Interesting Article on Small Business........ Cold Hard Facts

Why do businesses fail? How many businesses are there? Where do businesses succeed?

Click here for the article.

Running a small biz is tough, but good and free advice is available!

Excellent info about employment practices for small businesses. The very best medicine is preventive medicine!

Take a look at this blog article by Attorney Alan Bush about overtime perils and pitfalls.

Click Here

Confidentiality in the Sale of Small Businesses

Business sellers and buyers often look at confidentiality requirements in different ways. However, in the end, they both have the same interests.

The reason to maintain confidentiality is to protect the business from the possible negative impacts of  a sale.

Read more here............

Circular Money and the U.S. Tax System

Listening to a financial radio station today I heard something that caused me to say..."what?" Here's the outline:

First the Cash Source:
China has gobs of U.S. dollars that they get from selling us incredible amounts of stuff.
China is catching heat for owning so much U.S. Treasury debt, so they want to use the US Dollars for something other than lending it back to the US Treasury. So why not loan it to U.S. companies?

The Use of Cash:
A big U.S. company, that will remain nameless, pays 1.8% dividend on it's stock. Note, this is important ...Dividends for biz are not tax deductible, meaning companies pay dividends after they pay their tax obligations.

So what to do?
This company borrows US Dollars at 1.7% interest from China. The 1.7% interest is tax deductible which means the effective cost of the interest is about 1.2%...and remember the effective cost of dividends is 1.8% because dividends are not tax deductible. So the cost to the company for borrowing from China is 33% cheaper than the dividend cost.

The solution, borrow US Dollars from China, deduct the interest from taxes and use the cash to buy back the stock which eliminates the 1.8% cash dividend cost and replaces if with an effective $1.2% cash cost.

Incredible but true, another case of the perverted U.S. tax code. Borrowing is more tax effective than returning cash to shareholders as dividends.

Small Business - Management and Leadership Myths and Truths - Small Businesses and Good Employees

Why do so many small business owners say "I can't get good employees?"

The business owner's assumption seems to start from the premise that good employees are either no where to be found or will only work for big companies. In my experience I find both of these assumptions to be incorrect.

There are many small businesses with good employees and I believe there are many people working in large companies who would rather be working in small companies...if....they could find the circumstances that permit it. What's the problem? There are too many small business owners who have poor to terrible management and leadership skills. I meet with hundreds of business owners a year, I know small business owners.

If you want your small business to attract high quality employees here are the things I would focus on:

1. Your integrity - Say what you'll do, then do what you say.
2. Always be respectful to employees and customers, even when you're angry. Whatever anyone hears you say is what they assume you'll say when they aren't near.
3. Even if you know the answer, help the employee figure it out. 
4. Let your employees make little mistakes and then show the leadership compassion when you unscramble the problem.
5. Focus local  for employees, a short commute is high value these days.
6. Don't be afraid to hire people smarter than you...and...when you do hire someone smarter than you let them help you.
7. Focus on total compensation not just the salary. Put in place bonus plans so that when the business does well, everyone does well.
8. Hire slow, fire fast.

That's a start. Get focused on getting better people and you will have the opportunities. Now the real question is, how do you become a business owner who deserves better people?

Using Tax Logic to Manage the Value of your Business

In the real world of business management ownership you can only create income in 2 basic ways. These two income methods are taxed differently by good 'ol Uncle Sam.

The first method income is "earned" income. Let's say I'm a graphic artist and you hire me to create a logo. I design the logo and you pay me $250. That is earned income to me (assuming it goes to me and not into a corporation). The $250 goes into my gross income and I pay tax on it as high as 35% federal and depending on what state you live in, it could be over 45%. So your $250 of earned income (assumes no state tax) is worth only $162.50 in your pocket.

The second method is capital gains income. Capital Gains can be generated in many ways. Let's look at a simple example. You get on Ebay and find a great bike for $100, you buy it. Then a year later you're riding around the block on your $100 bike and a guy stops you and offers you $350 on the spot. You take it and walk home! You made $250 (same as if you designed a logo above) but this is capital gains and your tax on that is only 15% of your gain ($350 rec'd  - $100 paid = $250 gain). Your tax for this is $37.50 and your net in pocket is $212.50.

You get to keep $50 more if you earned your money through capital gains income.  This is just another reason why accumulating capital is important to long term wealth...if you have capital you can manage your taxes a lot better than if you only have earned income.

When running your business think of all the ways to build value that is taxed at 15% instead of 35%...over time it could be a lot more money in your pocket. Talk to your CPA to see if you have opportunities to maximize the availability of the capital gains tax rates.

So You're Sitting Around the House and You Decide..I want to....

I got it...I think I'll build a small business being a consultant/trainer for people who want to build sand castles!

Yep, here's someone else who figured out how to make something most of us never thought of into an interesting small business.

Read Here...

Time to start thinking, maybe a trip to the beach would help.

Good article on getting work done - 7 steps to Better Personal Productivity

These ideas for getting more done make a lot of sense to me, I think I'll keep them handy so I can stay on track for the big projects. I've done #3 successfully and I've victimized myself on #6.

Read the article here.

When I first got into the workforce I had a boss tell me, the distance between good and great is not as far as we like to use for an excuse. I've always tried to remember that.

Business Owners...Save Your Life...Now!

This post is a bit in left field for me but I ran across this study that is compelling and struck a nerve with me. Business owners often have way too much stress in their lives and the demands of the business can cause them to ignore their personal health while they slave away at keeping their business healthy.

Here's an article on how meditation can dramatically improve heart health and even save your life...and I believe it! Think about it.. 50% reduction in heart attacks.

Read Article Here

20 minutes twice a day to save your life? That's a great investment.

I am going to start this program and I'll let you know my progress. I hope you decide to try it, please let me know how you do.

Hmmm...Bad news for road-side businesses?...The tax man wants your customers too!

At least someone in government thinks having government employees running gas stations and C-Stores is a good idea..... I have my doubts..

Here's a story on a politician trying to reverse a 50 year old law that prohibits the government from setting up retail businesses on the interstate highway system.

Read Here..

Another example of why Buy Sell Agreements are so important

This may be an extreme example but the fundamentals are in many business problems we see on a regular basis.

Just because your business partner is your spouse it doesn't mean business judgement should be suspended.

Read about the Los Angeles Dodgers bankruptcy soap opera here.

Why are Entrepreneurs Better for the Economy than Bureaucrats?

Entrepreneurs, "My business will lose a trillion dollars this year if I don't do something. I'm cutting back on everything right now!"

Congressman, "We'll have a trillion dollar budget deficit this year...we need committee meetings for the next 8 months."

I rest my case.

Time to Look at Smart Growth for Your Small Business?

Business owners often get caught in the squeeze between seeing opportunity to grow but not having the resources to hire people or get more space. Managing a small business needs to be a creative process.

If you find yourself in this position (and if not now you certainly will if you grow) spend a few minutes looking at a 3rd party fulfillment service. Think of it as an expansion that you can make without hiring people or signing a big lease.

Take a look here. 

What Does Patricia Kluge Bankruptcy teach us about business ownership?

A messy business failure can always be learned from. The Patricia Kluge bankruptcy has lessons for small business owners with partners, both known partners and unknown partners.

I once heard a wise man say, "Pick your business partners twice as carefully as you pick a spouse..because a spouse can only take half of what you have."

If you are going into a partnership in a small business make sure you set up the proper buy/sell agreements so that you don't wind up with a partner you don't want. How could that happen?

You and you partner are 50/50 with no buy/sell agreements in place. You've known your partner since high school and trust him completely but..... after you two are in business he goes thru a divorce and his wife winds up being your 50/50 partner. Now what? But wait it could get worse...she remarries and now you have another partner, kind of. You get the picture.

Get your buy/sell agreements in order before you go into business with a partner. A good business attorney can help you avoid a terrible situation, one which we see way to often out in the real world. You'll even find businesses for sale solely because of partnership issues that weren't planned for at the beginning and now selling the business is the only way out.

Here's a good video post regarding buy/sell agreements.

Uncertain Times, Reason to Act or Reason to Wait?

I am often asked "when is the best time for someone start a business?". As you might imagine, the answer is different for everyone and even then, the answer is never 100% evident.

If you wait until the risks are minimal the time might may never come, if you leap when the risks are huge your chances of success are reduced. So what to do.......................

My advice is to make sure you have thought about the opportunity and the risks. Knowing that you can never really quantify the risk. Here are a few questions:

• If the business takes a year to get going what happens?
• How much of my own money am I willing to risk?
• How much of others people money am I willing to risk?
• Am I as smart as I think I am?
• Do I have a bullet-proof plan for the first 6 months? If not, why not?

The last item is critical, if you have a bullet-proof, well thought out plan for 6 months...and you can execute that plan, your chances of success go up dramatically. The reason is simple. A great and accurate 6 month plan means you know enough about your market and your customers to give you time to adjust to changes. The ability to adjust is an essential survival skill in business.

If you really want to start a business, focus on a well thought out 6 month plan. Review it with people who are in business, be honest and do your homework. If you've done all that and the opportunity still looks good...jump in..and welcome to the world of the entrepreneur.

Radio Interview with important industry information - Industry Security and Surveillance Companies

Listen to Industry experts discuss buying, selling and operating security and surveillance companies.

 Click here for the interview

Interviewed are Security firm CEO Alan Gilmore and George Abraham - Business Appraiser.

What is Working Capital and why is it Important?

Many small business owners don't understand or appreciate the need to have a good handle on working capital and how it is generated or consumed by the business. Let's take 2 examples on opposite ends of the business spectrum.

First a Day Spa. At a day spa the customer comes in, pays for the services and then gets the services - no accounts receivables to collect...no money, no service. Also, a Day Spa sell lots and lots of Gift Certificates. With gift certificates the biz collects $100 for a gift certificate and has the cash for weeks, months, years or even forever before the service is delivered. That's called negative working capital. I get your money before I incur the cost of providing the service.

Now lets look at an office supply business. A customer calls up, orders 5 cases of paper for delivery at a cost of $200 and the customer wants you to "bill" them. Which means they will pay in about 30 days. This $200 order requires a lot of working capital...you had to buy the paper, pay the driver, pay the person who took the order all BEFORE the customer pays you the $200. All those expenses you had to pay out before the customer paid you needs working capital to pay.

That's why understanding working capital is critical, if you are in a business that needs working capital to grow you'd better figure out where the working capital is coming from before you start to grow. Many. many profitable businesses have gone out of business because they didn't account for, and plan for, the working capital needs of the business.

We're proud to support the Cystic Fibrosis Foundation

Sunbelt sponsors CF Great Strides Walk to support research to find a cure for this terrible disease.

Please visit our Sunbelt Fan Page to support us!

Don't Forget to Visit our Facebook Fan Page

We love fans!!!! Hope to see you often.

Niche Manufacturing Business for Sale in Texas

Outstanding, fast growing manufacturing business with provisional patents for sale in Texas.

We are proud to announce this business has been sold. For more manufacturing businesses for sale like this one please  CLICK HERE

Where can I find information about buying a business in a specific industry?

As we all know the web has a lot of information but often it is hard to sort through the mass to get to the finer topics.

Every Friday, on internet radio, there is a 1 hour broadcast that deals with buying a business in a specific industry. This week's show (1pm cst, noon eastern) is about trucking companies. These shows feature industry specialists who can provide true insights into the good and bad to look for in a business.

Also, on the Entrepreneurial Insights website there is a menu of many previous shows and the industries they cover. You can replay those shows at your leisure.

Take a look.......and listen to Entrepreneurial Insights , you can visit and replay the broadcast anytime but the live broadcasts are Fridays at 1pm central.

The hard work of un-fooling yourself...........

As I've written before, during the 1st quarter of the new year I find myself trying to take extra time to plan and evaluate. Some of this is an natural reaction to reviewing the financials in preparation for filling taxes. Some of it is just my reaction to something I've heard or read somewhere.

During a recent walk I was thinking about something I read in a blog article by Michael Hyatt, by the way, if you are unfamiliar with him I recommend his blog. He writes a lot of good stuff about business and some interesting stuff about managing life. In one of his articles he hinted at something that I reformulated for my own use. What I'm talking about is trying to identify the business and personal habits, processes or practices that I automatically assume make sense but on closer investigation I'll find out the idea either was never a good idea or it's an idea who's time has passed.

Once I decided to take a look I couldn't believe how difficult it is to then decide which things to look at! I decided I'd look back at the prior week for some clues or direction. I had thought that the prior week was really pretty uneventful and not very interesting nor complex. But then I started breaking down the events and connecting the dots it got messy. I'm now convinced that many things are simple but few things are uncomplicated.

I then made the leap of logic that goes like this, "If I'm trying to figure out what I'm fooling myself about, then obviously I've already fooled myself and how will I recognize it?" Now what do I do?

It wasn't nearly as difficult as I thought. Here's what I did. I went to someone in our office and asked the brilliantly insightful question, "What do we do that's dumb?" Much to my surprise (and a bit of disappointment) they didn't need to think about it at all, nearly before the words came out of my mouth the person had listed 3 things.... bang..bang..bang!

To shorten this post I won't bore you with the details but here are the results of looking into the 3 things identified for me:

Starting a Small Business - What's the most important question to ask?

There are many issues to deal with and questions to ask when thinking about starting a small business.

Should I incorporate? LLC? C Corp? S Corp?
What name should I use?
How do I get or set-up my website?
How do I find a CPA? Do I even need a CPA?
How do I get a license to do biz in my state?
What accounting? Quickbooks? Excel?

And the list goes on and on...
But the real most important question is this...................

If I start a small business, how do I get out of my small business?

What is your exit plan? Your goals, time frame, limitations?

If you will think through, with honesty, this question - How do I exit my business?  You will make a better decision about how you go into your business. Do you want to sell the business? If yes, then there are things you need to do when you set up your small business...Want an example?

If you want to sell your business don't name your business after yourself. Believe me, Wizards A/C and Heat Service is easier to sell, and at a higher price, than John Q. Smith, Inc.

Send me your start up questions that relate to your exit plan, I'll take a shot at getting you useful answers.

What is CRM and does my small business need it?

Hard as it is to imagine, there was a time not terribly long ago when a sales or service person for a small business would go out into the field without a PDA or Smart Phone—or any phone at all. The reason for the current ubiquity of the communication devices in small business is obvious: it makes customer service or the new term, Customer Relationship Management  (CRM), easier and more effective. The success of any small business is built around this engine and the latest innovation in the field of CRM is also the most powerful yet seen, primarily because it is among the simplest-to-implement of all emerging information technologies. We speak, of course, of Cloud-Based Solutions.

Until recently any information gathered by, say, a serviceman sent into the field would have to be relayed through a series of data channels, each administered by an individual working within his or her own cataloging system, until it eventually found its way to the appropriate sales rep who is ultimately responsible for the client's satisfaction and continuing patronage of the business. Meanwhile, the client is already calling the rep and asking about progress on the issue. And the rep has no idea there was an issue to begin with.

Want to Know How a Business Appraiser Looks at Small Business Value?

Factors that Increase or Decrease Business Value

By: George D. Abraham

CEO & Chief Appraiser

Business Evaluation Systems

There's a range of key factors that can affect the value of a business.  While some of these factors are outside of the owner's control, steps can be taken to make the business as valuable as possible. Start planning well in advance and consider inserting an exit strategy into your original business plan. Then start implementing the factors that increase value and eliminate the factors that decrease the value.

Financial Statements

Just how good are your financials. Are they minimal or do they show an in-depth look at your business.  Can you easily track the flow of revenue and expenses flowing from the invoice to the financials to the tax returns?  Can your track the sales of your top 5 customers? Can you easily prove all of the perks you receive from the company?  Today's accounting software easily lets you do all of this and much more.  When a buyer is interested in a company, the ease at which the owner can prove the financial performance of his or her business has a direct impact on value. Incomplete or inaccurate financials tells the buyer that no one is watching and tracking the Company's performance and therefore the future performance (of real importance to the buyer) is unpredictable.  Value is created or destroyed by the ability to see the Company's future.  The longer the buyer can see that the Company will perform in the future as represented, the more secure they are and less risk is perceived.  To the contrary, when the future is a guess, risk is increased and value is decreased. 

Landscape Business for Sale in Texas

Recognized for excellence, this landscape business is known for its variety of designs which utilizes native Texas and low maintenance plants. Excellent reputation with outstanding and growing plant nursery to supply plants. Business has operated successfully for more than 12 years. The well trained staff is ready to help the new owner succeed. Business is located in growing area with excellent demographics for landscape design services. Excellent real estate included in the sale of the business.

Ever wonder what an Accredited Investor is? And why it matters......

Under the Securities Act of 1933, any company that sells securities must register with the SEC or file for an exemption if they so qualify.  The Act provides companies with a number of exemptions from federal registration requirements.  One of these exemptions is that the company may sell its securities to Accredited Investors.   Selling securities to Accredited Investors is deemed to be an exemption because the assumption is that Accredited Investors have the skill and knowledge to evaluate and determine the risk of the investment.

The term Accredited Investor is defined by the Securities and Exchange Commission (SEC) and is used to describe investors who have achieved a level of financial sophistication that eliminates or diminishes the need for protection that some government filings may provide. 

An Accredited Investor is:

It's a new year, winter is raging and opportunities await....

This time of year I like to take several days away from my day-to-day business, hide out somewhere cold but with a good fireplace and sort through the current opportunities and challenges of my business. I make it a point to seriously limit email and phones so I can think more clearly without the usual "noise" of day to day activity.

I'm always curious about how (or if) other business owners do the same and what approach they take to an annual review or plan. Please let me know your routine and your success with it.

Here's my approach:

Do you know yourself? Do you know your clients? What Kind of business owner are you?

I had a chance to meet with John Warrillow recently. He's the author of an excellent new book that talks about business owners and how they think. It's titled Built to Sell

If you have a dream of selling your business or growing your small business into a bigger business that one day can be sold, this book should help you.

If you're a business owner, or hope to one day be a business owner, this book is important for you...if you are an advisor to business owners this book is critical!

What kind of business owner are you? What kind of business owners are your clients?

• Mountain Climber
• Freedom Fighter
• Craftsperson

Take the time to figure it out, it could be worth a lot of money to you one day soon.

Give it a read, I'll bet you'll be glad you did.

Click here for the link to the book.

Thinking about buying a business? Here's a way to figure what is possible

If you want to own your own small business there are really only two ways to get into business. You can start a business from scratch, often called a start-up. Or you can buy an existing business from a business owner who is ready to sell their business.

There is much written about starting a business. The biggest problem with a start-up is in the time it takes a start-up to become cash flow positive and unfortunately many never become cash flow positive and they fold.

Buying an existing business is often a good choice. If you do it right you can be cash flow positive immediately and financing for purchasing a business is often very favorable. In a previous post I wrote about "Why would someone sell be their perfectly good business?" and it talks about why business owners choose to sell good businesses.

If you want to buy an existing, profitable, business you need to answer a couple of questions about your situation before you begin your search.

First, how much money do you have available for a down payment before borrowing any money from any banks, credit cards, etc. It will be very, very difficult to buy a good business without a down payment.

Second, what's the minimum amount of money you need to make from the business to live on once you buy the business.

If those two numbers are reasonably close to each other you have a decent shot at buying a business.

Here is a "typical" deal:

Business earnings (Seller's Discretionary Earnings)  $75,000
Selling Price of business   $200,000
Down payment    $50,000
 Earnings/Salary you need  $50,000
Get an SBA Loan for $150,000
Annual Payments for your SBA Loan $20,500 (10 years @ 6.5%)

Business earnings $75,000 - $20,500 (debt payments) = $54,500 to you the new owner.

Also, when thinking about your down payment there is a mechanism to use you 401(k) funds to buy a business without incurring early withdrawal penalties nor tax obligations.

If you want to be in business for yourself it's always a good idea to get informed and look at all your options.

Why would someone sell me their perfectly good business?

Often small business buyers wonder about this. There is an all too frequent buyer attitude that says "If it is a good business they wouldn't be willing to sell it to me!"
Here are some reasons we see business owner want to sell:

1. Divorce of husband and wife owners
2. Partnership disputes
3. Owner health issues
4. Kids don't want the business and the owner has gotten to retirement age.
5. The business has gotten bigger than the skills of the owner
6. The business needs professional management
7. The industry is changing faster than the owner wants to change (in this case the owner is always convinced the market is wrong and he is right).
8. The business is totally debt free and the owner doesn't want to take on debt to grow.

There are many other reasons that make sense to the seller, even if it doesn't always make sense to the buyer. the tricky part is, because confidentiality is so important it takes some work to locate a good business to buy. Finding a good business for sale and buying it from a seller who has a good reason to sell could be a formula for success in a business acquisition.