to start with yourself. Most buyers don’t do it because they don’t know what they are looking for and expect it will reveal itself to them as they start their search process. If this is what you choose to do it will increase your chances of failure as there is no such thing as the perfect business plus each buyers profile is unique. It is unique because there are so many variables. The variables include levels of education, amount of downpayment to buy a business, credit scores, credit report, business and life experiences, management experience, family support, personal situation such as being single or married with 4 children to support and most important of all, the location where you live and the opportunities available. If you come to your decision to look at business ownership and you are fresh out of college your frame of reference is really the subjects you studied in college and your life and business experiences. If you’re a 40 year old executive who has worked in Corporate America in the technology field for the last 10 years as a sales manager, but in your earlier years worked in retail books and the travel industry, you have much more diversity to pull from.
Your Buyer Profile is a critical starting point for you. I normally spend about two hours with each client before introducing any business opportunities to them as I want to get a basic level of understanding of the industries of interest to them and their preferred format such as whether they like retail, Business to Business (B2B), Food, Automotive or, Children’s services etc plus an extensive range of other questions. If the buyer knows what they do and don’t like it allows them to focus and thereby greatly increase their chances of finding the business they want.
If you would like more information about each of the books mentioned above, please visit the following website http://www.successfullybuyyourbusiness.com where you will find a brief description of each of the guides. If you would like some free tools to work with, please visit my website: http://www.andrew-rogerson.com/samples.htm. On this page there are some Excel and Word files such as a Business Plan, Sales and Marketing plan, Startup Budget planner and Cash flow projection etc. Download and use these free tools as much as you need.
The rewards to business ownership for each person are unique and real. If you think business ownership right now with the economy in recession is not a good option, I would disagree. The economy is constantly changing and looking for new ways to invest capital and provide a return on investment. Some areas of the economy are about to explode such as health care, businesses in energy efficiency, the “green” industry and, new technology innovations to name a few. It will take time to research, create and execute a plan and then explore any other options available to you. Making the decision to take the risk is the hardest part. Once that is done, the rest takes care of itself. If you think business ownership is part of your future, learn as much as you can, accept it comes with risk and get on with it as the rest will be up to you. Whether you stay in your current job, find a different job because you aren’t enjoying what you are doing or move into business ownership, at the end of the day it’s still all up to you and how you manage the risks that come from each decision you make.
Striking A Fair Deal With Your Business Broker « Email Marketing
Striking A Fair Deal With Your Business Broker « Email Marketing
05.30.2010 · Posted in Email Marketing
Many of the questions that I receive are about working with a business broker and striking a deal that works. One might assume since I’m a business broker, I’d be completely biased. But I’m very much of the belief that the best deals are ones that work for both sides. So with that in mind, let me provide some feedback on some of the most common issues that arise when business owners hire a business broker to sell their business. I sell businesses in the Boston area, but the issues are fairly common anywhere:
“Why should I pay an up-front fee?”: Good question. As pointed out in a previous post, the majority of good business brokers charge some up-front fee. It ensures that the seller has some “skin in the game” and compensates the broker for the considerable up-front work that needs to be done. So it’s all about balance. How much makes sense? My take is that it should enough such that the seller thinks twice about whether they want to move forward, but not much more than that. Your broker should be running his business on success fees, not retainers.
“How do I know that the business broker will do a good job?”: Another good question. The reality is that for the most part, business brokerage is a completely unlicensed, unregulated profession. So my suggestion is to spend a lot of time with the broker and really get a sense of how they will go about selling your business. Make sure you have a strong comfort level, but also make sure that the business broker has strong skills and experience. Ask lots of “what if” questions to get a sense of how they’d handle various situations. But also make sure that you get references and call them.
“What if I already have a buyer?”: If there’s a buyer you already have in mind – - perhaps a friendly competitor, an employee or an individual you know – - then discuss it with your broker and work out a reasonable discount if the business is sold to that buyer. A 25% discount is fairly common. Why not more? By definition, if the business broker is doing a good job, he’s creating competition. That gives you some leverage. Too often if a friendly buyer thinks they’ve got a clear shot to buy the business, they’ll bid low and take their time getting the deal closed. So the business broker is providing some subtle leverage that that’s well worth the fee being charged.
“What’s the term of a typical business broker agreement? Do I have any obligation after the contract is over?”: A business broker agreement typically has a term of 6 to 12 months. That’s fair, since on average it takes 6 to 9 months to sell a business. Upon the termination date, the agreement often remains in force until either side terminates. Once it does, you may still have some obligations. For some period of time after the agreement terminates, you may be obligated to pay the broker their full fee if the business is sold to someone with whom the broker had contact during the term of the agreement. This period of time, often called a “tail”, is usually in the 12 to 24 month range. Make sure that the agreement defines a process whereby these “buyers” are flagged. What defines someone being included on this list? How does the broker keep you informed about who’s on this list? Make sure that it’s all spelled out.
Key business terms should be clearly defined in the agreement that your business broker asks you to sign. Make sure that you fully understand it before moving forward. The litmus test should be to make sure that you and your business broker have goals that are aligned to the greatest extent possible.
The Coral Group is a business broker, specializing in the sale of owner-run businesses in the Greater Boston and New England areas. To learn more about selling your business, the Coral Group web site, (see link below) provides real-world, practical advice. Coral Group Web Site: http://www.coral-group.com
05.30.2010 · Posted in Email Marketing
Many of the questions that I receive are about working with a business broker and striking a deal that works. One might assume since I’m a business broker, I’d be completely biased. But I’m very much of the belief that the best deals are ones that work for both sides. So with that in mind, let me provide some feedback on some of the most common issues that arise when business owners hire a business broker to sell their business. I sell businesses in the Boston area, but the issues are fairly common anywhere:
“Why should I pay an up-front fee?”: Good question. As pointed out in a previous post, the majority of good business brokers charge some up-front fee. It ensures that the seller has some “skin in the game” and compensates the broker for the considerable up-front work that needs to be done. So it’s all about balance. How much makes sense? My take is that it should enough such that the seller thinks twice about whether they want to move forward, but not much more than that. Your broker should be running his business on success fees, not retainers.
“How do I know that the business broker will do a good job?”: Another good question. The reality is that for the most part, business brokerage is a completely unlicensed, unregulated profession. So my suggestion is to spend a lot of time with the broker and really get a sense of how they will go about selling your business. Make sure you have a strong comfort level, but also make sure that the business broker has strong skills and experience. Ask lots of “what if” questions to get a sense of how they’d handle various situations. But also make sure that you get references and call them.
“What if I already have a buyer?”: If there’s a buyer you already have in mind – - perhaps a friendly competitor, an employee or an individual you know – - then discuss it with your broker and work out a reasonable discount if the business is sold to that buyer. A 25% discount is fairly common. Why not more? By definition, if the business broker is doing a good job, he’s creating competition. That gives you some leverage. Too often if a friendly buyer thinks they’ve got a clear shot to buy the business, they’ll bid low and take their time getting the deal closed. So the business broker is providing some subtle leverage that that’s well worth the fee being charged.
“What’s the term of a typical business broker agreement? Do I have any obligation after the contract is over?”: A business broker agreement typically has a term of 6 to 12 months. That’s fair, since on average it takes 6 to 9 months to sell a business. Upon the termination date, the agreement often remains in force until either side terminates. Once it does, you may still have some obligations. For some period of time after the agreement terminates, you may be obligated to pay the broker their full fee if the business is sold to someone with whom the broker had contact during the term of the agreement. This period of time, often called a “tail”, is usually in the 12 to 24 month range. Make sure that the agreement defines a process whereby these “buyers” are flagged. What defines someone being included on this list? How does the broker keep you informed about who’s on this list? Make sure that it’s all spelled out.
Key business terms should be clearly defined in the agreement that your business broker asks you to sign. Make sure that you fully understand it before moving forward. The litmus test should be to make sure that you and your business broker have goals that are aligned to the greatest extent possible.
The Coral Group is a business broker, specializing in the sale of owner-run businesses in the Greater Boston and New England areas. To learn more about selling your business, the Coral Group web site, (see link below) provides real-world, practical advice. Coral Group Web Site: http://www.coral-group.com
How to Buy a Business Safely?
How to Buy a Business Safely?
How to Buy a Business Safely?
By Maryrose Malinao Platinum Quality Author
Maryrose Malinao
Level: Platinum
Article Word Count: 495 [View Summary] Comments (0)
Have you found your ideal niche for starting your own business? Do you already have a micro-niche to focus on? Do you have plans of expanding your business online for global purposes? Why not go for franchising or buy an existing business for sale?
Your decision to start your own business from scratch or invest some funds to buy a business to start with depends on some financial and personal considerations. There are many other factors to consider here but buying an existing business offers more security and establishes a business identity quickly. However, it involves a complex process that should be carefully dealt with for a safer business buying experience.
Pre-Buying Concepts
Start your business buying adventure by canvassing prices of every potential business that is available for sale. Know how much money could you set for such an investment. Compare down payment rates and some other expenses involved like escrow fee, franchise transfer fee, supplies, inventories, permit and license fees.
Once you get the grips of your desired investment criteria and budget, carefully plan your criteria and position in the business world by doing online research, going through local newspapers, asking real state agents and local business brokers. If you have short listed some business potentials you consider, assess its current status and project income potentials for short or long term goals. If you are now sure to get that particular business as an investment opportunity, then get ready for a safe and secure business buying process.
The Buying / Selling Process
Gear up with the careful step-by-step details for a faster and safer buying and selling business process. It basically starts with a Purchase and Sale Agreement. This is a very detailed and descriptive contract the buyer presents to the seller.
This contract carefully states such vital information as the amount of initial deposit, the buyer's offering price, closing date and financing terms. It should also include such supporting statements as the buyer's lease and landlord's approval, information in getting permits and licenses, closing cost allocation, amount of inventories and supplies, satisfaction of books and records, securing business equipments in good condition, seller non-competing agreement and buyer training session.
All details here need to be carefully written in very clear statements to avoid confusion or conflicts which may arise in the future. When you are ready with the contract, present it to the seller and be sure to discuss it thoroughly or negotiate for the terms and conditions and the price involved.
Your next step is to have your purchase price allocated to apply for the permits and licenses covered here and then the loan. A lease or a sublease is needed in getting things done here. secure your lease assignment approval before escrow closes. Review the list of equipments and fixtures as stated in the contract and purchase supplies and inventories before closing date. You then close transactions on the closing date and officially starts running the purchased business as your own.
The author is an internet marketer, researcher, teacher and an online supervisor for international services. She loves to share current trends in the online world especially about international business concerns on the road to quick wealth and success for lasting impact.
To know more about great secrets revealed on how to make money easily and other business tips and exciting opportunities on your way to success, visit our website - http://www.credit4profits.com and see the results effectively in less than a year for more profits and increased business success each month.
Article Source: http://EzineArticles.com/?expert=Maryrose_Malinao
How to Buy a Business Safely?
By Maryrose Malinao Platinum Quality Author
Maryrose Malinao
Level: Platinum
Article Word Count: 495 [View Summary] Comments (0)
Have you found your ideal niche for starting your own business? Do you already have a micro-niche to focus on? Do you have plans of expanding your business online for global purposes? Why not go for franchising or buy an existing business for sale?
Your decision to start your own business from scratch or invest some funds to buy a business to start with depends on some financial and personal considerations. There are many other factors to consider here but buying an existing business offers more security and establishes a business identity quickly. However, it involves a complex process that should be carefully dealt with for a safer business buying experience.
Pre-Buying Concepts
Start your business buying adventure by canvassing prices of every potential business that is available for sale. Know how much money could you set for such an investment. Compare down payment rates and some other expenses involved like escrow fee, franchise transfer fee, supplies, inventories, permit and license fees.
Once you get the grips of your desired investment criteria and budget, carefully plan your criteria and position in the business world by doing online research, going through local newspapers, asking real state agents and local business brokers. If you have short listed some business potentials you consider, assess its current status and project income potentials for short or long term goals. If you are now sure to get that particular business as an investment opportunity, then get ready for a safe and secure business buying process.
The Buying / Selling Process
Gear up with the careful step-by-step details for a faster and safer buying and selling business process. It basically starts with a Purchase and Sale Agreement. This is a very detailed and descriptive contract the buyer presents to the seller.
This contract carefully states such vital information as the amount of initial deposit, the buyer's offering price, closing date and financing terms. It should also include such supporting statements as the buyer's lease and landlord's approval, information in getting permits and licenses, closing cost allocation, amount of inventories and supplies, satisfaction of books and records, securing business equipments in good condition, seller non-competing agreement and buyer training session.
All details here need to be carefully written in very clear statements to avoid confusion or conflicts which may arise in the future. When you are ready with the contract, present it to the seller and be sure to discuss it thoroughly or negotiate for the terms and conditions and the price involved.
Your next step is to have your purchase price allocated to apply for the permits and licenses covered here and then the loan. A lease or a sublease is needed in getting things done here. secure your lease assignment approval before escrow closes. Review the list of equipments and fixtures as stated in the contract and purchase supplies and inventories before closing date. You then close transactions on the closing date and officially starts running the purchased business as your own.
The author is an internet marketer, researcher, teacher and an online supervisor for international services. She loves to share current trends in the online world especially about international business concerns on the road to quick wealth and success for lasting impact.
To know more about great secrets revealed on how to make money easily and other business tips and exciting opportunities on your way to success, visit our website - http://www.credit4profits.com and see the results effectively in less than a year for more profits and increased business success each month.
Article Source: http://EzineArticles.com/?expert=Maryrose_Malinao
A Business Broker Can Help You Get The Best Deal When You Are Planning To Sell Your Business « Email Marketing
A Business Broker Can Help You Get The Best Deal When You Are Planning To Sell Your Business « Email Marketing
05.30.2010 · Posted in Email Marketing
A business broker is a firm or a person who assists buying and selling process of small businesses. If you are planning to sell your business, the right business broker can help you get the right price for your business of which it is worth.
A business broker is much more than just a middleman. Apart from exposing you to the vast pool of potential buyers of your business, most brokers also help in facilitating various transactions involved in the buying-selling process. Selling any business is a complex process and is extremely difficult to be carried out own your own.
Taking professional help will let you concentrate on your business till it is completely sold, while the broker will be involved in searching the right buyer for you. This will help to get rid of a lot of unnecessary worries.
Here are some reasons, why you should hire a business broker, if you are serious on putting your business for sale:
The know-how of the market and current worth of a business is crucial before you try to sell your business. Business brokers are usually quite knowledgeable in this area and can usually derive an appreciably accurate value of your business.
Business brokers know how to package your business the right way and present it in a manner that would attract the buyers.
The database maintained by business brokers make it easier for you to find the potential buyers. If you find a listing in the ‘business for sale’ records of their database, a lot of buyers would be able to find you, if they are searching for something similar to what your business has to offer.
Confidentiality is one of the most important aspects that a business broker provides to its client, so that the present scenario of the business won’t be affected and the rivals and competitors of the enterprise don’t come to know that the business is for sale.
Business brokers are well equipped with the skills of converting seekers into buyers. For an individual it is very difficult to create competition among potential business buyers and competition is what fetches the best price in most cases.
The whole process, as we all know is quite complicated and many a times requires compromises on the sides of both the parties. A business broker acts as an intermediary and makes sure that best deal occurs between the two.
If you have a business for sale, it’s worth taking assistance of a broker to find you the best deal. They not only have the perseverance required to sell a business but also expertise in this field, which usually lacks in a non-professional. The advice provided by a business broker about the risks and opportunities involved in a transaction, can make the whole process a cakewalk for you.
05.30.2010 · Posted in Email Marketing
A business broker is a firm or a person who assists buying and selling process of small businesses. If you are planning to sell your business, the right business broker can help you get the right price for your business of which it is worth.
A business broker is much more than just a middleman. Apart from exposing you to the vast pool of potential buyers of your business, most brokers also help in facilitating various transactions involved in the buying-selling process. Selling any business is a complex process and is extremely difficult to be carried out own your own.
Taking professional help will let you concentrate on your business till it is completely sold, while the broker will be involved in searching the right buyer for you. This will help to get rid of a lot of unnecessary worries.
Here are some reasons, why you should hire a business broker, if you are serious on putting your business for sale:
The know-how of the market and current worth of a business is crucial before you try to sell your business. Business brokers are usually quite knowledgeable in this area and can usually derive an appreciably accurate value of your business.
Business brokers know how to package your business the right way and present it in a manner that would attract the buyers.
The database maintained by business brokers make it easier for you to find the potential buyers. If you find a listing in the ‘business for sale’ records of their database, a lot of buyers would be able to find you, if they are searching for something similar to what your business has to offer.
Confidentiality is one of the most important aspects that a business broker provides to its client, so that the present scenario of the business won’t be affected and the rivals and competitors of the enterprise don’t come to know that the business is for sale.
Business brokers are well equipped with the skills of converting seekers into buyers. For an individual it is very difficult to create competition among potential business buyers and competition is what fetches the best price in most cases.
The whole process, as we all know is quite complicated and many a times requires compromises on the sides of both the parties. A business broker acts as an intermediary and makes sure that best deal occurs between the two.
If you have a business for sale, it’s worth taking assistance of a broker to find you the best deal. They not only have the perseverance required to sell a business but also expertise in this field, which usually lacks in a non-professional. The advice provided by a business broker about the risks and opportunities involved in a transaction, can make the whole process a cakewalk for you.
Sunday, May 30, 2010
How To Sell Franchise Business
How To Sell Franchise Business
There are many different challenges that sometimes arise when you are trying to locate businesses for sale or are trying to sell a business. You may face many of those some challenges when you are selling or buying franchise businesses too, as well as some that are unique to franchise situations.
One reason why franchise businesses may not sell quickly or at all is because the franchisor is asking for too much money. They may not be thinking realistically when it comes to what the business is worth in any particular area or market. Before listing a franchise, it is a good idea to look through a franchise directory in order to see what other similar companies are selling their franchises for in the current market. Or, you can always enlist the aid of franchise brokers who can tell you what is considered the average selling price in your area.
Franchise profitability is also a huge consideration for buyers, as it can take a few years before a franchise begins to show any type of a decent profit. Unfortunately, many interested buyers are only looking for something that will show immediate profit, especially if they need the money to cover family and personal expenses. Yet often an interested buyer will consider the fact that a franchise has future potential and will make a profit, yet those types of buyers can be hard to come by.
Those who are trying to sell franchise businesses also need to make the terms of the deal more attractive, especially during times of an economic downturn. This normally means that the buyer will have a reasonable down payment and repayment terms, which will make it easier for the buyer to obtain a franchise loan and still be able to cover their daily expenses. Potential buyers should be sure to read over the franchise terms thoroughly, as many times there is not enough attention paid to the restrictions and royalty terms prior to the signing. If you are seriously considering the purchase of a particular franchise, then be sure to get the most current document disclosure from the franchiser to avoid future problems that may delay or invalidate the deal.
As a leading expert in the field of anxiety or panic attacks, Beth Kaminski is always on the lookout for ways to treat panic attacks. Visit her site for more information on treating panic disorder and much more.
There are many different challenges that sometimes arise when you are trying to locate businesses for sale or are trying to sell a business. You may face many of those some challenges when you are selling or buying franchise businesses too, as well as some that are unique to franchise situations.
One reason why franchise businesses may not sell quickly or at all is because the franchisor is asking for too much money. They may not be thinking realistically when it comes to what the business is worth in any particular area or market. Before listing a franchise, it is a good idea to look through a franchise directory in order to see what other similar companies are selling their franchises for in the current market. Or, you can always enlist the aid of franchise brokers who can tell you what is considered the average selling price in your area.
Franchise profitability is also a huge consideration for buyers, as it can take a few years before a franchise begins to show any type of a decent profit. Unfortunately, many interested buyers are only looking for something that will show immediate profit, especially if they need the money to cover family and personal expenses. Yet often an interested buyer will consider the fact that a franchise has future potential and will make a profit, yet those types of buyers can be hard to come by.
Those who are trying to sell franchise businesses also need to make the terms of the deal more attractive, especially during times of an economic downturn. This normally means that the buyer will have a reasonable down payment and repayment terms, which will make it easier for the buyer to obtain a franchise loan and still be able to cover their daily expenses. Potential buyers should be sure to read over the franchise terms thoroughly, as many times there is not enough attention paid to the restrictions and royalty terms prior to the signing. If you are seriously considering the purchase of a particular franchise, then be sure to get the most current document disclosure from the franchiser to avoid future problems that may delay or invalidate the deal.
As a leading expert in the field of anxiety or panic attacks, Beth Kaminski is always on the lookout for ways to treat panic attacks. Visit her site for more information on treating panic disorder and much more.
Business News and Business Products, Services, Reports and Advertising. Business News RSS Feed. » Blog Archive » Planning to Sell a Business
Business News and Business Products, Services, Reports and Advertising. Business News RSS Feed. » Blog Archive » Planning to Sell a Business
Many times, business owners make the decision to sell a business and too quickly dive into a listing arrangement without considering all of the consequences.
As a business owner looking to sell a business, here are a couple of issues to keep in mind if you want to sell your company quickly and at a good price.
Deal with a professional
As a business seller it is in your best interest to deal with a business broker, intermediary or specialist that focuses on the selling of businesses. Oftentimes, owners list their companies for sale with an individual who normally focuses on residential real estate and are disappointed when their business doesn’t sell. If you want to sell a business, it’s better to deal with a specialist.
Selling a business requires a unique skill set and the process is much different than selling a piece of real estate. For instance, business sales are usually kept confidential so dealing with a business sales specialist will benefit you by working with a professional that has an existing network of potential buyers interested specifically in businesses for sale. There is also more technical expertise required (example – business valuation for the purpose to sell a business is much different than determining the value for a piece of real estate, the negotiation is usually much more involved, there are typically more deal terms to be negotiated, due diligence must be managed and the overall transition facilitated). If you are looking to sell a business please choose to deal with a professional that specializes in business sales.
Declare your income
Too often, business owners don’t ‘declare’ a portion of their business income in order to have a lower tax bill. This is highly unadvisable. For starters, CCRA would not be too happy if they discovered such activity. Secondly, from a purely economic point of view, it costs you, as a business owner, in the long run when you go to sell a business. For instance, suppose you decide not to declare $10,000 in earnings and keep this instead as cash ‘off the books’. If your overall small business tax rate was 23% you would be saving about $2,300 in taxes. Alternatively, supposing you did declare the full amount you would pay $2,300 in taxes and be left with $7,700 in ‘declared’ income. However, supposing your business was valued at 2x earnings you would be gaining $15,400 in supportable business valuation when the day came to sell the business.
The point is that it may seem appealing in the short-run to cheat and not declare income but it really does pay to be honest. Businesses with undeclared earnings are much more difficult to sell and much more difficult to justify a valuation on. Business buyers always like to see properly documented and supportable earnings.
Do some analysis on your business
When you decide to sell a business, it is important to be able to tell a narrative to potential buyers about your business. Do some analysis and try to anticipate what an interested buyer might ask you. For instance, if profit margins have been decreasing, find out why. If sales have been decreasing, get to the root of it. Perhaps you had a period where you lost a staff member and have since resolved the situation.
Find out the story behind the numbers to paint an accurate picture to a buyer. Remember that no business is perfect and most reasonable buyers don’t expect it to be. Don’t try to gloss over any blemishes your business may have. Be forthright. Buyers expect you to be honest and if you’re not then that would raise a red flag that could potentially de-rail a deal.
Many times, business owners make the decision to sell a business and too quickly dive into a listing arrangement without considering all of the consequences.
As a business owner looking to sell a business, here are a couple of issues to keep in mind if you want to sell your company quickly and at a good price.
Deal with a professional
As a business seller it is in your best interest to deal with a business broker, intermediary or specialist that focuses on the selling of businesses. Oftentimes, owners list their companies for sale with an individual who normally focuses on residential real estate and are disappointed when their business doesn’t sell. If you want to sell a business, it’s better to deal with a specialist.
Selling a business requires a unique skill set and the process is much different than selling a piece of real estate. For instance, business sales are usually kept confidential so dealing with a business sales specialist will benefit you by working with a professional that has an existing network of potential buyers interested specifically in businesses for sale. There is also more technical expertise required (example – business valuation for the purpose to sell a business is much different than determining the value for a piece of real estate, the negotiation is usually much more involved, there are typically more deal terms to be negotiated, due diligence must be managed and the overall transition facilitated). If you are looking to sell a business please choose to deal with a professional that specializes in business sales.
Declare your income
Too often, business owners don’t ‘declare’ a portion of their business income in order to have a lower tax bill. This is highly unadvisable. For starters, CCRA would not be too happy if they discovered such activity. Secondly, from a purely economic point of view, it costs you, as a business owner, in the long run when you go to sell a business. For instance, suppose you decide not to declare $10,000 in earnings and keep this instead as cash ‘off the books’. If your overall small business tax rate was 23% you would be saving about $2,300 in taxes. Alternatively, supposing you did declare the full amount you would pay $2,300 in taxes and be left with $7,700 in ‘declared’ income. However, supposing your business was valued at 2x earnings you would be gaining $15,400 in supportable business valuation when the day came to sell the business.
The point is that it may seem appealing in the short-run to cheat and not declare income but it really does pay to be honest. Businesses with undeclared earnings are much more difficult to sell and much more difficult to justify a valuation on. Business buyers always like to see properly documented and supportable earnings.
Do some analysis on your business
When you decide to sell a business, it is important to be able to tell a narrative to potential buyers about your business. Do some analysis and try to anticipate what an interested buyer might ask you. For instance, if profit margins have been decreasing, find out why. If sales have been decreasing, get to the root of it. Perhaps you had a period where you lost a staff member and have since resolved the situation.
Find out the story behind the numbers to paint an accurate picture to a buyer. Remember that no business is perfect and most reasonable buyers don’t expect it to be. Don’t try to gloss over any blemishes your business may have. Be forthright. Buyers expect you to be honest and if you’re not then that would raise a red flag that could potentially de-rail a deal.
Why not sell the business yourself? « Business sales
Why not sell the business yourself? « Business sales
How many "Business For Sale" signs you see while you work or drive the main road on your daily run? None? Well, there are very logical reasons why you do not have. The main reason for this is that businesses for sale "sign" will soon be replaced by an "out of Business Sale." Consider the following points.
First, although not really a "sale" sign hanging out the window and tried to sell her own account on classified information Ads, or, God forbid, from mouth to mouth, for example, threatens the company's reputation and future. Secondly, even if the perspective is right on, you – the owner of a private company – the necessary skills and knowledge in accounting, law, taxation, marketing and, above all, your negotiating position on behalf precisely perhaps the most important resource – your life?
Are you an entrepreneur who runs, you try your ownon a daily basis, the time to have> Business> contacts and maintaining contact with potential buyers that your company is serious about buying my special? One can say that confidentiality is not necessary to damage the competitiveness of the market in your area? If employees and suppliers, to find that they sell, which will affect the current negotiation skills. Do you have experience in selling a business? You can remain calm and patient, if a buyer tries to negotiate alower price, especially when they are also targets the entire back of yours? You even know how to make your business value and what is really worth in the market?
We are talking about the major issue in the case of a sale of confidentiality …. The most important aspect of selling a business is confidentiality. It must be maintained throughout the transaction. When the people find that your company is for saleYour company is perceived in a negative light, in which some, especially your desire to use to competitors, and can damage the ongoing viability.
This is, of course, the right time to disclose a sale in progress. The optimum time to come clean is if the company has under contract and in the final stages of the sales process. Looking at the different reactions of different types of people in the news about your activities toYour company, sale, for why confidentiality is required.
Reviews –
If customers smell that your company is on the market, most likely take about a minute walk to New York for more than one of your competitors to do business as. Loss of customers affects the value of the company – it means less revenue and less income less profit, less interest from potential buyers. After all, one ofmain reasons why someone wants to be your company would buy because of the profit they could do.
Staff –
When staff said the deal is for sale, think nano-second. If you think a New York minute is fast, would your employees of the premises, evacuate before flashing. You feel uncertain about their future and seek a more stable job. Fear of new management and staff reductions, whether resulting from legitimate concernsfor all, where your business is their livelihood. When key employees leave the company after hearing the message, you can seriously cripple the performance of your company as well. Not only the value, but reduces the possibility of selling your company must be reduced significantly.
Suppliers –
Your relationship with suppliers, a turn for the worse when they are aware of your company expects to sell.You may feel that your decision to sell is based on financial difficulties, and if you currently buy supplies on credit, may reconsider your position and cash on delivery of the application, which can certainly have an immediate impact on cash flow. Large enterprises are sold every day. But in general it is a negative perception of a company if they are items to be sold.
Banks –
The banks are very cautious because of the small businesstheir risky nature, and therefore it is no wonder how they would react if they discover that yours is for sale. You can decide to stop further loans, overdrafts or credit lines. Or worse yet, an invitation to turn off any debts to be recovered.
Competitors –
How to react to the news of your competitors by placing their business on the market? Would take very positive. This is exactly how your competitors respondthey should find that you sell your business and could act quickly to restore confidence to influence sales and customer management. Competitors would proclaim from the rooftops, where they could say you are selling, so they can benefit from the collection of new profits from your existing customers.
For these reasons, a brokerage business would be very helpful in the sale of your direction. In fact, they may be the essential ingredient. Let's declare that this statementfurther. Before doing business in the need to contract with a brokerage firm to represent your sale, it is important that we recognize the value they bring to the table.
Business brokers generally work on a performance fee-based. Have paid if the company is sold and the deal is closed. You are your partner throughout the process and use of unique marketing methods to achieve the objective. Not only did they andScreen prospects for your business may value your company to resolve the negotiations and to get help. Experienced Business Brokers can often get a higher price because they are, and in line with current trends and economic conditions in their market area are aware of what people want to buy. Supply and demand plays a role when a company is for sale. For example, a seller has insisted on the market in Houston for the last fewYears and is still maturing as a result of economic conditions than they enjoyed in the rest of the country.
And potential buyers will feel more comfortable talking with the agents directly to the owner and therefore would be eligible you, time is running out to further the business and maintaining profitability. But most importantly, the confidentiality of mediators is needed, it saves the pain questions about potential customers, suppliers andCompetitors.
Search for a broker's reputation can be made the mouth, through recommendations from colleagues, such as accountants, lawyers, lenders to small businesses and also by mouth to have people who used a broker before.
Finally, if a company is on the market, must be done in times of confidence did, thousands of people. The owners have good reasons for selling, and there are large firms sold each day. But it is negative connotations because of a business for sale to the public eye. They think there must be something wrong with the business. What is obviously not the case in most cases. Remember, these two statistics. The national average for companies that actually sell the market is just about 30%, the reasons for a business broker might say. And only one in ten people, we must buy a> Economics, never actually do. So when trying to sell their business up for your fails, you can not or have lost employees, customers, suppliers. You do not want to end, leave the sign in the window that says: "Going Out of Business Sale!"
How many "Business For Sale" signs you see while you work or drive the main road on your daily run? None? Well, there are very logical reasons why you do not have. The main reason for this is that businesses for sale "sign" will soon be replaced by an "out of Business Sale." Consider the following points.
First, although not really a "sale" sign hanging out the window and tried to sell her own account on classified information Ads, or, God forbid, from mouth to mouth, for example, threatens the company's reputation and future. Secondly, even if the perspective is right on, you – the owner of a private company – the necessary skills and knowledge in accounting, law, taxation, marketing and, above all, your negotiating position on behalf precisely perhaps the most important resource – your life?
Are you an entrepreneur who runs, you try your ownon a daily basis, the time to have> Business> contacts and maintaining contact with potential buyers that your company is serious about buying my special? One can say that confidentiality is not necessary to damage the competitiveness of the market in your area? If employees and suppliers, to find that they sell, which will affect the current negotiation skills. Do you have experience in selling a business? You can remain calm and patient, if a buyer tries to negotiate alower price, especially when they are also targets the entire back of yours? You even know how to make your business value and what is really worth in the market?
We are talking about the major issue in the case of a sale of confidentiality …. The most important aspect of selling a business is confidentiality. It must be maintained throughout the transaction. When the people find that your company is for saleYour company is perceived in a negative light, in which some, especially your desire to use to competitors, and can damage the ongoing viability.
This is, of course, the right time to disclose a sale in progress. The optimum time to come clean is if the company has under contract and in the final stages of the sales process. Looking at the different reactions of different types of people in the news about your activities toYour company, sale, for why confidentiality is required.
Reviews –
If customers smell that your company is on the market, most likely take about a minute walk to New York for more than one of your competitors to do business as. Loss of customers affects the value of the company – it means less revenue and less income less profit, less interest from potential buyers. After all, one ofmain reasons why someone wants to be your company would buy because of the profit they could do.
Staff –
When staff said the deal is for sale, think nano-second. If you think a New York minute is fast, would your employees of the premises, evacuate before flashing. You feel uncertain about their future and seek a more stable job. Fear of new management and staff reductions, whether resulting from legitimate concernsfor all, where your business is their livelihood. When key employees leave the company after hearing the message, you can seriously cripple the performance of your company as well. Not only the value, but reduces the possibility of selling your company must be reduced significantly.
Suppliers –
Your relationship with suppliers, a turn for the worse when they are aware of your company expects to sell.You may feel that your decision to sell is based on financial difficulties, and if you currently buy supplies on credit, may reconsider your position and cash on delivery of the application, which can certainly have an immediate impact on cash flow. Large enterprises are sold every day. But in general it is a negative perception of a company if they are items to be sold.
Banks –
The banks are very cautious because of the small businesstheir risky nature, and therefore it is no wonder how they would react if they discover that yours is for sale. You can decide to stop further loans, overdrafts or credit lines. Or worse yet, an invitation to turn off any debts to be recovered.
Competitors –
How to react to the news of your competitors by placing their business on the market? Would take very positive. This is exactly how your competitors respondthey should find that you sell your business and could act quickly to restore confidence to influence sales and customer management. Competitors would proclaim from the rooftops, where they could say you are selling, so they can benefit from the collection of new profits from your existing customers.
For these reasons, a brokerage business would be very helpful in the sale of your direction. In fact, they may be the essential ingredient. Let's declare that this statementfurther. Before doing business in the need to contract with a brokerage firm to represent your sale, it is important that we recognize the value they bring to the table.
Business brokers generally work on a performance fee-based. Have paid if the company is sold and the deal is closed. You are your partner throughout the process and use of unique marketing methods to achieve the objective. Not only did they andScreen prospects for your business may value your company to resolve the negotiations and to get help. Experienced Business Brokers can often get a higher price because they are, and in line with current trends and economic conditions in their market area are aware of what people want to buy. Supply and demand plays a role when a company is for sale. For example, a seller has insisted on the market in Houston for the last fewYears and is still maturing as a result of economic conditions than they enjoyed in the rest of the country.
And potential buyers will feel more comfortable talking with the agents directly to the owner and therefore would be eligible you, time is running out to further the business and maintaining profitability. But most importantly, the confidentiality of mediators is needed, it saves the pain questions about potential customers, suppliers andCompetitors.
Search for a broker's reputation can be made the mouth, through recommendations from colleagues, such as accountants, lawyers, lenders to small businesses and also by mouth to have people who used a broker before.
Finally, if a company is on the market, must be done in times of confidence did, thousands of people. The owners have good reasons for selling, and there are large firms sold each day. But it is negative connotations because of a business for sale to the public eye. They think there must be something wrong with the business. What is obviously not the case in most cases. Remember, these two statistics. The national average for companies that actually sell the market is just about 30%, the reasons for a business broker might say. And only one in ten people, we must buy a> Economics, never actually do. So when trying to sell their business up for your fails, you can not or have lost employees, customers, suppliers. You do not want to end, leave the sign in the window that says: "Going Out of Business Sale!"
Saturday, May 29, 2010
Finding Money for That Franchise When Money is Tight | Small Business Trends
Finding Money for That Franchise When Money is Tight | Small Business Trends
Financial Management May 28, 2010 By Joel Libava
Commercial lenders have been making life difficult for future franchise owners and small business owners looking for capital. President Obama and his administration have been putting the heat on lenders. So far, however, that has not turned the credit situation around.
The franchise industry — where franchisees get a “business in a box” setup, is also feeling the pinch. Franchises known to have a proven system for success used to get fairly quick loan approvals. These days, though, they aren’t getting approved like they used to.
A recent article in Franchising World magazine states that:
“… financing for franchisees continues to be an obstacle to the growth of franchise brands. Conventional lenders have pulled out of franchise lending unless the concept meets very stringent criteria.”
Until recently, all the lenders that I’ve ever worked with (to help get my franchise candidates a small business loan) have been pretty easy to work with, and were looking for ways to approve the loans.
As a matter of fact, over a period of a number of years, I only remember two or three instances in which candidates of mine were ever turned down for a loan. Things are a lot different now.
It may be time for all of us to stop living in the problem, and start living in the solution.
Since traditional ways of obtaining start-up loans and expansion loans aren’t working anymore, I’m thinking that it’s time for some deep exploration of some non-traditional routes.
Folks that are finding it difficult to get the “approved” stamp on their loan applications are starting to approach specialty lenders. The Wall Street Journal’s Emily Maltby not long ao posted an article about these types of lenders, suggesting that:
“… business owners who approach specialty lenders have an advantage. The loan officer already knows the revenue potential, financing and cash-flow needs of that industry, particularly in the context of the broader economy, and can advise with keen awareness of any snags in the business plan.”
She gave an example of an entrepreneur who wanted to open an emergency animal clinic, but was turned down numerous times by conventional lenders. (She ended up getting financed by a specialty lender.)
Is your future or current business in a niche that may have some specialty lenders that can give you a real shot at obtaining a loan?
Another “specialty lender” could be your Uncle Mort. He’s the one who told you years ago, “You’re going places kid. When you’re ready to go into business for yourself, I’ll back you.”
If there was ever a time to cash in that chip ….
I’m thinking that there are a lot of nephews, nieces, sons and daughters around who are going to their families for business loans. I wonder if their loans are getting the “approved” stamp.
If you do end up going the family loan route, it may be wise to consult with a business attorney. There could be legal ramifications for you, and the family member. There may even be issues relating to taxation, too.
If your business start-up is one that has equipment needs, there’s pretty good news for you. Companies like Direct Capital have been expanding their financial capacity for a while now, and may be able to provide some leasing options for your business. Leasing your equipment can be a good way to free up some of your up-front loan requirements. (Maybe even enough for your lender to approve your small business loan.)
There is another way to get a business off the ground, but it’s a bit controversial. It involves using a portion of your 401K money.
Jeff Schnepper from MSN.com, explains the process;
“First, get yourself a lawyer and an accountant. This is not a do-it-yourself project. Though the structure is relatively simple, the implementation can be complex.”
Then he describes how this works;
“You set up a corporation. You’ll become an employee of the new corporation. The new corporation sets up a 401(k) plan that allows the rollover of existing retirement funds into the new account. This is a self-directed plan — you run it and make all the investment decisions.”
Here’s where it gets a bit more complicated;
“Under your direction, the 401(k) then buys stock in your new corporation. The corporation uses those dollars as seed money to cover your wages and other working capital needs.”
Finally;
“You’re not taxed on any of the money that goes to your new corporation. And there’s no 10% early-distribution penalty either. The key here is that your new 401(k) is making an investment, not a distribution. But what you’ve done is convert your retirement account into instant business capital by using the rollover process. And you’ve done it without a tax hit.”
Read the entire MSN.com article about using funds from your 401K to start a business.
I’ve had a few candidates of mine go this route over the years, and they seemed comfortable with the process.
Determined current and future small business owners will continue to use creative financing arrangements to reach their goals. Are you determined, too?
Financial Management May 28, 2010 By Joel Libava
Commercial lenders have been making life difficult for future franchise owners and small business owners looking for capital. President Obama and his administration have been putting the heat on lenders. So far, however, that has not turned the credit situation around.
The franchise industry — where franchisees get a “business in a box” setup, is also feeling the pinch. Franchises known to have a proven system for success used to get fairly quick loan approvals. These days, though, they aren’t getting approved like they used to.
A recent article in Franchising World magazine states that:
“… financing for franchisees continues to be an obstacle to the growth of franchise brands. Conventional lenders have pulled out of franchise lending unless the concept meets very stringent criteria.”
Until recently, all the lenders that I’ve ever worked with (to help get my franchise candidates a small business loan) have been pretty easy to work with, and were looking for ways to approve the loans.
As a matter of fact, over a period of a number of years, I only remember two or three instances in which candidates of mine were ever turned down for a loan. Things are a lot different now.
It may be time for all of us to stop living in the problem, and start living in the solution.
Since traditional ways of obtaining start-up loans and expansion loans aren’t working anymore, I’m thinking that it’s time for some deep exploration of some non-traditional routes.
Folks that are finding it difficult to get the “approved” stamp on their loan applications are starting to approach specialty lenders. The Wall Street Journal’s Emily Maltby not long ao posted an article about these types of lenders, suggesting that:
“… business owners who approach specialty lenders have an advantage. The loan officer already knows the revenue potential, financing and cash-flow needs of that industry, particularly in the context of the broader economy, and can advise with keen awareness of any snags in the business plan.”
She gave an example of an entrepreneur who wanted to open an emergency animal clinic, but was turned down numerous times by conventional lenders. (She ended up getting financed by a specialty lender.)
Is your future or current business in a niche that may have some specialty lenders that can give you a real shot at obtaining a loan?
Another “specialty lender” could be your Uncle Mort. He’s the one who told you years ago, “You’re going places kid. When you’re ready to go into business for yourself, I’ll back you.”
If there was ever a time to cash in that chip ….
I’m thinking that there are a lot of nephews, nieces, sons and daughters around who are going to their families for business loans. I wonder if their loans are getting the “approved” stamp.
If you do end up going the family loan route, it may be wise to consult with a business attorney. There could be legal ramifications for you, and the family member. There may even be issues relating to taxation, too.
If your business start-up is one that has equipment needs, there’s pretty good news for you. Companies like Direct Capital have been expanding their financial capacity for a while now, and may be able to provide some leasing options for your business. Leasing your equipment can be a good way to free up some of your up-front loan requirements. (Maybe even enough for your lender to approve your small business loan.)
There is another way to get a business off the ground, but it’s a bit controversial. It involves using a portion of your 401K money.
Jeff Schnepper from MSN.com, explains the process;
“First, get yourself a lawyer and an accountant. This is not a do-it-yourself project. Though the structure is relatively simple, the implementation can be complex.”
Then he describes how this works;
“You set up a corporation. You’ll become an employee of the new corporation. The new corporation sets up a 401(k) plan that allows the rollover of existing retirement funds into the new account. This is a self-directed plan — you run it and make all the investment decisions.”
Here’s where it gets a bit more complicated;
“Under your direction, the 401(k) then buys stock in your new corporation. The corporation uses those dollars as seed money to cover your wages and other working capital needs.”
Finally;
“You’re not taxed on any of the money that goes to your new corporation. And there’s no 10% early-distribution penalty either. The key here is that your new 401(k) is making an investment, not a distribution. But what you’ve done is convert your retirement account into instant business capital by using the rollover process. And you’ve done it without a tax hit.”
Read the entire MSN.com article about using funds from your 401K to start a business.
I’ve had a few candidates of mine go this route over the years, and they seemed comfortable with the process.
Determined current and future small business owners will continue to use creative financing arrangements to reach their goals. Are you determined, too?
Business Sellers Increasingly Play Banker - BusinessWeek
Business Sellers Increasingly Play Banker - BusinessWeek
Creative financing can help sellers command better prices or close deals. It can also create complications among banks, sellers, and buyers
By Monica Mehta
During the recession, merger and acquisition activity in the lower-middle market (private companies with up to $100 million in annual sales) was anything but active. Now sharp discounts of private company valuations—I'm seeing 30 percent to 40 percent reductions from 2007 levels—are again piquing buyer interest. But with deals on the table and the dialing for dollars begun, the bank loan market, which is still licking its wounds from the credit crunch, is coming up short. Buyers are increasingly turning to sellers to fill the funding gap. It's not that financing is unavailable. Companies with strong recurring cash flow and significant collateral can still obtain debt. They're just raising less of it and at a higher cost.
Acquirers accustomed to providing only 30 percent equity and funding 70 percent of a deal through bank loans are now lucky to get a commitment for even 50 percent of the purchase price. Increasingly, they are looking to the seller to supply a separate loan (often called a note), to cover the remaining 20 percent. The seller is becoming the lender of last resort.
Seller participation in deal financing is not new. Most prerecession deals included some kind of earnout provision that delayed payment of a portion of the purchase price—up to 20 percent for one to three years. Despite cutting down the immediate tab for the seller, earnouts continue to be used primarily as insurance against seller misrepresentations post-closing.
In most instances, a seller note is still issued on top of bank debt and earnouts. When any portion of a purchase is financed by a conventional lender, seller paper is almost always subordinate in terms of when the note is paid and the ability to exercise remedies in the event of a default. Transactions are highly negotiated, with terms varying widely from deal to deal. Seller paper is usually held longer than a bank loan and can have limited transferability. Commensurate with the additional risk, interest rates for seller paper are almost always higher than those for traditional loans.
A seat on the board?
When much of the purchase price is tied up in notes and earnouts, it's not uncommon for the seller to remain involved with a company for three to five years post-closing. Unlike a clean sale with residual involvement, the seller's realization of the purchase price is now tied to the buyer's ability to operate the company profitably. Bear in mind that seller paper is unsecured, with limited transferability. When a deal goes south it can get messy fast. As the junior lender, the seller will take a back seat to the bank (the senior lender) and will not have many remedies.
As a result, the seller has greater incentive to monitor the new owners and how they spend cash. This may involve seeking a board seat so as to have a say in critical business decisionmaking, including key management changes, new fundraising attempts, and large capital expenditures. It's fair to say that neither the buyer nor the seller may relish such continued participation.
To avoid conflict down the road, it's best to keep paperwork in order, document the specific terms of a seller note in a separate credit agreement, and attach those terms to the purchase agreement. Prepare for a senior lender that may also require an intercredit document to memorialize the terms and rights provided to the junior lender. Like a bank, the seller must evaluate the buyer's credit and consider carefully the buyer's ability to repay the loan. With higher bank loan margins and Libor floors, today's funding costs are 5 percent to 7 percent higher than the terms of an equivalent loan just three years ago. Fortunately, the seller is in the right shoes to make the call as to whether the buyer can manage the increased costs. After all, few will know the business better.
Monica Mehta is managing principal of New York-based investment firm Seventh Capital.
Creative financing can help sellers command better prices or close deals. It can also create complications among banks, sellers, and buyers
By Monica Mehta
During the recession, merger and acquisition activity in the lower-middle market (private companies with up to $100 million in annual sales) was anything but active. Now sharp discounts of private company valuations—I'm seeing 30 percent to 40 percent reductions from 2007 levels—are again piquing buyer interest. But with deals on the table and the dialing for dollars begun, the bank loan market, which is still licking its wounds from the credit crunch, is coming up short. Buyers are increasingly turning to sellers to fill the funding gap. It's not that financing is unavailable. Companies with strong recurring cash flow and significant collateral can still obtain debt. They're just raising less of it and at a higher cost.
Acquirers accustomed to providing only 30 percent equity and funding 70 percent of a deal through bank loans are now lucky to get a commitment for even 50 percent of the purchase price. Increasingly, they are looking to the seller to supply a separate loan (often called a note), to cover the remaining 20 percent. The seller is becoming the lender of last resort.
Seller participation in deal financing is not new. Most prerecession deals included some kind of earnout provision that delayed payment of a portion of the purchase price—up to 20 percent for one to three years. Despite cutting down the immediate tab for the seller, earnouts continue to be used primarily as insurance against seller misrepresentations post-closing.
In most instances, a seller note is still issued on top of bank debt and earnouts. When any portion of a purchase is financed by a conventional lender, seller paper is almost always subordinate in terms of when the note is paid and the ability to exercise remedies in the event of a default. Transactions are highly negotiated, with terms varying widely from deal to deal. Seller paper is usually held longer than a bank loan and can have limited transferability. Commensurate with the additional risk, interest rates for seller paper are almost always higher than those for traditional loans.
A seat on the board?
When much of the purchase price is tied up in notes and earnouts, it's not uncommon for the seller to remain involved with a company for three to five years post-closing. Unlike a clean sale with residual involvement, the seller's realization of the purchase price is now tied to the buyer's ability to operate the company profitably. Bear in mind that seller paper is unsecured, with limited transferability. When a deal goes south it can get messy fast. As the junior lender, the seller will take a back seat to the bank (the senior lender) and will not have many remedies.
As a result, the seller has greater incentive to monitor the new owners and how they spend cash. This may involve seeking a board seat so as to have a say in critical business decisionmaking, including key management changes, new fundraising attempts, and large capital expenditures. It's fair to say that neither the buyer nor the seller may relish such continued participation.
To avoid conflict down the road, it's best to keep paperwork in order, document the specific terms of a seller note in a separate credit agreement, and attach those terms to the purchase agreement. Prepare for a senior lender that may also require an intercredit document to memorialize the terms and rights provided to the junior lender. Like a bank, the seller must evaluate the buyer's credit and consider carefully the buyer's ability to repay the loan. With higher bank loan margins and Libor floors, today's funding costs are 5 percent to 7 percent higher than the terms of an equivalent loan just three years ago. Fortunately, the seller is in the right shoes to make the call as to whether the buyer can manage the increased costs. After all, few will know the business better.
Monica Mehta is managing principal of New York-based investment firm Seventh Capital.
Friday, May 28, 2010
5 tips to maximize your next M&A deal « ACG National Capital's Blog
5 tips to maximize your next M&A deal « ACG National Capital's Blog
By Jason Rigoli, Principal at The White Oak Group
As the M&A market continues to improve, companies are beginning to explore options to help achieve their strategic growth opportunities. However, there are a few things for business leaders to keep in mind to maximize their next transaction.
Based on a recent article by Paul Hartzell, Senior Vice President of Merrill Data, following are a few tips to help you make the best of an offer:
1. Prepare for thorough due diligence
With strategic buyers on the rise and financial buyers on the decline, it has become very important to make sure that your presentation of due diligence is comprehensive. This ensures there are no surprises as the deal comes to a close. Follow an approach of full disclosure and transparency to prevent unexpected renegotiation, lower valuation, or complete withdrawal.
2. Evaluate the “readiness” of your company
* Assess the company’s sales and profitability trends, combined with market developments, to determine if you are ready to go to market.
* Prepare and validate financial records to avoid errors coming up during the deal process.
* Thoroughly analyze customer and market trends to help create a three- to five-year strategic plan and financial forecast. Resolve any legal, operational, managerial, or environmental issues that may exist.
* Develop a summary of marketing and sales plans which includes your new business pipeline.
3. Assemble the right team
It is important to ensure that the M&A process is finalized in a timely and ultimately successful manor. To give your company the best chances at a successful and efficient deal ask yourself the following:
* Does your management team have M&A experience?
* What preparation work must be completed and what resources will be required?
* Can my company support the burden of an M&A transaction and still function at a high level on day to day activities?
* Can the management team find time to lead the company through the preparation process and be available to respond to arising issues and unexpected challenges as a potential deal unfolds?
4. Position the company correctly
Package the company objectively to ensure that you are presenting it from the buyer’s perspective. Focusing on the buyer’s interests will give the seller the opportunity to maximize the value from the interested party.
5. Identify the right buyers and sustain a competitive process
Involve an objective third party, such as an investment banker since they have knowledge of and access to a broader range of buyers. They will also better understand how to customize the approach to each party to ensure the maximum chance of success. Consult with M&A experts who have the necessary experience to read the situation and keep the deal on track. Lastly keep multiple interested parties involved to create and leverage competition to obtain maximum valuation.
Do you have any additional tips that can help maximize M&A deals in this economy? Please comment below and share your ideas.
By Jason Rigoli, Principal at The White Oak Group
As the M&A market continues to improve, companies are beginning to explore options to help achieve their strategic growth opportunities. However, there are a few things for business leaders to keep in mind to maximize their next transaction.
Based on a recent article by Paul Hartzell, Senior Vice President of Merrill Data, following are a few tips to help you make the best of an offer:
1. Prepare for thorough due diligence
With strategic buyers on the rise and financial buyers on the decline, it has become very important to make sure that your presentation of due diligence is comprehensive. This ensures there are no surprises as the deal comes to a close. Follow an approach of full disclosure and transparency to prevent unexpected renegotiation, lower valuation, or complete withdrawal.
2. Evaluate the “readiness” of your company
* Assess the company’s sales and profitability trends, combined with market developments, to determine if you are ready to go to market.
* Prepare and validate financial records to avoid errors coming up during the deal process.
* Thoroughly analyze customer and market trends to help create a three- to five-year strategic plan and financial forecast. Resolve any legal, operational, managerial, or environmental issues that may exist.
* Develop a summary of marketing and sales plans which includes your new business pipeline.
3. Assemble the right team
It is important to ensure that the M&A process is finalized in a timely and ultimately successful manor. To give your company the best chances at a successful and efficient deal ask yourself the following:
* Does your management team have M&A experience?
* What preparation work must be completed and what resources will be required?
* Can my company support the burden of an M&A transaction and still function at a high level on day to day activities?
* Can the management team find time to lead the company through the preparation process and be available to respond to arising issues and unexpected challenges as a potential deal unfolds?
4. Position the company correctly
Package the company objectively to ensure that you are presenting it from the buyer’s perspective. Focusing on the buyer’s interests will give the seller the opportunity to maximize the value from the interested party.
5. Identify the right buyers and sustain a competitive process
Involve an objective third party, such as an investment banker since they have knowledge of and access to a broader range of buyers. They will also better understand how to customize the approach to each party to ensure the maximum chance of success. Consult with M&A experts who have the necessary experience to read the situation and keep the deal on track. Lastly keep multiple interested parties involved to create and leverage competition to obtain maximum valuation.
Do you have any additional tips that can help maximize M&A deals in this economy? Please comment below and share your ideas.
Normalized earnings - are you considering everything in the calculation to buy a business? | Businesses for Sale - The Business Place
Normalized earnings - are you considering everything in the calculation to buy a business? | Businesses for Sale - The Business Place
May 28th, 2010
Normalized earnings is the profit that would continue to the new owner after the old owner left the business. In theory, it is the profit after the owner is paid a reasonable salary that would be earned after the business is sold. What should be factored into this calculation? There is no standard of what to include and not to include the businesses is becoming more international, there are many more things affecting a business. Should you consider them before offering a price for the business for sale?
What should you consider in normalized earnings
* profit per the financial statements
* add back salaries of family members who not working in the business
* add back personal expenses which will not continue after the sale of the business. But what should these include, owners want to say everything is personal and should be added back. The onus is on the seller of the business to prove that it was not a normal business expense
* with a large amount of infrastructure investment going on by the government, these are limited time abnormal sales. Should these be treated separately? They will not continue in a year or two, they are up to a three year potential increase in revenues and profits
* foreign currency fluctuations, if the owner hedges the foreign currency fluctuations or does not hedge the exchange when he sells to the US or a foreign country. Is the method of speculating on currency a normal business transaction or should there be an adjustment?
* unusual advertising programs which failed – some people have tried to argue is to be added back however, if you did not undertake that advertising, would you undertake another form that may be successful?
* personal travel
* depreciation and amortization relating to personal items purchased and set up as a capital asset and amortized for accounting and tax purposes over a period of time
* inventory – some owners will write down inventory which is good and state that they are just trying to reduce taxes – do you think that their argument is valid, they can’t argue it both ways? I have seen one seller want to recover some of the written down inventory when he sold it. The fact that they old owner could not sell it for years would imply there is not a lot of value but he wanted to argue that he should be rewarded down the road for selling something that he could not succeed in selling. Needless to say, the buyer of the business did not agree to this term
* do you factor in rent – too large or too small a location and it needs to be moved. Some people work out of their house and they charge no rent but the new owner must rent space and pay rent. This needs to be deducted from profits to come up with what the profits will be in the future.
This is just a sample of items to consider when determining what is normalized earnings.
May 28th, 2010
Normalized earnings is the profit that would continue to the new owner after the old owner left the business. In theory, it is the profit after the owner is paid a reasonable salary that would be earned after the business is sold. What should be factored into this calculation? There is no standard of what to include and not to include the businesses is becoming more international, there are many more things affecting a business. Should you consider them before offering a price for the business for sale?
What should you consider in normalized earnings
* profit per the financial statements
* add back salaries of family members who not working in the business
* add back personal expenses which will not continue after the sale of the business. But what should these include, owners want to say everything is personal and should be added back. The onus is on the seller of the business to prove that it was not a normal business expense
* with a large amount of infrastructure investment going on by the government, these are limited time abnormal sales. Should these be treated separately? They will not continue in a year or two, they are up to a three year potential increase in revenues and profits
* foreign currency fluctuations, if the owner hedges the foreign currency fluctuations or does not hedge the exchange when he sells to the US or a foreign country. Is the method of speculating on currency a normal business transaction or should there be an adjustment?
* unusual advertising programs which failed – some people have tried to argue is to be added back however, if you did not undertake that advertising, would you undertake another form that may be successful?
* personal travel
* depreciation and amortization relating to personal items purchased and set up as a capital asset and amortized for accounting and tax purposes over a period of time
* inventory – some owners will write down inventory which is good and state that they are just trying to reduce taxes – do you think that their argument is valid, they can’t argue it both ways? I have seen one seller want to recover some of the written down inventory when he sold it. The fact that they old owner could not sell it for years would imply there is not a lot of value but he wanted to argue that he should be rewarded down the road for selling something that he could not succeed in selling. Needless to say, the buyer of the business did not agree to this term
* do you factor in rent – too large or too small a location and it needs to be moved. Some people work out of their house and they charge no rent but the new owner must rent space and pay rent. This needs to be deducted from profits to come up with what the profits will be in the future.
This is just a sample of items to consider when determining what is normalized earnings.
Using the SBA 7a Loan for a Business Acquisition | Stimyoul.us
Using the SBA 7a Loan for a Business Acquisition | Stimyoul.us
One of easier ways of becoming an entrepreneur is to acquire a business that has already been established by someone else. The risks related to acquiring a business are significantly lower than starting a business from scratch. Established businesses already have customers, an operating history, and hopefully profits as well. Additionally, obtaining a business loan for the acquisition of a business (while more paperwork) is usually easier than obtaining financing for a startup. This primarily due to the fact, again, that the risks are lower.
The 7a SBA loan can be used for business acquisition purposes. As we have discussed before, the flexibility of this loan can allow you to finance varying parts of the acquisition differently. Prior to applying for a SBA guarantee, you should see if the business for sale has been preapproved for a SBA loan. If a business broker is involved then the broker may have acquired pre-approval from the SBA so that the transaction can happen more quickly. Additionally, a business broker will have generally assembled much of the paperwork required by the bank and the SBA in order to render both a lending and a guarantee decision.
From time to time, business owners that are selling their businesses will already have a business plan in place showcasing the necessary components of the business and the owner’s anticipation of how the business will grow over the next three to five years. This business plan is generally modified by the incoming owner based on the ideas that the new owner will implement once the business has been acquired.
Whenever you intend to acquire a business, it is imperative that you complete your due diligence. Prior to applying for a 7a SBA loan, your accountant should thoroughly review the profit and loss statements, cash flow statements, and balance sheet of the prospective business to ensure that they are factually correct and match the business’ tax returns.
May 28, 2010
One of easier ways of becoming an entrepreneur is to acquire a business that has already been established by someone else. The risks related to acquiring a business are significantly lower than starting a business from scratch. Established businesses already have customers, an operating history, and hopefully profits as well. Additionally, obtaining a business loan for the acquisition of a business (while more paperwork) is usually easier than obtaining financing for a startup. This primarily due to the fact, again, that the risks are lower.
The 7a SBA loan can be used for business acquisition purposes. As we have discussed before, the flexibility of this loan can allow you to finance varying parts of the acquisition differently. Prior to applying for a SBA guarantee, you should see if the business for sale has been preapproved for a SBA loan. If a business broker is involved then the broker may have acquired pre-approval from the SBA so that the transaction can happen more quickly. Additionally, a business broker will have generally assembled much of the paperwork required by the bank and the SBA in order to render both a lending and a guarantee decision.
From time to time, business owners that are selling their businesses will already have a business plan in place showcasing the necessary components of the business and the owner’s anticipation of how the business will grow over the next three to five years. This business plan is generally modified by the incoming owner based on the ideas that the new owner will implement once the business has been acquired.
Whenever you intend to acquire a business, it is imperative that you complete your due diligence. Prior to applying for a 7a SBA loan, your accountant should thoroughly review the profit and loss statements, cash flow statements, and balance sheet of the prospective business to ensure that they are factually correct and match the business’ tax returns.
May 28, 2010
Merger and Acquisition Advisor or Business Broker ? Which One Do you Need in Order to Sell your Business? « Email Marketing
Merger and Acquisition Advisor or Business Broker ? Which One Do you Need in Order to Sell your Business? « Email Marketing
05.28.2010 · Posted in Email Marketing
Most businessmen sell a business only once or twice in their lifetime. Selling a business may be the most difficult task for a businessman who might have taken years to build a profitable and reputable business. When he puts it up for sale, he hopes to recover the price for all that he has put into it. Selling a business can be profitable decision or one that can result in the loss of one’s life’s work. It is advisable for businessmen to hire professionals for selling their business. If your business falls into the mid-market category and you aim to drive a strategic deal out of your sale, you will require an expert merger and acquisition advisor. But if your business belongs to the Main Street and you just want to get the best price for it, you might need a business broker. Below, we discuss some of the differences between the two professionals, which can help one decide whom to hire for selling a business.
• Type of Business
Business brokers specialize in what are called main street businesses, which could be in the range of $100,000 to 25,000,000 in revenues and include businesses like restaurants, dry cleaners, gas stations, convenience stores etc. M&A advisors usually take on businesses with larger turnover, like manufacturing units, technology firms, distributors etc. If the business to be sold is amongst main street businesses, the services of a business broker to sell the business would be appropriate, whereas if it is larger, then the services of a merger and acquisition advisor would be needed.
• Targeted Buyer
Business brokers target individual businessmen for selling a business, whereas M&A advisors are connected with corporate buyers, who seek a strategic reason behind a merger or an acquisition.
• Business Valuation
Business brokers generally apply “rule of the thumb” valuations for main street businesses to determine their selling price. Such valuations rarely vary. Merger and acquisition advisors are called in when there can be a broad interpretation of strategic value and rules of thumb do not apply. Large businesses generally have high components of niche services, intellectual properties, strong customer base etc, which make the strategic value for the business vary widely.
• Complexity of Transaction
Business brokers handle small businesses to sell and their clients consist of individuals. The process of selling the business is simpler as compared to larger corporations. Contracts for small businesses are straightforward and negotiations are based on the requirements of the seller, price and financing. For a merger and acquisition advisor, the target is a corporate buyer, who is an expert at M&A deals. Corporate buyers have different teams working for them like legal experts, investment bankers, valuation professionals etc. and their contracts are extremely complex. A corporate buyer sends in teams to conduct due diligence and examine the business to sell in detail. Hence if the business to sell is a large corporation, the seller will need a merger and acquisition advisor, who is equipped and experienced to negotiate with such pros.
• Volume of Clients
Business brokers represent as many businesses for sale as they can. For business brokers, it is a benefit to have many businesses listed with them when they are contacting individual buyers. Business brokers rely on mass email a campaign, posting on websites etc. and their attention is divided amongst many clients at one point of time. Merger and acquisition advisors, on the other hand, have an exclusive clientele of 3 to 4 clients per professional. With specific industry niches and a customized database of contacts, merger and acquisition advisors give their clients the personal and professional touch that they demand.
• Fees
Business brokers have a system of a minimum upfront fee plus around 10% of the transaction fee on completion of a successful deal. They do not charge monthly fees. Merger and acquisition advisors, on the other hand, charge a substantial upfront fee or a monthly fee in the range of $3000 to $10,000 per month. M&A advisors also charge a percentage of transaction value as fees on completion of the deal, which is decided on basis of the size of the business. Big Wall Street M&A companies are known to refuse transactions below $1 million in fees.
Based on the points made above, you can decide whether to hire a business broker or an M&A advisor for selling your business. The major deciding factor will be the cost that you are willing to incur. Keep in mind that if you have a small business to sell, it will not be able to sustain substantial upfront as well as monthly fees of the merger and acquisition advisor. Hence it would be better to go for a business broker. Go for a merger and acquisition advisor only if you need to sell a large corporation with high intellectual property and niche services.
05.28.2010 · Posted in Email Marketing
Most businessmen sell a business only once or twice in their lifetime. Selling a business may be the most difficult task for a businessman who might have taken years to build a profitable and reputable business. When he puts it up for sale, he hopes to recover the price for all that he has put into it. Selling a business can be profitable decision or one that can result in the loss of one’s life’s work. It is advisable for businessmen to hire professionals for selling their business. If your business falls into the mid-market category and you aim to drive a strategic deal out of your sale, you will require an expert merger and acquisition advisor. But if your business belongs to the Main Street and you just want to get the best price for it, you might need a business broker. Below, we discuss some of the differences between the two professionals, which can help one decide whom to hire for selling a business.
• Type of Business
Business brokers specialize in what are called main street businesses, which could be in the range of $100,000 to 25,000,000 in revenues and include businesses like restaurants, dry cleaners, gas stations, convenience stores etc. M&A advisors usually take on businesses with larger turnover, like manufacturing units, technology firms, distributors etc. If the business to be sold is amongst main street businesses, the services of a business broker to sell the business would be appropriate, whereas if it is larger, then the services of a merger and acquisition advisor would be needed.
• Targeted Buyer
Business brokers target individual businessmen for selling a business, whereas M&A advisors are connected with corporate buyers, who seek a strategic reason behind a merger or an acquisition.
• Business Valuation
Business brokers generally apply “rule of the thumb” valuations for main street businesses to determine their selling price. Such valuations rarely vary. Merger and acquisition advisors are called in when there can be a broad interpretation of strategic value and rules of thumb do not apply. Large businesses generally have high components of niche services, intellectual properties, strong customer base etc, which make the strategic value for the business vary widely.
• Complexity of Transaction
Business brokers handle small businesses to sell and their clients consist of individuals. The process of selling the business is simpler as compared to larger corporations. Contracts for small businesses are straightforward and negotiations are based on the requirements of the seller, price and financing. For a merger and acquisition advisor, the target is a corporate buyer, who is an expert at M&A deals. Corporate buyers have different teams working for them like legal experts, investment bankers, valuation professionals etc. and their contracts are extremely complex. A corporate buyer sends in teams to conduct due diligence and examine the business to sell in detail. Hence if the business to sell is a large corporation, the seller will need a merger and acquisition advisor, who is equipped and experienced to negotiate with such pros.
• Volume of Clients
Business brokers represent as many businesses for sale as they can. For business brokers, it is a benefit to have many businesses listed with them when they are contacting individual buyers. Business brokers rely on mass email a campaign, posting on websites etc. and their attention is divided amongst many clients at one point of time. Merger and acquisition advisors, on the other hand, have an exclusive clientele of 3 to 4 clients per professional. With specific industry niches and a customized database of contacts, merger and acquisition advisors give their clients the personal and professional touch that they demand.
• Fees
Business brokers have a system of a minimum upfront fee plus around 10% of the transaction fee on completion of a successful deal. They do not charge monthly fees. Merger and acquisition advisors, on the other hand, charge a substantial upfront fee or a monthly fee in the range of $3000 to $10,000 per month. M&A advisors also charge a percentage of transaction value as fees on completion of the deal, which is decided on basis of the size of the business. Big Wall Street M&A companies are known to refuse transactions below $1 million in fees.
Based on the points made above, you can decide whether to hire a business broker or an M&A advisor for selling your business. The major deciding factor will be the cost that you are willing to incur. Keep in mind that if you have a small business to sell, it will not be able to sustain substantial upfront as well as monthly fees of the merger and acquisition advisor. Hence it would be better to go for a business broker. Go for a merger and acquisition advisor only if you need to sell a large corporation with high intellectual property and niche services.
Thursday, May 27, 2010
Buy A Business Like This… And It’s Almost Guaranteed You’ll Go Bankrupt In A New York Minute « All About Small Business
Buy A Business Like This… And It’s Almost Guaranteed You’ll Go Bankrupt In A New York Minute « All About Small Business
May 27, 2010 by: Art Hamel
If you’ve ever wanted to buy a business that is obviously undervalued by its owner — one that is under-performing now but that you think you could turn around and make a killing with if you bought it — then this will be one of the single most important articles you ever read, and will save you a lot of money and time.
Here’s why: People come up to me all the time and ask what my best “technique” is for finding profitable but undervalued businesses to buy.
And I basically tell them two things.
1.) First of all, you have to get this “undervalued business” idea out of your head. Because you’re going to find the return you get on the money you’ve invested, and time you’ve invested (and that the investors invest if you use investors), is going to be quite significant. And there’s no reason to waste those resources going after under-performing businesses.
2.) And secondly, if you’re looking for “dogs” (businesses that are under-performing), you’re going to find that even if you solve that problem and you get your picture in the paper, and they put you in “Inc” magazine, I’ll make you a bet on the next three or four that you work on you go bankrupt and you dump every one of the companies that you have.
Bottom line: It is way less expensive…and way less worrisome and troublesome…to go after good businesses that are already making huge profits, and that are extremely easy to get investor financing for, than “dog” businesses that have lots of “potential.”
May 27, 2010 by: Art Hamel
If you’ve ever wanted to buy a business that is obviously undervalued by its owner — one that is under-performing now but that you think you could turn around and make a killing with if you bought it — then this will be one of the single most important articles you ever read, and will save you a lot of money and time.
Here’s why: People come up to me all the time and ask what my best “technique” is for finding profitable but undervalued businesses to buy.
And I basically tell them two things.
1.) First of all, you have to get this “undervalued business” idea out of your head. Because you’re going to find the return you get on the money you’ve invested, and time you’ve invested (and that the investors invest if you use investors), is going to be quite significant. And there’s no reason to waste those resources going after under-performing businesses.
2.) And secondly, if you’re looking for “dogs” (businesses that are under-performing), you’re going to find that even if you solve that problem and you get your picture in the paper, and they put you in “Inc” magazine, I’ll make you a bet on the next three or four that you work on you go bankrupt and you dump every one of the companies that you have.
Bottom line: It is way less expensive…and way less worrisome and troublesome…to go after good businesses that are already making huge profits, and that are extremely easy to get investor financing for, than “dog” businesses that have lots of “potential.”
Can’t Find a Job? Buy a Business! | World Business & Economy Review
Can’t Find a Job? Buy a Business! | World Business & Economy Review
Having a hard time finding a job? Unfortunately that̢۪s not surprising news due to the fact that the current serve economic downturn has already lead to some of the highest unemployment rates we have seen in decades. Many of the hardest hit industries such as financial services and home construction face the prospect of an extended or permanent contraction that will force many workers to seek new careers as positions in those industries become eliminated or harder to replace.
One viable alternative that has always been available to workers who either want to leave the restrictions of the corporate world, or can‘t find a job in their industry because of tough economic times is to “buy a jobâ€. How do you do that? By either finding and purchasing an existing small business, or starting a franchise.
Buy An Existing Business: Business Brokerage Industry statistics indicate that your odds of success increase dramatically when you buy an established business as compared to launching a start up. This is particularly true in challenging economic times, and if the target business has been established for over 5 years and has a proven track record that can be validated via a thorough due diligence process.
What Type of Business?: Your basic goals should be to find a business that you will enjoy working in and growing, compliments some of your existing skill sets, and will also provide enough net income for you to make a comfortable living. Ideally the business should also generate enough income to allow you to cover any debt service you may have incurred if you financed a portion of the purchase price.
How To Find a Business: What’s the best way to find existing businesses for sale? The most efficient way to begin your search is via the internet. There are quite a few online “Business For Sale†directories like bizbuysell.com that offer a large searchable database of existing small businesses broken down by categories like states and industries. When you see a business that strikes your interest you can then contact the owner or the Business Broker who represents the listing for more information. In most case you will be required to sign a confidentiality agreement and provide some basic financial qualifications before receiving a detailed business summary.
Another way to find an established business is to employ the services of a professional business broker in your local area. Many Business Brokers have access to listings that might not normally appear on a local MLS system, are kept in house, or have knowledge about new listings coming available soon that may fit your investment parameters. A good Broker can also show and help you indentify potential business matches that you may have not even considered. And in most cases Business Brokers working with buyers are paid on a commission basis with the fee paid by the Seller so you have no out of packet expenses. Â
Buy A Franchise: Another viable option to replace a lost job is to start a franchise business. The biggest advantage of buying a franchise opportunity is that it’s a lot less risky than starting a new business from scratch. Most established franchise concepts are proven business models that have a verifiable track record of success that generally can be easily validated during your investigation of the offering. Franchisers can also provide comprehensive training and support before and after you open your location.  And keep in mind that one of the main reasons for the success of franchising as a business model is that Franchisers have a vested economic interest in your success in the form of royalty and other fees.
Find A Franchise: As with existing small businesses, the fastest and most convenient way to begin the process of finding a franchise is with a Internet connection. There are now dozens of franchise directories on line today that offer comprehensive listings of franchises available for sale, including information about investment levels, training, availability, and how to contact the franchise company for more details. These directories are also a good source for free information about the general process of buying a franchise business. You may want to visit A couple different directories such as franchiseopportunites.com, franchiseforsale.com, and azfranchises.com because not all of then will carry the same franchise opportunity listings.
Final Note: Always thoroughly investigate any franchise or business opportunity, obtain all appropriate disclosure documents available, and seek expert consultation prior to making any investment decisions.
Having a hard time finding a job? Unfortunately that̢۪s not surprising news due to the fact that the current serve economic downturn has already lead to some of the highest unemployment rates we have seen in decades. Many of the hardest hit industries such as financial services and home construction face the prospect of an extended or permanent contraction that will force many workers to seek new careers as positions in those industries become eliminated or harder to replace.
One viable alternative that has always been available to workers who either want to leave the restrictions of the corporate world, or can‘t find a job in their industry because of tough economic times is to “buy a jobâ€. How do you do that? By either finding and purchasing an existing small business, or starting a franchise.
Buy An Existing Business: Business Brokerage Industry statistics indicate that your odds of success increase dramatically when you buy an established business as compared to launching a start up. This is particularly true in challenging economic times, and if the target business has been established for over 5 years and has a proven track record that can be validated via a thorough due diligence process.
What Type of Business?: Your basic goals should be to find a business that you will enjoy working in and growing, compliments some of your existing skill sets, and will also provide enough net income for you to make a comfortable living. Ideally the business should also generate enough income to allow you to cover any debt service you may have incurred if you financed a portion of the purchase price.
How To Find a Business: What’s the best way to find existing businesses for sale? The most efficient way to begin your search is via the internet. There are quite a few online “Business For Sale†directories like bizbuysell.com that offer a large searchable database of existing small businesses broken down by categories like states and industries. When you see a business that strikes your interest you can then contact the owner or the Business Broker who represents the listing for more information. In most case you will be required to sign a confidentiality agreement and provide some basic financial qualifications before receiving a detailed business summary.
Another way to find an established business is to employ the services of a professional business broker in your local area. Many Business Brokers have access to listings that might not normally appear on a local MLS system, are kept in house, or have knowledge about new listings coming available soon that may fit your investment parameters. A good Broker can also show and help you indentify potential business matches that you may have not even considered. And in most cases Business Brokers working with buyers are paid on a commission basis with the fee paid by the Seller so you have no out of packet expenses. Â
Buy A Franchise: Another viable option to replace a lost job is to start a franchise business. The biggest advantage of buying a franchise opportunity is that it’s a lot less risky than starting a new business from scratch. Most established franchise concepts are proven business models that have a verifiable track record of success that generally can be easily validated during your investigation of the offering. Franchisers can also provide comprehensive training and support before and after you open your location.  And keep in mind that one of the main reasons for the success of franchising as a business model is that Franchisers have a vested economic interest in your success in the form of royalty and other fees.
Find A Franchise: As with existing small businesses, the fastest and most convenient way to begin the process of finding a franchise is with a Internet connection. There are now dozens of franchise directories on line today that offer comprehensive listings of franchises available for sale, including information about investment levels, training, availability, and how to contact the franchise company for more details. These directories are also a good source for free information about the general process of buying a franchise business. You may want to visit A couple different directories such as franchiseopportunites.com, franchiseforsale.com, and azfranchises.com because not all of then will carry the same franchise opportunity listings.
Final Note: Always thoroughly investigate any franchise or business opportunity, obtain all appropriate disclosure documents available, and seek expert consultation prior to making any investment decisions.
Tuesday, May 25, 2010
Five Skills You Must Learn to Buy a Business « Clarice Letson
Five Skills You Must Learn to Buy a Business « Clarice Letson
Most people who set out to buy a business do so with very little knowledge and experience in the field. This is fine as long as you can do some homework on the key principles and skills that are needed to successfully complete a transaction. Not only will mastering these skills increase your effectiveness and odds of doing a deal, but they will boost your confidence and performance in every area of your business life.
1. You must learn to read a balance sheet and profit and loss statement. This is a little basic accounting which can give you the tools needed to analyze any company for purchase of for any reason at all. Read, compare, read, compare balance sheets. No not IBM and General Electric annual reports for your stock portfolio, the ones on small companies that we want to buy. It will give you the core understanding of finance that very few individuals possess.
2. You must learn to deal with people. This is a little broad but here is what I mean. You need to get out and visit companies. The more companies you visit, the more CEOs of companies you will deal with. Some smart some not, some nice, some nasty. In order for you to feel comfortable in this environment you need to visit 50 companies (ok even 25 is a good start – it’s not that hard, just find the sellers and set up the appointments) as a buyer which will pave the way to develop instant rapport and presentation skills needed to keep the seller interested and motivated.
3. You must learn to negotiate. Where the rapport ends, the negotiation begins. Learn to say no without ever giving the impression you are saying no. Never get unnerved or angry at any terms the seller proposes. They always ask for the Moon. Be a very polite Tiger Shark. Always believe your offer is never too low, as insulting as it might be.
4. Learn to dance. Dance around difficult questions, criticisms and deficiencies. Your credibility is always a direct function of the image and confidence you project. You will never be as big or as strong a buyer as you think you should be. Forget about it. Lay your cards on the table and let them fall where they may. If someone does not like your story that is just fine with you… there are always other sellers that will be happy to take your money.
5. Learn to move on. One must approach fifty or so deals before getting the hang of it. There are dozens of reasons not to continue negotiations with a Seller. Once you hit one move on. Do not dwell on the deal because you think it is a neat business. Some of the neatest businesses are overpriced and unbankable. Learn what makes and breaks a deal up front and as soon as a red flag emerges, do not waste time throwing in the towel.
Most people who set out to buy a business do so with very little knowledge and experience in the field. This is fine as long as you can do some homework on the key principles and skills that are needed to successfully complete a transaction. Not only will mastering these skills increase your effectiveness and odds of doing a deal, but they will boost your confidence and performance in every area of your business life.
1. You must learn to read a balance sheet and profit and loss statement. This is a little basic accounting which can give you the tools needed to analyze any company for purchase of for any reason at all. Read, compare, read, compare balance sheets. No not IBM and General Electric annual reports for your stock portfolio, the ones on small companies that we want to buy. It will give you the core understanding of finance that very few individuals possess.
2. You must learn to deal with people. This is a little broad but here is what I mean. You need to get out and visit companies. The more companies you visit, the more CEOs of companies you will deal with. Some smart some not, some nice, some nasty. In order for you to feel comfortable in this environment you need to visit 50 companies (ok even 25 is a good start – it’s not that hard, just find the sellers and set up the appointments) as a buyer which will pave the way to develop instant rapport and presentation skills needed to keep the seller interested and motivated.
3. You must learn to negotiate. Where the rapport ends, the negotiation begins. Learn to say no without ever giving the impression you are saying no. Never get unnerved or angry at any terms the seller proposes. They always ask for the Moon. Be a very polite Tiger Shark. Always believe your offer is never too low, as insulting as it might be.
4. Learn to dance. Dance around difficult questions, criticisms and deficiencies. Your credibility is always a direct function of the image and confidence you project. You will never be as big or as strong a buyer as you think you should be. Forget about it. Lay your cards on the table and let them fall where they may. If someone does not like your story that is just fine with you… there are always other sellers that will be happy to take your money.
5. Learn to move on. One must approach fifty or so deals before getting the hang of it. There are dozens of reasons not to continue negotiations with a Seller. Once you hit one move on. Do not dwell on the deal because you think it is a neat business. Some of the neatest businesses are overpriced and unbankable. Learn what makes and breaks a deal up front and as soon as a red flag emerges, do not waste time throwing in the towel.
Known Article Directory » Business Succession Planning: Beyond Buy-Sell Agreements for the Closely Held Business
Known Article Directory » Business Succession Planning: Beyond Buy-Sell Agreements for the Closely Held Business
25.05.2010 | Author: Dan A. Penning
A large portion of the businesses in the United States are closely held companies, and many of the closely held companies are family owned enterprises. The long term perpetuation of the family business is a common and laudable goal of most founders. Developing strategic and successful transitions to subsequent generations largely centers on who will control the company and whether the control will be concentrated in one family member or a small group of family members, or if the control of the company will be spread out among a large group of family members or all the family members. Limiting control to a sole shareholder or a concentrated group of shareholders that are involved in the company is usually the preferable option. The founder’s decision to select the most advantageous successor(s) is hardly adequate, however, and many founders approach this first order of business tepidly and do not make the difficult decision due to the attendant consequences that include a possible disruption of the business and family relationships. A successful transition inevitably involves addressing the possible conflicts that will arise within the company itself and among the family members involved. Conflicts can emerge from the most expected and unexpected sources, and a founder that is willing to plan for and manage potential conflict will provide a more secure foundation for the business to continue successfully beyond his or her lifetime.
A part of a lawyer’s arsenal in assisting the family business owner is to formulate a succession plan and draft a buy-sell agreement that determines the steps and the results of various shareholders buying out other shareholders and under what circumstances a shareholder may or may not continue as a shareholder in the business. In many family situations, however, the inherent conflicts that arise and come to the surface are because the family has not been taught the intangible character development and emotional fortitude that is necessary to successfully navigate and resolve disagreements. Personality clashes, the history of family members’ childhood relationships, opposing perspectives on the management and operation of the family business, and the founder’s choice of who will succeed to the control and ownership of the company have the potential to ignite family blow ups.
Lawyers provide legal advice in these unfortunate situations, however, lawyers also have a unique perspective in that we also see successful family enterprises implement transition plans that go beyond the necessary buy-sell agreement. Successful family transitions are usually the result of cultivating cooperation, understanding, and forgiveness amongst family members. Founders who succeed at fostering personal growth and character development, including honesty, respect and leadership alongside teaching business acumen generally observe a more successful and peaceful generational transition of the control of their business. The founders themselves must make a deliberate and long term dedication to cultivating a family culture that brings in and nurtures the emotional intelligence necessary to perpetuate a successful family business. There are a myriad of resources available to business owners who desire guidance in this area. The Family Firm Institute, Inc. is an excellent starting point. The attorneys at Wright Penning & Beamer are committed to helping our clients successfully transition their businesses to the next generation, and we can provide you with resources that will complement a comprehensive buy-sell agreement.
25.05.2010 | Author: Dan A. Penning
A large portion of the businesses in the United States are closely held companies, and many of the closely held companies are family owned enterprises. The long term perpetuation of the family business is a common and laudable goal of most founders. Developing strategic and successful transitions to subsequent generations largely centers on who will control the company and whether the control will be concentrated in one family member or a small group of family members, or if the control of the company will be spread out among a large group of family members or all the family members. Limiting control to a sole shareholder or a concentrated group of shareholders that are involved in the company is usually the preferable option. The founder’s decision to select the most advantageous successor(s) is hardly adequate, however, and many founders approach this first order of business tepidly and do not make the difficult decision due to the attendant consequences that include a possible disruption of the business and family relationships. A successful transition inevitably involves addressing the possible conflicts that will arise within the company itself and among the family members involved. Conflicts can emerge from the most expected and unexpected sources, and a founder that is willing to plan for and manage potential conflict will provide a more secure foundation for the business to continue successfully beyond his or her lifetime.
A part of a lawyer’s arsenal in assisting the family business owner is to formulate a succession plan and draft a buy-sell agreement that determines the steps and the results of various shareholders buying out other shareholders and under what circumstances a shareholder may or may not continue as a shareholder in the business. In many family situations, however, the inherent conflicts that arise and come to the surface are because the family has not been taught the intangible character development and emotional fortitude that is necessary to successfully navigate and resolve disagreements. Personality clashes, the history of family members’ childhood relationships, opposing perspectives on the management and operation of the family business, and the founder’s choice of who will succeed to the control and ownership of the company have the potential to ignite family blow ups.
Lawyers provide legal advice in these unfortunate situations, however, lawyers also have a unique perspective in that we also see successful family enterprises implement transition plans that go beyond the necessary buy-sell agreement. Successful family transitions are usually the result of cultivating cooperation, understanding, and forgiveness amongst family members. Founders who succeed at fostering personal growth and character development, including honesty, respect and leadership alongside teaching business acumen generally observe a more successful and peaceful generational transition of the control of their business. The founders themselves must make a deliberate and long term dedication to cultivating a family culture that brings in and nurtures the emotional intelligence necessary to perpetuate a successful family business. There are a myriad of resources available to business owners who desire guidance in this area. The Family Firm Institute, Inc. is an excellent starting point. The attorneys at Wright Penning & Beamer are committed to helping our clients successfully transition their businesses to the next generation, and we can provide you with resources that will complement a comprehensive buy-sell agreement.
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