tag:blogger.com,1999:blog-49307057043862383602024-03-05T12:12:46.709-06:00Buying, Selling and Managing a Small BusinessSmart and informed approaches to starting a small business, buying a business, selling a business and small business management. Real world examples, tips, successes and dangers.BizBuyerhttp://www.blogger.com/profile/15901148990548855057noreply@blogger.comBlogger140125tag:blogger.com,1999:blog-4930705704386238360.post-68533672096599801822013-05-09T19:45:00.001-05:002013-05-09T19:45:42.982-05:00Visit our New Blog siteWe're growing! Thanks for your interest.<br />
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Visit our new blog at <a href="http://www.sunbelttexas.com/site/blog/">http://www.sunbelttexas.com/site/blog/</a><br />
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Also, our RSS feed at <a href="http://feeds.feedburner.com/SunbeltBusinessAdvisorsBuyABusinessTexasBlog">http://feeds.feedburner.com/SunbeltBusinessAdvisorsBuyABusinessTexasBlog</a><br />
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Thank you!BizBuyerhttp://www.blogger.com/profile/15901148990548855057noreply@blogger.com0tag:blogger.com,1999:blog-4930705704386238360.post-47875181047733987092013-04-21T10:33:00.001-05:002013-07-28T16:39:16.653-05:00Why I want YOU to Own a Successful Small BusinessWhy do I want you to own a successful small business?<br />
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Here's my list of 7:<br />
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<ol>
<li>So you can go to your kids baseball games. You can control your time and not be controlled by someone else's schedule. Boss "Hey John, get on a plane and spend next week in Portland." John, "Next week is my kids birthday party." Boss, "Sorry about that but you have to be there."</li>
<li>So you can make your community a better place by supporting good causes that effect your neighbors. </li>
<li>So you can provide the services and products the community wants instead of decisions for Omaha being made in New York.</li>
<li>So you can provide jobs for your friends, neighbors and family.</li>
<li>So your kids can feel the security of a home that's in control of it's future and your kids don't hear you and your spouse talking about the layoffs that might be coming.</li>
<li>So that you can have the security of being in control of your future</li>
<li>So that I can buy products and services from my neighbors.</li>
</ol>
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Please add your reasons in the comments section so we can move forward local small businesses in our communities<br />
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What's the Value of a Small Business? <b><span style="color: blue;"><a href="http://www.amazon.com/gp/product/1598697668/ref=as_li_tf_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=1598697668&linkCode=as2&tag=sunbeltbusine-20%22%3EThe%20Small%20Business%20Valuation%20Book:%20Easy-to-Use%20Techniques%20That%20Will%20Help%20You%20Determine%20a%20fair%20price,%20Negotiate%20Terms,%20Minimize%20taxes%3C/a%3E%3Cimg%20src=%22http://ir-na.amazon-adsystem.com/e/ir?t=sunbeltbusine-20&l=as2&o=1&a=1598697668%22%20width=%221%22%20height=%221%22%20border=%220%22%20alt=%22%22%20style=%22border:none%20!important;%20margin:0px%20!important;%22" target="_blank">Here's your easy to use guide to Small Business Value.</a></span></b></div>
BizBuyerhttp://www.blogger.com/profile/15901148990548855057noreply@blogger.com0tag:blogger.com,1999:blog-4930705704386238360.post-55436686284046609402013-04-07T09:15:00.001-05:002013-07-28T16:40:06.337-05:00Common Characteristics of Profitable BusinessesAs a Business Broker I've had the opportunity to meet with and analyze more than 2,000 businesses. I have come to discover that there are 6 basic characteristics that are almost always found in profitable businesses.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgEFkgVkZyB3hvBjzn1qhveeVTViQn2VAXk8CJ5qsoBoWm135o472l-VUWKCeZCs2lZu_6KDQmb02ZjZpuYEwO7ntCt9zQ40pDp9sOTALi8fyn9lMXF6t2FlD2jjWV2qOMK_n3_VVvCLb-_/s1600/test+from+en.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgEFkgVkZyB3hvBjzn1qhveeVTViQn2VAXk8CJ5qsoBoWm135o472l-VUWKCeZCs2lZu_6KDQmb02ZjZpuYEwO7ntCt9zQ40pDp9sOTALi8fyn9lMXF6t2FlD2jjWV2qOMK_n3_VVvCLb-_/s320/test+from+en.jpg" width="320" /></a></div>
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6 Characteristics of Profitable Businesses:<br />
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<ol>
<li><b>The business owner has an firm grip on reality.</b> They understand the good and the bad of their industry and their business.</li>
<li><b>The business owner spends the money to get good advice. </b>They have an accountant, attorney and financial adviser that is competent in the specific industry and size business.</li>
<li><b>The business owner makes a good faith effort to have systems and procedures in place so that their product or service experience is repeatable. </b>The vast majority of activity is done the same way each time. </li>
<li><b>The business owner is always trying to find ways to do #3 better.</b></li>
<li><b>The business owner doesn't blame his employees and his customers for his results. </b>It is shocking to me how often this is the case in bad businesses.</li>
<li><b>The business owner owns the business for a reason other than it's just a way to make a living. </b>The owner might want to sell the business to fund their retirement or next venture or pass the business on to their kids or create enough profit to fund a charitable cause important to them or operate a business to allow them enough free time and money to pursue an important cause.</li>
</ol>
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Businesses and business owners with the above characteristics are much more likely to be profitable, more valuable and easier to operate than businesses without these characteristics.</div>
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Are there other characteristics that are important to you as a customer? Can you identify businesses with these 6 characteristics?</div>
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What's the Value of a Small Business? <b><span style="color: blue;"><a href="http://www.amazon.com/gp/product/1598697668/ref=as_li_tf_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=1598697668&linkCode=as2&tag=sunbeltbusine-20%22%3EThe%20Small%20Business%20Valuation%20Book:%20Easy-to-Use%20Techniques%20That%20Will%20Help%20You%20Determine%20a%20fair%20price,%20Negotiate%20Terms,%20Minimize%20taxes%3C/a%3E%3Cimg%20src=%22http://ir-na.amazon-adsystem.com/e/ir?t=sunbeltbusine-20&l=as2&o=1&a=1598697668%22%20width=%221%22%20height=%221%22%20border=%220%22%20alt=%22%22%20style=%22border:none%20!important;%20margin:0px%20!important;%22" target="_blank">Here's your easy to use guide to Small Business Value.</a></span></b><br />
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<br />BizBuyerhttp://www.blogger.com/profile/15901148990548855057noreply@blogger.com0tag:blogger.com,1999:blog-4930705704386238360.post-52645359238133159262013-04-06T10:25:00.000-05:002013-04-06T10:25:10.281-05:00Sunbelt Completes the Sale of a Specialized Property Management CompanyWe are pleased to announce this successful transaction. The business is a 30 year old company operated by the same 2 partners since it's inception. Both partners were ready to retire.<br />
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The sellers were referred to Sunbelt by <a href="http://ksevradio.com/hosts/steve-drake" target="_blank">Steve Drake</a> a well known Houston, Texas financial planner and host of his own financial radio show call Money Matters.<br />
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The business specializes in the management of Homeowners Associations.<br />
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The buyer had experience in working for an association management firm and was able to finance the purchase with a very attractive<a href="http://www.allegiancebanktexas.com/business_sba.asp" target="_blank"> bank loan from Allegiance Bank utilizing the SBA Loan Guarantee</a> program. Gary Henderson managed the process for Allegiance Bank.<br />
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The buyer will assure the business lives on long past the time when the founders were able to operate the company.<br />
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We are proud to be a part of this transaction that enables long time business owners to realize the value created in their business and retire in the comfort they had worked so hard to earn.<br />
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<br />BizBuyerhttp://www.blogger.com/profile/15901148990548855057noreply@blogger.com0tag:blogger.com,1999:blog-4930705704386238360.post-46023371509772448672013-03-12T21:02:00.001-05:002013-03-12T21:03:31.872-05:00Outstanding B2B Digital Printing Business for Sale in Houston TexasWell established business-to-business company that focuses on servicing other companies. Clients are strong companies who utilize this company's outsource digital printing services.<br />
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In business for nearly 20 years this business adapts to and leads the market in sophisticated, specialized niche printing and media services.<br />
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Annual sales are nearly $1,000,000<br />
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SDE (profit available to owner) is $235,000+<br />
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Asking price: $550,000 is extremely reasonable for this B2B Monday - Friday business.<br />
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A qualified buyer with approximately $100,000 liquid for a down payment could obtain an SBA Loan for $500,000 (includes some working capital).Loan payments would be approximately $66,000.<br />
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For new owner a cash flow profit could be $169,000.<br />
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<a href="http://listings.sunbelttexas.com/listings/view.asp?listing=1121838" target="_blank">Click here for more details</a> and contact information or call 281.440.513<br />
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<a href="http://www.sunbelttexas.com/">www.sunbelttexas.com</a><br />
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Sunbelt Business Brokers Houston TexasBizBuyerhttp://www.blogger.com/profile/15901148990548855057noreply@blogger.com0tag:blogger.com,1999:blog-4930705704386238360.post-49029744101266566182013-02-16T11:25:00.001-06:002013-03-31T17:08:14.716-05:00So you're in business..how do you get out?<script type="text/javascript"></p>
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window.google_analytics_uacct = "UA-10255021-2";</p>
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</script>I was meeting with a business owner the other day and he said to me "When I started this business I never gave any thought to how I would get out of it, never crossed my mind."<br />
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His business now does over $3 million in sales and has significant value....<a href="http://sunbelttexas.blogspot.com/2013/01/top-8-things-business-owners-do-to.html" target="_blank">but no where near the value he thinks it has</a>.......for one reason.<br />
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<div style="text-align: center;">
<b>He's never looked at his business the way a buyer for the business would look at it.</b></div>
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<b><br /></b></div>
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I see this nearly everyday. Business owners don't understand, or at least they don't have an appreciation for, the difference between a good business for them and a business that would be valuable to someone else.</div>
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A perfect example was the business owners (let's call him John) strategy as it relates to the real estate the business utilizes.</div>
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John started the business 10 years ago, it grew quickly and started generating good profits. About 6 years ago John decided he needed a new, bigger, building for his growing business. John also decided he wanted exposure on a major freeway so everyone would be able to see his business.</div>
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John located a great building with an excellent location. He went to his bank who was willing to give him a <a href="http://www.amazon.com/gp/product/0814415075/ref=as_li_tf_tl?ie=UTF8&camp=211189&creative=373489&creativeASIN=0814415075&link_code=as3&tag=sunbeltbusine-20" target="_blank">commercial real estate loan</a> to buy the building because the business had the cash flow to pay the note. Everything was great. He moved into his new, bigger business and life was good.</div>
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However, John was only focused on making the note payments on the building. As he said to me "the business paying down the debt on the building is my retirement fund." </div>
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Now fast forward to today. </div>
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John's business is generating a profit for himself of $10,000 per month or $120,000 per year. Pretty good, wouldn't you say? Maybe......maybe not.</div>
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The area around John's business has grown and property values have increased while Johns note has stayed the same. Good right? Not necessarily.</div>
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John's note is $8,000 per month which the biz can afford...BUT the real estate is now worth much more than he paid for it. If John were to lease the property out at today's fair market value he could lease the building for $15,000 per month.</div>
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But remember John's biz profit is $10,000 per month. If John was getting fair value for the property he would get $15,000 per month which is $7,000 per month more than the $8,000 monthly note payment.</div>
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If we adjust John's monthly expenses to reflect fair value for the building then John's monthly profit drops from $10,000 per month down to $3,000 per month ($10k - $7k).</div>
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John is now stuck. His business can't afford a fair rent but he needs the building to run his business. John's real estate value makes his business value very low. A <a href="http://sunbelttexas.blogspot.com/2013/01/how-to-use-sba-loan-in-acquisition-of.html" target="_blank">buyer who pays fair value</a> for the real estate won't have enough cash flow from the business to pay the note and a reasonable salary for himself.</div>
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John came to me thinking he was in a great situation and left thinking his situation was not nearly as good as he thought.</div>
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Do you have a business that one day will need to be sold? What concerns do you have as you look ahead to that day?<br />
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BizBuyerhttp://www.blogger.com/profile/15901148990548855057noreply@blogger.com2tag:blogger.com,1999:blog-4930705704386238360.post-74299584875854141952013-02-12T07:44:00.002-06:002013-03-24T08:18:42.794-05:00Virtual Assistance | Delegating Your Social Media<div class="MsoListParagraphCxSpFirst" style="margin-left: 0in; text-align: center;">
<span style="font-family: Calibri, sans-serif; font-size: 11pt;"><b><br />Guest Post from Professional Virtual Assistant Susan Poirier </b></span><span style="font-family: Calibri, sans-serif;"><span style="font-size: 14.545454025268555px;"><b><script type="text/javascript"></b></span></font></p>
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<font face="Calibri, sans-serif"><span style="font-size: 14.545454025268555px;"><b>window.google_analytics_uacct = "UA-10255021-2";</b></span></font></p>
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<font face="Calibri, sans-serif"><span style="font-size: 14.545454025268555px;"><b></script></b></span></span><br />
<span style="font-family: Calibri, sans-serif; font-size: 11pt;">(Disclosure: I use Susan's VA services and I am not receiving any compensation for this post.)</span></div>
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<span style="font-family: Calibri, sans-serif; font-size: 11pt;"><b><br /></b></span></div>
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<span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">In today’s ever competitive
business climate, social media is not a passing fad or simply a source of
amusement for the younger generations. It represents an essential platform as
part of your marketing mix. Consumer buyer behavior now reflects their
consistent quest for up to the minute information about your company’s products
and services. People buy from people and customers prefer the immediacy of the
web, the data they can search, the recommendations they find and a community
for their voice. You need to not only have an online presence but to be
actively listening to your prospects, colleagues, partners, competition and
clients.<o:p></o:p></span></div>
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<br /></div>
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<span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Social Media (SM) is a key facet
in your viral efforts to drive business to your website, enhance company
recognition, build your brand, create market segments, meet your clients and
prospective client needs for information and customer service, join
communities, disseminate news, press releases, product launches, improve customer
service, troubleshoot issues and listen to the chatter about your company.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0in; mso-add-space: auto;">
<br /></div>
<a name='more'></a><span style="font-family: Calibri, sans-serif; font-size: 11pt;">A recent survey by Deloitte
revealed that 60% of consumers are going online more often to locate the best
products and services and their decisions are greatly influenced by the tools,
information and service they find when they visit websites or perform a search.
Brand loyalty and reputation are still based on the quality of the customer
experience.</span><br />
<div class="MsoListParagraphCxSpLast" style="margin-left: 0in; mso-add-space: auto;">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Whether you are B2B or B2C, your
social media presence should represent a strong role in your marketing and
online energies. Your message must reach
your audience where THEY reside, not where you think they are. Whether you
choose to blog, send an e-newsletter or generate dialog via Facebook, Twitter,
Pinterest, LinkedIn, Instagram or Google+, you need to discover where your
client “hangs out” and greet them on their territory. Remember, you will need to utilize more than
one neighborhood to reach your target markets.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 0in; mso-add-space: auto;">
<span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">You don’t generate revenue by
posting on your blog, scheduling social media updates, searching for relevant
content or images for your e-newsletter, creating Google keyword alerts, </span><a href="http://aceconcierge.net/2013/1-tip-to-maximize-your-content-marketing/"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">content marketing</span></a><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">, </span><a href="http://www.copyblogger.com/grammar-goofs/"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">editing/proofing</span></a><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"> your website or sending appointment reminders. While these
sample tasks are vital to your daily business operation, they are all </span><a href="http://www.coachdanfoster.com/2012/05/getting-more-from-your-schedule/"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">low payoff activities</span></a><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"> that do not directly produce
income. They inhibit your “real” productivity. Sustainable growth is
derived from doing more of what creates growth and less of what seizes your
time in the name of growth. You must determine the most profitable use of
your working hours.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0in; mso-add-space: auto;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0in; mso-add-space: auto;">
<i><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">“Simplify, delegate, or eliminate
other low payoff routines and activities that absorb too much of your time.
This common-sense approach frees you for productive work on high priority
items.” </span></i><a href="http://strategicessentials.com/2012/12/be-more-productive-by-becoming-better-and-doing-better/"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Strategic Essentials</span></a><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0in; mso-add-space: auto;">
<br /></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0in; mso-add-space: auto;">
<span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Your valuable time is best spent
focusing on your </span><a href="http://aceconcierge.net/leveraging-time-and-your-core-genius/"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">core genius</span></a><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">, doing what only YOU can do to
produce revenue for your business. Essentially, </span><a href="http://aceconcierge.net/your-income-is-limited-to-your-time/"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">your income is limited by your
time</span></a><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">. If you are
hindered with all of the backend details and daily minutia, you are not able to
concentrate on business development, customer experience, creating
relationships, engaging with your tribe, creating new products, planning your
goals and action steps or networking with other industry thought leaders.<o:p></o:p></span></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 0in; mso-add-space: auto;">
<span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"> </span><span style="font-family: Calibri, sans-serif; font-size: 11pt;"> </span></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 0in; mso-add-space: auto;">
Case Study</div>
<b><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Social Media
Woes:</span></b><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><o:p></o:p></span><br />
<span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">You are set up with some basic
social media platforms, but realize that to create engagement, increase
visibility, generate a sense of trust and build your tribe, you need some
assistance.<o:p></o:p></span><br />
<b><span style="font-family: Calibri, sans-serif; font-size: 11pt;"><br /></span></b>
<b><span style="font-family: Calibri, sans-serif; font-size: 11pt;"><a href="http://www.amazon.com/gp/product/B008WAKDAC/ref=as_li_tf_tl?ie=UTF8&camp=211189&creative=373489&creativeASIN=B008WAKDAC&link_code=as3&tag=sunbeltbusine-20" target="_blank">Enter the Virtual Assistant</a>: </span></b><b><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"> </span></b><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><o:p></o:p></span><br />
<ul type="disc">
<li class="MsoNormal"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Discuss key market initiates, where do
your clients commune, who is the competition<o:p></o:p></span></li>
<li class="MsoNormal"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Important industry keywords<o:p></o:p></span></li>
<li class="MsoNormal"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Create keyword alerts across multiple
services<o:p></o:p></span></li>
<li class="MsoNormal"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Enhance social visual image of social
media pages<o:p></o:p></span></li>
<li class="MsoNormal"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Set up news aggregators to deliver
targeted content<o:p></o:p></span></li>
<li class="MsoNormal"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Create RSS feeds for industry blogs for
post commenting or content generation<o:p></o:p></span></li>
<li class="MsoNormal"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Design content calendar<o:p></o:p></span></li>
<li class="MsoNormal"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Find/follow pertinent groups or lists<o:p></o:p></span></li>
<li class="MsoNormal"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Research, write and deliver relevant
posts<o:p></o:p></span></li>
<li class="MsoNormal"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Edit/proof your blog content<o:p></o:p></span></li>
<li class="MsoNormal"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">Regularly monitor and update your social
media</span></li>
<li class="MsoNormal"><span style="font-family: Calibri, sans-serif; font-size: 11pt;">Other VA industry </span><strong style="font-family: Calibri, sans-serif; font-size: 11pt;">secrets</strong><span style="font-family: Calibri, sans-serif; font-size: 11pt;"> employed! </span></li>
</ul>
<span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">In reviewing this list of a <b>few</b>
of the social media management processes we administer, how much time <b>do YOU</b>
have to spend to successfully handle your online reputation and brand? Maintaining
your online presence can represent a highly significant amount of hours that
take you away from your core genius. Is this the best use of your precious
time?<o:p></o:p></span><br />
<em><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">These are
low payoff activities but in the digital world, they are crucial essentials to
building your positive online presence.</span></em><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><o:p></o:p></span><br />
<span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><br /></span>
<span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">If you want to operate at your
maximum efficiency level, focusing on only your high payoff activities, please </span><a href="http://aceconcierge.net/contact-us/"><b><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">contact us</span></b></a><strong><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"> today! <o:p></o:p></span></strong><br />
<br />
<span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; mso-ascii-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><br /></span>
<br />
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BizBuyerhttp://www.blogger.com/profile/15901148990548855057noreply@blogger.com0tag:blogger.com,1999:blog-4930705704386238360.post-1529826116536284102013-02-10T10:38:00.000-06:002013-03-02T08:33:56.657-06:00Business Library of Excellent Books<br />
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<br />BizBuyerhttp://www.blogger.com/profile/15901148990548855057noreply@blogger.com0tag:blogger.com,1999:blog-4930705704386238360.post-15494790699052901562013-02-10T07:53:00.000-06:002013-02-10T07:53:11.091-06:00Run Your Family Like a BusinessHere's a Wall Street Journal article that helps tie the process of creating software with raising a family. Using Agile process principles for a family. Interesting concepts worth consideration.<br />
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BizBuyerhttp://www.blogger.com/profile/15901148990548855057noreply@blogger.com1tag:blogger.com,1999:blog-4930705704386238360.post-86028186168958632672013-01-06T13:11:00.001-06:002013-01-06T17:04:59.926-06:0020,000 days...give or take...... that's all we have.......Live with purpose.......................<br />
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might find yourself believing that creating a valuable business is more luck
than skill. Business value can be managed and if you manage the value you will become more profitable.</span><br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhe2OZVVbd3jsiEPulgpF7xkslLg3hN1Vfi1nT7shMCXDnIE0gKkAZQof5HsfJUuGWpmWjoqN8L2XMAuljfwqMv-8ELc5g5bMXJaFA-LXRZ_GVJkiSO2NaMurmaRIVEJDW8J_1tzWCGor2-/s1600/Biz+vakue.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhe2OZVVbd3jsiEPulgpF7xkslLg3hN1Vfi1nT7shMCXDnIE0gKkAZQof5HsfJUuGWpmWjoqN8L2XMAuljfwqMv-8ELc5g5bMXJaFA-LXRZ_GVJkiSO2NaMurmaRIVEJDW8J_1tzWCGor2-/s1600/Biz+vakue.jpg" /></a></div>
<span style="line-height: 14.15pt;">Small business owners often confuse business
earnings or profit with the actual </span><a href="http://www.amazon.com/gp/product/0470344016/ref=as_li_qf_sp_asin_il_tl?ie=UTF8&tag=sunbeltbusine-20&linkCode=as2&camp=1789&creative=9325&creativeASIN=0470344016" style="line-height: 14.15pt;"><span style="color: #5d7d9d;">value of a business</span></a><span style="line-height: 14.15pt;">. All profits are not
created (or valued) equally. A fundamental method of measuring the value of a
business is applying a multiple to earnings. Take two businesses that have the
exact same earnings of $100,000. Will they have the exact same value to a
business buyer? No.</span></div>
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<span style="color: #333333; font-family: "Arial","sans-serif"; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"></span><br />
<a name='more'></a></div>
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<span style="color: #333333; font-family: "Arial","sans-serif"; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">Why not? There are many, many reasons. Here
are some examples of why business buyers value earnings differently, we'll use
the $100,000 earnings for company A and B example.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 14.15pt; margin-bottom: 6.0pt; margin-left: 24.0pt; margin-right: 0in; margin-top: 0in; mso-list: l0 level1 lfo1; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: #333333; font-family: Symbol; font-size: 10.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><span style="color: #333333; font-family: "Arial","sans-serif"; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">What is the quality of
the earning? Company A earnings have been growing for 5 consecutive years, company B
earnings have been down for 5 consecutive years. Which is more valuable?<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 14.15pt; margin-bottom: 6.0pt; margin-left: 24.0pt; margin-right: 0in; margin-top: 0in; mso-list: l0 level1 lfo1; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: #333333; font-family: Symbol; font-size: 10.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><span style="color: #333333; font-family: "Arial","sans-serif"; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">Company B financial
statements are cleaner than company A and a buyer will pay more for a company
with cleaner books because there is less risk. Uncertainty in the quality of the business financial records drives down value.<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 14.15pt; margin-bottom: 6.0pt; margin-left: 24.0pt; margin-right: 0in; margin-top: 0in; mso-list: l0 level1 lfo1; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: #333333; font-family: Symbol; font-size: 10.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><span style="color: #333333; font-family: "Arial","sans-serif"; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">Company A has 5
lawsuits against it, company B never had any lawsuits. <o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="color: #333333; font-family: Symbol; font-size: 10.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><span style="color: #333333; font-family: "Arial","sans-serif"; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">Company B has well
documented processes and it's easier to train employees, therefore B's owner
can take lots of time off. Company A, with no processes, couldn't stay open a
week without the owner at the business. Which business has lower risk and therefore higher value?<o:p></o:p></span></div>
<div class="MsoNormal" style="line-height: 14.15pt; margin-bottom: 6.0pt; margin-left: 24.0pt; margin-right: 0in; margin-top: 0in; mso-list: l0 level1 lfo1; tab-stops: list .5in; text-indent: -.25in;">
<!--[if !supportLists]--><span style="color: #333333; font-family: Symbol; font-size: 10.0pt; mso-bidi-font-family: Symbol; mso-fareast-font-family: Symbol;">·<span style="font-family: 'Times New Roman'; font-size: 7pt; line-height: normal;"> </span></span><span style="color: #333333; font-family: "Arial","sans-serif"; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">I could give you a
hundred more variables as to why one business' $100,000 profit is worth more,
or less, than another business' $100,000 profit.<o:p></o:p></span></div>
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<span style="color: #333333; font-family: "Arial","sans-serif"; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">As you can see business value and
corresponding multiples of earnings is based on a number of fundamental factors
that a business owner can control and these factors effect how valuable the
business is. There are many businesses that are very valuable to the current
owner but of little value, or much lower value, to a buyer. There have been several good books written about building value in a small business including <b><i><a href="http://www.amazon.com/gp/product/1591843979/ref=as_li_tf_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=1591843979&linkCode=as2&tag=sunbeltbusine-20%22%3EBuilt%20to%20Sell:%20Creating%20a%20Business%20That%20Can%20Thrive%20Without%20You%3C/a%3E%3Cimg%20src=%22http://www.assoc-amazon.com/e/ir?t=sunbeltbusine-20&l=as2&o=1&a=1591843979%22%20width=%221%22%20height=%221%22%20border=%220%22%20alt=%22%22%20style=%22border:none%20!important;%20margin:0px%20!important;%22">Built To Sell</a>.</i></b><o:p></o:p></span></div>
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<b><span style="color: #333333; font-family: "Arial","sans-serif"; font-size: 12.0pt; mso-fareast-font-family: "Times New Roman";">8 Mistakes Business
Owners Make that Hurt their Business Value</span></b></div>
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<b style="line-height: 14.15pt;"><span style="color: #333333; font-family: "Arial","sans-serif"; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">Mistake #1</span></b><span style="color: #333333; font-family: Arial, sans-serif; font-size: 10pt; line-height: 14.15pt;">: Keep your <b>financial records as obscure</b> and
inaccurate as possible to make sure that the IRS can't figure out if you made a
profit. <b>Effect:</b> If the IRS can't figure out if you made a
profit neither will a buyer.</span></div>
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<b><span style="color: #333333; font-family: "Arial","sans-serif"; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">Mistake #2: </span></b><span style="color: #333333; font-family: "Arial","sans-serif"; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">Don't know what your <b>competitors </b>are
doing, just assume you know what you don't know. <b>Effect: </b>If you
don't know where your prices or services fit in the market your prices are
probably too low. If they are too low you are missing profit. A smart business buyer
will know this and buy your business based on your under-achieved profits, they will then increase the prices and make more money from your business than you did.<o:p></o:p></span></div>
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<b><span style="color: #333333; font-family: "Arial","sans-serif"; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">Mistake #3: </span></b><span style="color: #333333; font-family: "Arial","sans-serif"; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">Don't <b>document any systems</b>, just
spend 20 hours a day at the business and when somebody needs to know something
they'll ask. <b>Effect: </b>If you get hit by a truck, the business
will be in the tank before you're out of the hospital.<o:p></o:p></span></div>
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<b><span style="color: #333333; font-family: "Arial","sans-serif"; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">Mistake #4: </span></b><span style="color: #333333; font-family: "Arial","sans-serif"; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">Let people who you <b>didn't train.....
be the people</b> who train the new guy. <b>Effect: </b>See #3 above.<o:p></o:p></span></div>
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<b><span style="color: #333333; font-family: "Arial","sans-serif"; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">Mistake #5: Mix your personal finances with
your business finances</span></b><span style="color: #333333; font-family: "Arial","sans-serif"; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">.
(Relates to #1 above). <b>Effect: </b>You won't be able to plan since
you don't know what your real business results are. If your business makes $200,000 but you spend $250,000 it's the owners fault, not the businesses.<o:p></o:p></span></div>
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<b><span style="color: #333333; font-family: "Arial","sans-serif"; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">Mistake #6: </span></b><span style="color: #333333; font-family: "Arial","sans-serif"; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">Don't get the<b> proper business
insurances </b>you need. Example, many businesses who should have product
liability coverage..don't. Often they also fail to obtain adequate umbrella coverage
or have policies that don't adequately cover the risks. Do you know the
difference between a <i><a href="http://en.wikipedia.org/wiki/Reinsurance"><span style="color: #5d7d9d;">claims made</span></a></i> policy and an <i>as
occurred</i> policy? <b>Effect: </b>Buyers don't want to be exposed
to litigation, which is inadequately insured, created by the business before
they buy the business. I have seen more businesses fail due to under-insurance than I've seen businesses fail because customers don't pay their bills.<o:p></o:p></span></div>
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<b><span style="color: #333333; font-family: "Arial","sans-serif"; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">Mistake #7</span></b><span style="color: #333333; font-family: "Arial","sans-serif"; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"> - No documented <b>policies related to employees</b>,
i.e. vacation, sick pay, etc. Are employees classified as salaried who should
not be? Are there 1099 contractors who really should be W-2 employees? <b>Effect: </b>If
the best buyer for your business is a big company they will spend a lot of time
in due diligence of<a href="http://hrriskybusiness.com/"><span style="color: #5d7d9d;"> employment practice</span></a>s and they don't want
to inherit confusion and risk. There is huge risk in poor employee documentation and policy inadequacies. If you have more than 4 employees you should seriously explore outsourcing your HR functions to professionals.<o:p></o:p></span></div>
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<b><span style="color: #333333; font-family: "Arial","sans-serif"; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">Mistake #8 - </span></b><span style="color: #333333; font-family: "Arial","sans-serif"; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">Let your <b>customer concentration </b>get
out of balance. Meaning one or two customers represent a huge portion of your
business <b>Effect: </b>A business with 2-3 customers that do 90% of
the business has more risk than a business that has 100 customers each doing 1%.
If your top customer does 75% of your business it might be easy for you to
manage one customer but if that customer leaves you, you'll take BIG steps backwards. Try to
get your largest customer to represent no more that 10% of your total sales.<o:p></o:p></span></div>
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<span style="color: #333333; font-family: "Arial","sans-serif"; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";">While it's easy to get wrapped up in making a business
profitable, always keep an eye on the things that make a business valuable. </span><br />
<span style="color: #333333; font-family: "Arial","sans-serif"; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><br /></span>
<span style="color: #333333; font-family: "Arial","sans-serif"; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><b>I
can guarantee every business owner one irrefutable fact. You will exit your
business, either willingly or not, but it is 100% guaranteed. </b></span><br />
<span style="color: #333333; font-family: "Arial","sans-serif"; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><b><br /></b></span>
<br />
<span style="color: #333333; font-family: "Arial","sans-serif"; font-size: 10.0pt; mso-fareast-font-family: "Times New Roman";"><b>What other things business owners do to crush the value of their businesses?</b></span></div>
<span style="color: #333333; font-family: Arial, sans-serif; font-size: x-small;"><span style="line-height: 18.863636016845703px;"></span></span><br />
<br /></div>
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BizBuyerhttp://www.blogger.com/profile/15901148990548855057noreply@blogger.com4tag:blogger.com,1999:blog-4930705704386238360.post-22335934942252565062013-01-06T09:19:00.000-06:002013-01-06T16:25:45.489-06:00Caring for a Cause can be Good for your Business<br />
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<span style="font-family: Arial, sans-serif; font-size: 14pt;">Many
business owners I encounter say they want to "give back" and will
start doing so after they ...</span><b style="font-family: Arial, sans-serif; font-size: 14pt;"><i>hit it big</i></b><span style="font-family: Arial, sans-serif; font-size: 14pt;">. I'm sure many of them
mean what they say and I'm equally sure that many, many of them will never get
to the point where what they've achieved is enough to start "giving
back".</span></div>
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<b><span style="font-family: "Arial","sans-serif"; font-size: 17.0pt;">Should
You make A Charitable Cause Part of Your Business Model Instead of Just a Part
of Your Hopes?<o:p></o:p></span></b></div>
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<span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">There
are many benefits to a business if they make a serious and genuine effort to
support a charitable cause on a consistent and ongoing basis. A few well known
businesses do this and many other lesser known companies do as well. Business
charity is not only good for your communities..it's good for your business. Never underestimate the power of a <a href="http://amzn.to/zCHN5G">good business plan</a>.</span><br />
<span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;"></span><br />
<a name='more'></a><br />
<span style="font-family: "Arial","sans-serif"; font-size: 14pt;">The
best known of these companies is </span><a href="http://www.benandjerrysfoundation.org/"><span style="color: windowtext; font-family: "Arial","sans-serif"; font-size: 14.0pt; text-decoration: none; text-underline: none;">Ben & Jerry's Ice Cream</span></a><span style="font-family: "Arial","sans-serif"; font-size: 14pt;"> Foundation. Every
year Ben & Jerry's contributes a percentage of their profits to the
foundation and distributes grants based on a complex process of applicatsions
and evaluation. What they do is not nearly as important as how they do it.
Everything you see from Ben & Jerry's references their commitment to this
charitable cause. It's on the ice cream containers, the</span><a href="http://www.benjerry.com/company/"><span style="color: windowtext; font-family: "Arial","sans-serif"; font-size: 14.0pt; text-decoration: none; text-underline: none;"> Ben & Jerry website</span></a><span style="font-family: "Arial","sans-serif"; font-size: 14pt;"> and all promotional materials. Why
does Ben & Jerry's do what they do?</span></div>
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<b><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">First</span></b><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">, I think they truly
care about giving back and making a difference in communities.<o:p></o:p></span></div>
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<b><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">Second</span></b><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">, it's great for
employees. Nearly everyone wants to be part of something bigger than
themselves.<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;"></span></div>
<br />
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<b><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">Third</span></b><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">...it's great for
business. Supporting a company that is trying to do more than just earn a
profit is emotionally satisfying for a large percentage of people.<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">Can
every business do what Ben & Jerry's does? Probably not but that doesn't
mean you shouldn't do anything. Give this some thought, how much is it worth to
have employees who care just a little more? Or customers who respect what you
do a little more? Or suppliers who respect what you're trying to do?<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">It
has been my experience that, like many things in business and life, getting
started is the most difficult part. It doesn't have to be complicated. Here are
some ideas on how to start, this worked for us:<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt; mso-fareast-font-family: Arial;">•<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><!--[endif]--><b><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">Be genuinely committed, no faking it!</span></b><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;"> - Make the commitment
that supporting a cause is part of your business, everyday..not just when it's
convenient or when you're rolling in the money.<o:p></o:p></span></div>
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</span></span><!--[endif]--><b><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">Pick a Cause You or Your Employees have or can develop an
emotional attachment to - </span></b><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">In my business we support two causes every year. One is </span><a href="http://www.cff.org/"><span style="color: windowtext; font-family: "Arial","sans-serif"; font-size: 14.0pt; text-decoration: none; text-underline: none;">Cystic Fibrosis
Foundation</span></a><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">.
We support this cause because an associate in our firm is very committed to
this organization. He sits on the board and works tirelessly at fund raising
for this terrible but under-funded disease. Our other cause is the Pulmonary
Hypertension Association for whom we sponsor the annual fundraisers </span><a href="http://www.thewoodlandscrawfish.com/"><span style="color: windowtext; font-family: "Arial","sans-serif"; font-size: 14.0pt; text-decoration: none; text-underline: none;">The Woodlands CrawPHish Festival</span></a><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">. We chose this
effort because a local attorney and friend of our firm, whose family has been
touched in a very personal way by this disease, is very active and works
year-round to raise money to cure adolescent pulmonary hypertension. In
addition, this Crawfish Festival is great fun and we invite employees, clients
and referral sources for a great day.<o:p></o:p></span></div>
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</span></span><!--[endif]--><b><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">Commit to a Financial Contribution - </span></b><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">The tendency with
many is to view charitable donations as the "extra" money available
in a good year. Although any contribution is good, it is better for your
business and the charity if you make a financial commitment and stick to it.
Why is it good for the business?<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt; mso-fareast-font-family: Arial;">•<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><!--[endif]--><b><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">Market Your Charitable Efforts Consistently - </span></b><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">By making your
financial commitment without fail, you can embed that in your marketing
efforts. Market your support on your website and other marketing materials that
you are producing anyway...there's no additional costs. As an example, I have
recently been invited by a financial advisory firm to a wine event by </span><a href="http://www.tithewines.com/"><span style="color: windowtext; font-family: "Arial","sans-serif"; font-size: 14.0pt; text-decoration: none; text-underline: none;">Tithe
Wines</span></a><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">.
The mission of Tithe Wines is to make great wines AND contribute 10% of their
revenue (not profits.. 10% of top line revenue, that's a commitment) to </span><a href="http://www.water.cc/"><span style="color: windowtext; font-family: "Arial","sans-serif"; font-size: 14.0pt; text-decoration: none; text-underline: none;">Living Water</span></a><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;"> which is a charity
with a mission to provide clean, safe water in poverty stricken places around
the world. Had Tithe wines not partnered with a financial adviser who I know to
present this event, it is highly unlikely I would have ever heard of this wine.
Now I get to try some new wines and help bring clean water to people that need
it. Tithe Wines is doing their part by supporting a great cause and I'm happy
to help them do so.<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">With
business charity doing good can go hand in hand with a business doing well...In
fact it can help give you an edge. Start with your employees, find a cause they
can connect with then build that commitment into your business plan and
day-to-day activities.<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">Small
business owners can make a difference in their communities and can make a big
difference over a long period of consistent charitable contributions. Get
involved, do good.<o:p></o:p></span></div>
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BizBuyerhttp://www.blogger.com/profile/15901148990548855057noreply@blogger.com0tag:blogger.com,1999:blog-4930705704386238360.post-34475827725411745592013-01-06T09:07:00.002-06:002013-02-18T13:18:57.733-06:00Anatomy of a Successful Small Business Purchase<br />
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<span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">Although
the names, location, types of businesses and other details have been changed
for confidentiality purchases this Hub reflects real transactions in the world
of buying and selling a business.<o:p></o:p></span></div>
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<b><span style="font-family: "Arial","sans-serif"; font-size: 17.0pt;">The Buyer<o:p></o:p></span></b></div>
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<span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">Susan,
45, had been employed in the corporate world for 15 years and had done well,
worked hard and gotten good performance ratings. She felt like she would be
with her company for a long, long time. She thought that right up until the
moment when, on a Friday afternoon, she opened an email from the company CEO
stating that the company had just agreed to be acquired and more details about
what that means to individual employees would be forthcoming in the next few
weeks and months.<o:p></o:p></span><br />
<span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;"></span><br />
<a name='more'></a><br />
<span style="font-family: Arial, sans-serif; font-size: 14pt;"><br /></span>
<span style="font-family: Arial, sans-serif; font-size: 14pt;">This news
wasn't a total surprise since there had been rumors for months but now it was
real. Susan felt like her group might get consolidated and that, though she
might survive, she was fairly certain that would require a move for her family.
However, within weeks it became apparent that no one in Susan's group was
likely to survive the merger and now they were just waiting on the details of a
severance package, if there was to be one.</span></div>
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<span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">Susan
began as many in her situation often begin, she updated her resume, did a quick
analysis of her current financial situation and started thinking about where
she might look for another job. She started going through her contacts and she
quickly found out that another job at her pay grade was likely to be very
difficult to find. In addition, she wondered what would happen if her job
search went on for months or even years, would she need to use up her savings
and 401k money just to live on while she was looking for work?<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">What
other options did she have? One of her contacts asked her if she ever consider
owning her own business. Susan had only occasionally given it a brief thought
but decided to investigate it more closely since she had no idea what the process of buying a business entailed.<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">Susan's
financial situation wasn't great but wasn't terrible either. She had some
liquid assets (about $30k cash), not much debt, pretty good credit and her 401k
plan had about $125k in it. She considered her 401k sacred and had no plans to
touch it until retirement. Susan's salary was $90,000 per year with the
occasional bonus....although there hadn't been one for the last two years.<o:p></o:p></span><br />
<span style="font-family: Arial, sans-serif; font-size: 14pt;"><br /></span>
<span style="font-family: Arial, sans-serif; font-size: 14pt;">Susan had
no idea how to find a business to buy and didn't know what are the right questions to ask when buying a
business so she did the obvious, she googled buy a business Houston Texas.</span><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;"></span></div>
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<span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">That's
how Susan found </span><a href="http://www.sunbelttexas.com/"><span style="color: windowtext; font-family: "Arial","sans-serif"; font-size: 14.0pt; text-decoration: none; text-underline: none;">us</span></a><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">.</span><br />
<b><span style="font-family: "Arial","sans-serif"; font-size: 17.0pt;"><br /></span></b>
<b><span style="font-family: "Arial","sans-serif"; font-size: 17.0pt;">The
Seller</span></b></div>
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<span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">Arthur
had owned his small manufacturing business, XYZ, Inc, for 30 years and was
comfortable. It had been a good business for him. Arthur had recently turned 68
years old and, although he had hoped otherwise, his children had their own
careers and weren't returning to run the family business.<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">Arthur
was talking to his accountant about his taxes and mentioned he had had some
health problems. His accountant asked Arthur if he intended to run the business
until they carried him out on a stretcher or did selling the business make more
sense for him? After talking with his wife Arthur decided selling the business
was the right thing to do. He could get the value of his business to fund his
retirement, relax, travel more and enjoy his family.<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">Arthur
told his CPA he was ready to sell and his CPA referred Arthur to us.<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">That's
how Arthur found </span><a href="http://www.sunbelttexas.com/"><span style="color: windowtext; font-family: "Arial","sans-serif"; font-size: 14.0pt; text-decoration: none; text-underline: none;">us</span></a><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">.<o:p></o:p></span></div>
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<b><span style="font-family: "Arial","sans-serif"; font-size: 17.0pt;">The
Business<o:p></o:p></span></b></div>
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<span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">XYC is a
light manufacturing business that makes a variety of small parts used in the
transportation industry. Arthur hadn't really worked on growing the business
for the last 10 years. He had a variety of regular customers and didn't have
any organized sales effort. At this point in his life he felt like growing the
business would be more work than he wanted to do. He liked his 30-40 hour work
week.<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt; mso-fareast-font-family: Arial;">•<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">XYZ did $1,200,000 in annual sales most years and didn't vary much from
year-to-year<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt; mso-fareast-font-family: Arial;">•<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">XYZ's
net profit available to Arthur was consistently around $180,000 per year. This
$180,000 is often called Seller's Discretionary Earnings (SDE) because it
includes Arthur's salary and all of Arthur's substantial benefits. Many of
these benefits are in pre-tax dollars so they can't be directly compared to a
salary that might be earned from working as an employee at a big company.<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt; mso-fareast-font-family: Arial;">•<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">XYZ
didn't have any debts other than what was normal accounts payable owed to
suppliers.<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt; mso-fareast-font-family: Arial;">•<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">XYZ
was located in a leased building and did not own the real estate.<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt; mso-fareast-font-family: Arial;">•<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">Asking
Price for the Business $675,000 - FYI- How we determined the asking price is
too long for this post and I'll create another Hub to describe the business
valuation logic and methodology.<o:p></o:p></span></div>
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<br /></div>
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<b><span style="font-family: "Arial","sans-serif"; font-size: 17.0pt;">The
Transaction<o:p></o:p></span></b></div>
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<span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">Susan
came to us looking for a business to buy and based on her experience, skills,
lifestyle and financial capability we decided to present XYZ company to her.
(Here is a post about </span><a href="http://sunbelttexas.blogspot.com/2012/02/confidentiality-when-buying-business.html"><span style="color: windowtext; font-family: "Arial","sans-serif"; font-size: 14.0pt; text-decoration: none; text-underline: none;">Confidentiality when buying a
business</span></a><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">).
Susan liked the industry and the business location. We provided her with some
high level financial reports for her review and Susan decided she wanted to
look more closely at this opportunity.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 10.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">We
arranged for Susan and Arthur to meet to tour the business and for Susan to ask
Arthur all the questions she felt were important. After due diligence, research
and negotiations here is the final transaction that was completed and Susan
purchased the business which she still runs today.<o:p></o:p></span></div>
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<b><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">Selling
price $655,000</span></b><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;"><o:p></o:p></span></div>
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<b><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">Susan's
down payment was $110,000</span></b><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;"> which she obtained, tax & penalty free, from her
401k plan.<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">Susan
received an <b><a href="http://www.amazon.com/dp/1572485531/ref=as_li_tf_til?tag=sunbeltbusine-20&camp=0&creative=0&linkCode=as1&creativeASIN=1572485531&adid=07QVP0QZM7ST1QA7MA45" target="_blank">Bank Loan with an SBA Loan</a> guaranty for $605,000</b> (the bank
included some working capital to assure Susan's financial comfort). Terms: 10
years @ 6.0%. </span><a href="http://sunbelttexas.blogspot.com/2013/01/how-to-use-sba-loan-in-acquisition-of.html"><span style="color: windowtext; font-family: "Arial","sans-serif"; font-size: 14.0pt; text-decoration: none; text-underline: none;">Click here for a Hub about using aSBA Loan to acquire a business.</span></a><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;"><o:p></o:p></span></div>
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<b><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">Results:</span></b><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;"><o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 7.0pt; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-layout-grid-align: none; mso-list: l1 level1 lfo2; mso-pagination: none; tab-stops: 11.0pt .5in; text-align: justify; text-autospace: none; text-indent: -.5in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt; mso-fareast-font-family: Arial;">•<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">The
business was earning $180,000/year.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 7.0pt; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-layout-grid-align: none; mso-list: l1 level1 lfo2; mso-pagination: none; tab-stops: 11.0pt .5in; text-align: justify; text-autospace: none; text-indent: -.5in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt; mso-fareast-font-family: Arial;">•<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">Susan's
bank note payment is $80,000 per year.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 7.0pt; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-layout-grid-align: none; mso-list: l1 level1 lfo2; mso-pagination: none; tab-stops: 11.0pt .5in; text-align: justify; text-autospace: none; text-indent: -.5in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt; mso-fareast-font-family: Arial;">•<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">Earnings
available to Susan in excess of debt payments = $100,000/year ($180,000 -
$80,000)<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 7.0pt; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-layout-grid-align: none; mso-list: l1 level1 lfo2; mso-pagination: none; tab-stops: 11.0pt .5in; text-align: justify; text-autospace: none; text-indent: -.5in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt; mso-fareast-font-family: Arial;">•<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">The
business is paying the debt. On a straight line basis Susan is building $60,500
per year in equity ($605,000 divided by 10 years). That's a 55% investment
return per year on Mary's equity of $110,000, I doubt you can get that kind of
return over 10 years in any other investment.<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">Summary:<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt; mso-fareast-font-family: Arial;">•<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">Susan
was able to immediately replace her $90,000 per year, fully taxable salary with
$100,000 per year of income that had significant tax advantages.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 7.0pt; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-layout-grid-align: none; mso-list: l2 level1 lfo3; mso-pagination: none; tab-stops: 11.0pt .5in; text-align: justify; text-autospace: none; text-indent: -.5in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt; mso-fareast-font-family: Arial;">•<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">Susan
had no worries about being laid-off ever again. She did have a business to run
that comes with it's on worries but at least Susan feels like she is in
complete control and can manage any problems successfully.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 7.0pt; margin-left: .5in; margin-right: 0in; margin-top: 0in; mso-layout-grid-align: none; mso-list: l2 level1 lfo3; mso-pagination: none; tab-stops: 11.0pt .5in; text-align: justify; text-autospace: none; text-indent: -.5in; text-justify: inter-ideograph;">
<!--[if !supportLists]--><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt; mso-fareast-font-family: Arial;">•<span style="font-family: 'Times New Roman'; font-size: 7pt;">
</span></span><!--[endif]--><span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">When
the day comes for Susan to sell the business she expects the value of the
business to have far outgrown the value of her $110,000 had she left it in her
401k plan and relied on the luck of the stock market. Susan, like Arthur before
her, is now in total control of her retirement investment.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="font-family: "Arial","sans-serif"; font-size: 14.0pt;">If you have the
skills to operate a successful small business the financial rewards can be
tremendous.</span><o:p></o:p><br />
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BizBuyerhttp://www.blogger.com/profile/15901148990548855057noreply@blogger.com0tag:blogger.com,1999:blog-4930705704386238360.post-74048530870239381342013-01-03T18:47:00.000-06:002013-01-03T18:47:15.657-06:0050 Things I Wish Someone had told me!<br />
Go into business with your eyes wide open!<br />
<br />
<br />
<iframe frameborder="0" marginheight="0" marginwidth="0" scrolling="no" src="http://rcm.amazon.com/e/cm?t=sunbeltbusine-20&o=1&p=8&l=as1&asins=0814401678&nou=1&ref=tf_til&fc1=000000&IS2=1&lt1=_blank&m=amazon&lc1=0000FF&bc1=000000&bg1=FFFFFF&f=ifr" style="height: 240px; width: 120px;"></iframe>BizBuyerhttp://www.blogger.com/profile/15901148990548855057noreply@blogger.com0tag:blogger.com,1999:blog-4930705704386238360.post-55381306807535586342013-01-02T18:11:00.000-06:002013-01-06T12:50:38.907-06:00The 2% Solution for Disputes among Business Partners and Partnerships<br />
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<b><span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 17.0pt;">Preparation Avoids Business Partnership Problems that could Kill
a Business </span></b><br />
<span style="color: #262626; font-family: Arial, sans-serif;"><br /></span>
<span style="color: #262626; font-family: Arial, sans-serif;">Many people start a business with friends, neighbors, relatives
or spouses and it's often a partnership 50/50 arrangement. Rarely is there a
written</span><b style="color: #262626; font-family: Arial, sans-serif;"> business partnership agreement</b><span style="color: #262626; font-family: Arial, sans-serif;"> and this can be a big mistake.
These arrangements often work well until there is a problem but then...the
problem could be a big problem and the dispute can spin out of control quickly.</span></div>
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<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjfd0Z3AXkDTErc42oWxg_soVTNUKlfzcPXBUNkNM1vhhm1XjPwAnRvj4KrqlihBSKjo77nsROmUluyaiww_D1IQPvrajNEuLore2CCa7jT1hG4Z1pllPVJXImu0lkFKozqP-v5-I5Oc9C8/s1600/factory.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="200" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjfd0Z3AXkDTErc42oWxg_soVTNUKlfzcPXBUNkNM1vhhm1XjPwAnRvj4KrqlihBSKjo77nsROmUluyaiww_D1IQPvrajNEuLore2CCa7jT1hG4Z1pllPVJXImu0lkFKozqP-v5-I5Oc9C8/s320/factory.jpg" width="320" /></a></div>
<span style="color: #262626; font-family: Arial, sans-serif;">Small business partnerships should come with a warning label
"<b>Caution:</b> <b>Partnerships work best when the partners document the
problem resolution methods before entering the partnership."</b><o:p></o:p></span><br />
<span style="color: #262626; font-family: Arial, sans-serif;"><b></b></span><br />
<a name='more'></a></div>
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<span style="color: #262626; font-family: Arial, sans-serif;">There are many advantages of a partnership which can lead to business
success far beyond what an individual might have accomplished on there own.
However, the success of a partnership 50/50 agreement is often determined by
the care taken when the partnership agreement is put in place. A good and well
defined partnership in business agreement can serve as a tool to help you run
your business professionally and increase your chances of getting outside
investors.<o:p></o:p></span></div>
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<span style="color: #262626; font-family: Arial, sans-serif;">I've seen what appear to be small issues to outsiders become big
issues to business partners. A simple and very effective solution is available
to </span><a href="http://www.nolo.com/legal-encyclopedia/partnership-basics-30072.html"><span style="color: #2166c4; font-family: Arial, sans-serif; text-decoration: initial;">business partners</span></a><span style="color: #262626; font-family: Arial, sans-serif;"> who
have the foresight to set up a system to break impasses should they arise. A
business partnership dissolution doesn't have to be a financial catastrophe for
the business or it's owners if there is a well documented and thought out
business partnership agreement.<o:p></o:p></span><br />
<span style="color: #262626; font-family: Arial, sans-serif;"><br /></span>
<span style="color: #262626; font-family: Arial, sans-serif;"></span><br />
<span style="color: #262626; font-family: Arial, sans-serif;">I have seen businesses fail because the owners were stuck on
issues that most of you would say "oh, that would never happen to us"
but you are rolling the dice. What happens if your business partner is involved
in a divorce and suddenly there is a new spouse in the picture who thinks 50/50
means opportunity?</span></div>
<div class="MsoNormal" style="margin-bottom: 10.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="color: #262626; font-family: Arial, sans-serif;">I saw a situation a few years back (I know you're thinking I'm
making this up but I'm not) where one partner put out a contract on the other.
The partner got out on bail and showed back up at the business! He was a 50/50
owner and the other partner couldn't do a thing about it without resulting in a
lawsuit and a request for an injunction and restraining order through the court
system.<o:p></o:p></span></div>
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<span style="color: #262626; font-family: Arial, sans-serif;">Another benefit of going through these "what if"
scenarios with your soon to be business partner is it will help you understand
how they think and how they might react in a business crisis which will surely
present itself in one form or another.<o:p></o:p></span></div>
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<b><span style="color: #262626; font-family: Arial, sans-serif;">The 2% Solution</span></b><span style="color: #262626; font-family: Arial, sans-serif;"><o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 10.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="color: #262626; font-family: Arial, sans-serif;">This is elegant, simple and highly practical. In your LLC
partnership or </span><a href="http://en.wikipedia.org/wiki/Operating_agreement"><span style="color: #2166c4; font-family: Arial, sans-serif; text-decoration: initial;">operating agreement</span></a><span style="color: #262626; font-family: Arial, sans-serif;"> put in
a provision that grants a third party, agreed to by the partners, a 2% voting
interest. Each partner would have 49% voting rights each. That way if the
partners agree they have 98% vote and they can do what they want. But if the
partners disagree, they take their problem to their 2% voting partner and
whichever position the 2% takes means there is 51% of the votes and that's the
decision.<o:p></o:p></span></div>
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<span style="color: #262626; font-family: Arial, sans-serif;">Some attorneys may prefer to have a separate business
partnership document or member agreement to govern this issue, certainly get
legal advice from a </span><a href="http://hubpages.com/topics/business-and-employment/809"><span style="color: #2166c4; font-family: Arial, sans-serif; text-decoration: initial;">business attorney</span></a><span style="color: #262626; font-family: Arial, sans-serif;">.<o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 10.0pt; mso-layout-grid-align: none; mso-pagination: none; text-autospace: none;">
<span style="color: #262626; font-family: Arial, sans-serif;">Remember, the only time the 2% vote is required is if the
partners can't agree on an issue. As long as the partners agree then the 2%
vote doesn't effect anything. And that's exactly the purpose of this
partnership agreement, to have a mechanism to resolve issues when the partners
can't agree.<o:p></o:p></span></div>
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<span style="color: #262626; font-family: Arial, sans-serif;">The important part of this strategy is to do it long before
there are any disputes. It will be much easier to select who the 2% voter is if
there aren't any pressing disputes at hand.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="color: #262626; font-family: Arial, sans-serif;">Here's an excellent </span><a href="http://www.amazon.com/gp/product/1413308635/ref=as_li_qf_sp_asin_il_tl?ie=UTF8&tag=sunbeltbusine-20&linkCode=as2&camp=1789&creative=9325&creativeASIN=1413308635"><span style="color: #2166c4; font-family: Arial, sans-serif; text-decoration: initial;">guide to forming a good partnership</span></a><span style="color: #262626; font-family: Arial, sans-serif;">.
Setting up your business partnership correctly at the beginning is the key to
resolving inevitable problems in a manner that doesn't destroy the partnership
or the business.</span><o:p></o:p></div>
BizBuyerhttp://www.blogger.com/profile/15901148990548855057noreply@blogger.com0tag:blogger.com,1999:blog-4930705704386238360.post-2848492373840371052013-01-02T18:03:00.000-06:002013-02-17T10:14:58.237-06:00How to Use an SBA Loan in Acquisition of a Business <div style="text-align: justify;">
<span style="color: #262626; font-family: Arial, sans-serif;"><script type="text/javascript"></font></p>
<p style="text-align: justify;">
<font color="#262626" face="Arial, sans-serif">window.google_analytics_uacct = "UA-10255021-2";</font></p>
<p style="text-align: justify;">
<font color="#262626" face="Arial, sans-serif"></script></span><span style="color: #262626; font-family: Arial, sans-serif; text-align: justify;">When looking at businesses you might want to buy you should
always keep in mind how you are going to finance the purchase of the business.
Most small businesses are purchased using bank lender financing in the form of
a small business SBA loan. This post discusses the </span><a href="http://en.wikipedia.org/wiki/Small_Business_Administration" style="text-align: justify;"><span style="color: #2166c4; font-family: Arial, sans-serif; text-decoration: initial;">Small Business Administration</span></a><span style="color: #262626; font-family: Arial, sans-serif; text-align: justify;"> (SBA)
loans that are available and what are the general requirements to qualify for
an SBA loan. Keep in mind that specific banks may have slightly different
requirements but the main issues will be the same across all banks. The SBA
supports </span><a href="http://www.asbdc-us.org/" style="text-align: justify;"><span style="color: #2166c4; font-family: Arial, sans-serif; text-decoration: initial;">small business development centers</span></a><span style="color: #262626; font-family: Arial, sans-serif; text-align: justify;"> throughout the U.S. which can
provide information about the SBA Loan process.</span></div>
<span style="color: #262626; font-family: Arial, sans-serif; text-align: justify;"><br /></span>
<br />
<div class="MsoNormal" style="margin-bottom: 10.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<b><span style="color: #262626; font-family: Arial, sans-serif;">What is an SBA Loan? What are the SBA guidelines for small
business acquisition loans?</span></b><span style="color: #262626; font-family: Arial, sans-serif;"><o:p></o:p></span></div>
<div class="MsoNormal" style="margin-bottom: 10.0pt; mso-layout-grid-align: none; mso-pagination: none; text-align: justify; text-autospace: none; text-justify: inter-ideograph;">
<span style="color: #262626; font-family: Arial, sans-serif;">Commercial banks and the SBA agree to certain ground rules
whereby if the bank adheres to the SBA loan rules, guidelines and regulations
and makes a loan to a borrower under those rules, then the SBA will guarantee a
significant portion of the loan (up to 90% in some cases). This SBA loan
guarantee makes the loans very low risk for the banks and therefore the banks
have an incentive to make these loans to small business borrowers. Not all
banks participate in this program and it involves a lot of paperwork!<o:p></o:p></span></div>
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<b><span style="color: #262626; font-family: Arial, sans-serif;">What do I need and what can I borrow?</span></b><span style="color: #262626; font-family: Arial, sans-serif;"><o:p></o:p></span><br />
<b><span style="color: #262626; font-family: Arial, sans-serif;"></span></b><br />
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<b><span style="color: #262626; font-family: Arial, sans-serif;"><br /></span></b></div>
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<span style="color: #262626; font-family: Arial, sans-serif;">Here is a basic formula that will get you a good idea of what’s
possible when it comes to getting a bank to provide an SBA loan to finance the </span><a href="http://buyabiz.hubpages.com/hub/What-do-you-buy-when-you-buy-a-business"><span style="color: #2166c4; font-family: Arial, sans-serif; text-decoration: initial;">acquisition of a business</span></a><span style="color: #262626; font-family: Arial, sans-serif;">.<o:p></o:p></span></div>
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<b><span style="color: #262626; font-family: Arial, sans-serif;">Assumptions</span></b><span style="color: #262626; font-family: Arial, sans-serif;">: You purchase an on-going, operating
business that meets the requirements and criteria below. For this example, it
assumes the business is in a leased space and you plan to take over the
existing facility lease and keep the business in its current location. If you
are buying a business which includes the purchase of real estate there are some
differences. Generally a down payment on the real estate portion can be as low
as 10 -15% and a longer amortization – as long as 20 years.<o:p></o:p></span></div>
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<b><span style="color: #262626; font-family: Arial, sans-serif;">Typical Loan Structure for Purchase of an Operating Business:</span></b><span style="color: #262626; font-family: Arial, sans-serif;"><o:p></o:p></span></div>
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<span style="color: #262626; font-family: Arial, sans-serif;">Loan Term - 10 years<o:p></o:p></span></div>
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<span style="color: #262626; font-family: Arial, sans-serif;">Interest Rate - </span><a href="http://en.wikipedia.org/wiki/Prime_rate"><span style="color: #2166c4; font-family: Arial, sans-serif; text-decoration: initial;">Prime Rate</span></a><span style="color: #262626; font-family: Arial, sans-serif;"> +2.75% adjusted quarterly (currently this would mean a 6%
interest rate)<o:p></o:p></span></div>
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<b><span style="color: #262626; font-family: Arial, sans-serif;">Here’s the formula 20%/70%/10%</span></b><span style="color: #262626; font-family: Arial, sans-serif;"><o:p></o:p></span></div>
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<b><span style="color: #262626; font-family: Arial, sans-serif;">20% - Unencumbered cash required from the buyer should equal
approximately <u>20%</u> of the total purchase price of the business</span></b><span style="color: #262626; font-family: Arial, sans-serif;">.
Unencumbered means pure equity… which means you can’t borrow this amount.
However, if you’re lucky enough, a significant portion of this can be a gift,
if you have friends and relatives willing to do that. Do not try to disguise
loans as gifts. Committing bank fraud is no way to start a business.<o:p></o:p></span></div>
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<span style="color: #262626; font-family: Arial, sans-serif;">Here's the good news, you can </span><a href="http://www.sunbelttexas.com/using-a-401k-to-buy-a-business.htm"><span style="color: #2166c4; font-family: Arial, sans-serif; text-decoration: initial;">use your IRA or 401k Plan funds tax
free</span></a><span style="color: #262626; font-family: Arial, sans-serif;"> and without any early withdrawal penalties to generate your
equity. The rules for this are complicated and you will need to work with
professionals who specialize in this area of very complex tax law. But the
decision to use your retirement funds is easier. Would you rather use your
retirement funds to bet on your self or would you prefer to leave your
retirement funds in the hands of Wall Street?<o:p></o:p></span></div>
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<b><span style="color: #262626; font-family: Arial, sans-serif;">70% </span></b><span style="color: #262626; font-family: Arial, sans-serif;">- <b>The SBA backed loan would equal 70% of the total purchase
price. </b>Again this is usually a 10 year loan at an interest rate of Prime
Rate plus 2 3/4% adjusted quarterly.<o:p></o:p></span></div>
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<b><span style="color: #262626; font-family: Arial, sans-serif;">10% </span></b><span style="color: #262626; font-family: Arial, sans-serif;">- <b>The bank will likely ask the seller to finance 10% of the
purchase price. The theory is this 10% note is an incentive to the seller to
help the buyer succeed. </b>While in some cases this may help, the real reason
the bank does it is to reduce the banks risk. This 10% seller note will be </span><a href="http://en.wikipedia.org/wiki/Subordinated_debt"><span style="color: #2166c4; font-family: Arial, sans-serif; text-decoration: initial;">subordinated debt</span></a><span style="color: #262626; font-family: Arial, sans-serif;"> to the bank which means the
seller will have little recourse against the assets of the business if the loan
is not repaid by the borrower. It is important that a seller have confidence in
your ability to run the business successfully so that you can pay the seller
note according to the terms.<o:p></o:p></span></div>
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<b><span style="color: #262626; font-family: Arial, sans-serif;">The above breaks down the source of money for a purchase. Now
let’s look at the qualitative requirements so that a bank will actually lend
you 70% of the purchase price.</span></b><span style="color: #262626; font-family: Arial, sans-serif;"><o:p></o:p></span></div>
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<b><span style="color: #262626; font-family: Arial, sans-serif;">You’ve found a business you want to buy, now what?</span></b><span style="color: #262626; font-family: Arial, sans-serif;"><o:p></o:p></span></div>
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<span style="color: #262626; font-family: Arial, sans-serif;">Getting an SBA loan from a bank to acquire an operating business
has its own special rules and requirements. There are 3 primary elements of the
qualification process - the borrower, the business and the financial elements.
Let’s take them one at a time although as you will see there is some overlap.<o:p></o:p></span><br />
<span style="color: #262626; font-family: Arial, sans-serif;"><br /></span>
<span style="color: #262626; font-family: Arial, sans-serif;">Here's a good book about getting an SBA Loan</span><br />
<span style="color: #262626; font-family: Arial, sans-serif;"></span><br />
<span style="color: #262626; font-family: Arial, sans-serif;"><iframe frameborder="0" marginheight="0" marginwidth="0" scrolling="no" src="http://rcm.amazon.com/e/cm?t=sunbeltbusine-20&o=1&p=8&l=as1&asins=0471207527&nou=1&ref=tf_til&fc1=000000&IS2=1&lt1=_blank&m=amazon&lc1=0000FF&bc1=000000&bg1=FFFFFF&f=ifr" style="height: 240px; width: 120px;"></iframe></span><br />
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<b><span style="color: #262626; font-family: Arial, sans-serif;">The Business I Buy</span></b></div>
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<span style="color: #262626; font-family: Arial, sans-serif;">A bank will look at a business to try to determine the risks in
the business that could affect the borrower’s ability to pay the loan back. As
a buyer these risks affect you the same way, so in this respect the borrower
and the bank are on the same side of the issue. Here are some, but not all,
common red flags:<o:p></o:p></span></div>
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<b><span style="color: #262626; font-family: Arial, sans-serif;">Customer concentration</span></b><span style="color: #262626; font-family: Arial, sans-serif;"> – there are many businesses
that have 1 customer doing 50-75% of the total revenue for the business. What
happens if this customer leaves? 75% of the business goes with it. When looking
at businesses to buy remember this - less customer concentration is better
unless there are some long term, ironclad, contracts<o:p></o:p></span></div>
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<b><span style="color: #262626; font-family: Arial, sans-serif;">Vendor Concentration</span></b><span style="color: #262626; font-family: Arial, sans-serif;">- A business may have a great
deal from a vendor but if the business loses the vendor the buyer would need to
pay more for the product and their profits would be harmed.<o:p></o:p></span></div>
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<b><span style="color: #262626; font-family: Arial, sans-serif;">Regulatory Issues</span></b><span style="color: #262626; font-family: Arial, sans-serif;">- Are there new laws,
regulations or licenses coming into play that will require the business to
significantly change their operations? How will those changes affect their
profits and cash flow? For example - Back in the 90s nearly all dry cleaners
used a chemical that was basically outlawed. The dry cleaning businesses had to
invest significant money to change their business. For a couple of years you
couldn’t give away a dry cleaner , many of them were losing money due to the
cost of the conversion and with the uncertainty of the effect on profits, it
was nearly impossible to sell a dry cleaner.<o:p></o:p></span></div>
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<b><span style="color: #262626; font-family: Arial, sans-serif;">Location Issues – </span></b><span style="color: #262626; font-family: Arial, sans-serif;">Let’s say you own a great
business on the corner of the busiest intersection in town. Things have been
great for 10 years. But what if the state decides to widen the road and
condemns your building?<o:p></o:p></span></div>
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<b><span style="color: #262626; font-family: Arial, sans-serif;">Financial Issues</span></b><span style="color: #262626; font-family: Arial, sans-serif;"><o:p></o:p></span></div>
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<span style="color: #262626; font-family: Arial, sans-serif;">Assuming the business passes all the operational reviews it’s
time to look at the businesses financials.<o:p></o:p></span></div>
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<b><span style="color: #262626; font-family: Arial, sans-serif;">Cash flow and profits – </span></b><span style="color: #262626; font-family: Arial, sans-serif;">The bank (and I’m sure the
borrower) wants to be certain that the business can pay the debt incurred to
buy the business. And in addition to being able to pay the debt the bank wants
enough free cash flow to pay the debt with room to spare! The banks room to
spare is officially called the “Coverage Ratio”. The coverage ratio is best
described in simple terms. If a banks coverage ratio is 30% it means that for
every $100 of debt payments required the business needs to have $130 to pay it.
Another way to look at it is 30% can go wrong and the business can still pay
the debt.<o:p></o:p></span></div>
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<b><span style="color: #262626; font-family: Arial, sans-serif;">What are the “real” earnings and </span></b><a href="http://buyabiz.hubpages.com/hub/Cash-Flow-vs-Profit"><b><span style="color: #2166c4; font-family: Arial, sans-serif; text-decoration: initial;">cash flow</span></b></a><b><span style="color: #262626; font-family: Arial, sans-serif;"> of the
business?</span></b><span style="color: #262626; font-family: Arial, sans-serif;"><o:p></o:p></span></div>
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<span style="color: #262626; font-family: Arial, sans-serif;">The smaller the business the less likely it is that you will
find what would appear to be well-kept financial records for the business. I
emphasize the word <b>appear. </b>The simple fact is small business owners are,
for the most part very, very tax averse. If they can manage their affairs to
minimize their tax burden they will do so. By the way this is no different from
large corporations. Business tax returns seems to bare little resemblance to
their profit and loss statements. Don’t be surprised to see small businesses
with owners living really well but the business tax returns show the business
barely breaking even or even losing money.<o:p></o:p></span></div>
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<span style="color: #262626; font-family: Arial, sans-serif;">There is a process that you can go thru with the business owner
(or Business Broker if one is involved) that can identify the true earnings and
cash flow of the business. If you use experienced advisors and you can’t get to
the numbers that make sense you just need to move on. There are lots of
businesses whose financials will stand up to due diligence.<o:p></o:p></span></div>
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<span style="color: #262626; font-family: Arial, sans-serif;">Determining the real earnings of the business is key to
determining if the business will generate the free cash flow needed to pay back
the bank loan.<o:p></o:p></span></div>
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<b><span style="color: #262626; font-family: Arial, sans-serif;">What is the value of the business and will the bank make a
determination as to the business value?</span></b><span style="color: #262626; font-family: Arial, sans-serif;"><o:p></o:p></span></div>
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<span style="color: #262626; font-family: Arial, sans-serif;">Since the banks and the SBA have an interest in getting the loan
re-paid they have an interest in making sure that the buyer is paying a fair
and reasonable price for the business. Most SBA lenders will, as part of the
loan packaging process, require that an independent Business Appraisal (often
called a business valuation) is completed on the business. The bank normally
picks the valuation firm and the buyer pays for the valuation. This valuation
is part of the banks risk mitigation system. The basic idea is that even if the
buyer and seller agree to a price and the cash flow debt service work… the deal
still has to pass the fair market value hurdle.<o:p></o:p></span></div>
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<b><span style="color: #262626; font-family: Arial, sans-serif;">Business Plan for Success - </span></b><span style="color: #262626; font-family: Arial, sans-serif;">As part of the business
loan application process the buyer/borrower will need to produce a <!--[if gte vml 1]><v:shapetype id="_x0000_t75"
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Here’s a</b> piece of advice you may find to be very valuable. Before you start
looking for a business to buy you should invest in good business plan software.
Start building this business plan before you get serious about a search. That
way when you do find an interesting business you just plug in their specific
numbers and you’ll have a very quick answer on many critical questions
including cash flow available for debt service, working capital required for
the business and capital expenditures effect on cash flow.<o:p></o:p></span></div>
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<br /></div>
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<b><span style="color: #262626; font-family: Arial, sans-serif;">Borrower Guidelines<o:p></o:p></span></b></div>
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<b><span style="color: #262626; font-family: Arial, sans-serif;">Credit History – </span></b><span style="color: #262626; font-family: Arial, sans-serif;">As you might imagine, when you
are borrowing money a good </span><a href="http://en.wikipedia.org/wiki/Credit_score"><span style="color: #2166c4; font-family: Arial, sans-serif; text-decoration: initial;">credit score</span></a><span style="color: #262626; font-family: Arial, sans-serif;"> is important. If your credit score is below 680 it will be very
difficult to get an SBA backed loan even if all the other requirements are met.<o:p></o:p></span></div>
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<b><span style="color: #262626; font-family: Arial, sans-serif;">Other financial obligations and resources – </span></b><span style="color: #262626; font-family: Arial, sans-serif;">The
buyer can’t have a heavy personal debt burden that will require the business
cash flow to pay. Similar to a home mortgage loan the bank will look at the
buyer’s overall financial situation, not just the cash flow of the business.
Often this is where the Coverage Ration becomes an issue.<o:p></o:p></span></div>
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<b><span style="color: #262626; font-family: Arial, sans-serif;">Personal History – </span></b><span style="color: #262626; font-family: Arial, sans-serif;">We often see items in buyer’s
personal history that cause problems in the loan approval process. There are
little problems and big problems, Some can be worked around, some can’t.
Example- we once had a buyer in his early 30’s. On his record he had pleaded no
contest in a bar fight incident 12 years earlier while in college. That held up
his loan process for months.<o:p></o:p></span></div>
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<span style="color: #262626; font-family: Arial, sans-serif;">For certain you need to make sure you don’t have problems with
student loan repayments, child support or alimony.<o:p></o:p></span></div>
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<b><span style="color: #262626; font-family: Arial, sans-serif;">Applicable Skills</span></b><span style="color: #262626; font-family: Arial, sans-serif;"><o:p></o:p></span></div>
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<span style="color: #262626; font-family: Arial, sans-serif;">This is often the most important element in a successful
business acquisition loan process.<o:p></o:p></span></div>
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<span style="color: #262626; font-family: Arial, sans-serif;">The banks and SBA want to have a borrower who has some skill or
experience that can be applied to the business immediately. An example is if
your only experience is as a high school history teacher it is very unlikely
that you could get approved to purchase an industrial machine shop. However,
you might well get approved to purchase a vocational training school.<o:p></o:p></span></div>
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<span style="color: #262626; font-family: Arial, sans-serif;">A buyer should search their personal history so that they can
identify all of their experiences and possible skills applicable to the
business the wish to purchase.<o:p></o:p></span></div>
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<b><span style="color: #262626; font-family: Arial, sans-serif;">Summary</span></b></div>
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<span style="color: #262626; font-family: Arial, sans-serif;">You may be able to buy a business on favorable terms using a
small business bank loan backed by the SBA. The requirements are lengthy and
complicated but there is a great deal of help available to guide you through
the process. The truth is a commercial bank would be very, very unlikely to
loan money to small business buyers without the SBA guarantee loan program.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="color: #262626; font-family: Arial, sans-serif;">There
are many, many very good businesses available to purchase which might fit your personal goals.</span></div>
BizBuyerhttp://www.blogger.com/profile/15901148990548855057noreply@blogger.com0tag:blogger.com,1999:blog-4930705704386238360.post-7818897100967806662013-01-02T17:18:00.001-06:002013-02-24T16:09:54.364-06:00Business Partnerships - The good, the bad and the ugly...<span style="color: #262626; font-family: Arial, sans-serif; font-size: 14pt; text-align: justify;">In my line of work we run into business partnerships every day
and we are often the ones trying to figure out how to resolve the myriad
issues, problems and crisis that revolve around the small business partnership
dynamics. A wise person once said famously,</span><br />
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<span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;"><br /></span>
<span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;">"<b>Choose your business partner <i>twice</i> as carefully
as you choose a spouse..because your spouse can only take <i>half</i> of what
you have."</b><o:p></o:p></span></div>
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<span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;">Business partnerships can be a wonderful thing, especially in
the early stages in the life of a small business start-up. The sense of mission
and teamwork can be addictive. But what we often see is that the business
partners didn't really agree to anything before they become partners.<o:p></o:p></span></div>
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<span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;">Often the partnership conversation goes like this:<o:p></o:p></span></div>
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<span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;">Mary, "Bill, I have a great idea. I'm going to make ice
skates that have training wheels."<o:p></o:p></span></div>
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<span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;">Bill, "Cool, I have some free time, I can help. Want to be
partners?"<o:p></o:p></span></div>
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<span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;">Mary, "Sure 50/50"<o:p></o:p></span></div>
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<span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;">Bill, "Awesome, let's go to Starbucks and noodle out a plan."<o:p></o:p></span></div>
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<span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;">There you have it, you now have your business partner and, as
long as the business doesn't succeed <b>or</b> fail things will likely be o.k.
However, every business, over time, does exactly one or the other. It either
succeeds of it fails.<o:p></o:p></span></div>
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<br /></div>
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<b><span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 17.0pt;">Good Business Partnership Agreements are All About the
"What ifs?"<o:p></o:p></span></b><br />
<b><span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 17.0pt;"></span></b><br />
<a name='more'></a><b><span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 17.0pt;"><br /></span></b></div>
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<span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;">When you are thinking about a </span><a href="http://buyabiz.hubpages.com/hub/Disputes-among-Business-Partners"><span style="color: #2166c4; font-family: "Arial","sans-serif"; font-size: 14.0pt; text-decoration: none; text-underline: none;">business partner</span></a><span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;"> you
need to consider many things. Below is a list of outcomes and issues you might
want to consider. We'll go through these issues using Mary and Bill as the
potential business partners. To make things easy we'll assume both are married
but not to each other. The issues below are a very short list and the list
doesn't cover all the possible issues. The idea here is for the partners to sit
down and talk about ALL of the possible outcomes and what they want to do in
those circumstances. Also, just as a point of interest, every item below I have
seen (and more than once) in real businesses involving real people:<o:p></o:p></span></div>
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<b><span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;">Issue</span></b><span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;">: Mary and Bill love being business partners, but what happens
if, against her wishes, Mary ends up with a business partner that isn't Bill?
How could that happen? What if Bill get's a divorce and as part of the divorce
settlement Bill's wife Jane get's Bill's interest in Skate Blades & Wheels
LLC? And then Jane decides her new boyfriend Bubba needs a job and Bubba starts
"reporting to work" with Mary every day?<o:p></o:p></span></div>
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<b><span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;">Solution: </span></b><span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;">Have an agreement in the </span><a href="http://en.wikipedia.org/wiki/Limited_liability_company"><span style="color: #2166c4; font-family: "Arial","sans-serif"; font-size: 14.0pt; text-decoration: none; text-underline: none;">Limited Liability Company</span></a><span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;">
agreement that specifically defines how/if partners can transfer ownership to
other parties. You can be very restrictive.<o:p></o:p></span></div>
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<b><span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;">Issue: </span></b><span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;">Mary and Bill get the </span><a href="http://www.amazon.com/dp/B005IHW242/ref=as_li_tf_til?tag=sunbeltbusine-20&camp=14573&creative=327641&linkCode=as1&creativeASIN=B005IHW242&adid=099PQQ8TM8F1S7PR8XCZ&&ref-refURL=http%3A%2F%2Fsunbelttexas.blogspot.com%2F"><b><span style="color: #2166c4; font-family: "Arial","sans-serif"; font-size: 14.0pt; text-decoration: none; text-underline: none;">business plan</span></b></a><span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;"> done
and they need to buy $1,000 worth of skates that they can modify as prototypes.
But, Mary doesn't have her $500 and Bill doesn't either but Bill has $750 open
on his credit card and Mary has $250. Who puts in how much? If they are 50/50
partners what do they do?<o:p></o:p></span></div>
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<b><span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;">Solution: </span></b><span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;">The Limited Liability Company (</span><a href="http://girlygirl09.hubpages.com/hub/Limited-Liability-Company-LLC"><span style="color: #2166c4; font-family: "Arial","sans-serif"; font-size: 14.0pt; text-decoration: none; text-underline: none;">here's a Hub on LLCs</span></a><span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;">)
operating agreement can have a provision whereby the </span><a href="http://www.simplicitylaw.com/law-articles/what-limited-liability-capital-account-and-what-do-i-do-it"><span style="color: #2166c4; font-family: "Arial","sans-serif"; font-size: 14.0pt; text-decoration: none; text-underline: none;">capital</span></a><span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;"> would
go in as loans and the partners can get their loans paid back before any
profits are shared.<o:p></o:p></span></div>
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<b><span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;">Issue: </span></b><span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;">Mary and Bill have been working on this
idea for 100 hours per week for 6 months. Things look promising but it will
take 100 hours a week for 3 more months to get where they want to be. Bill
decides he has to get a job and will only be able to devote 10 hours a week to
the business, Mary will have to pull the load across the finish line almost all
by herself.<o:p></o:p></span></div>
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<b><span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;">Solution: </span></b><span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;">The operating agreement can state that the
additional labor contributed by a partner can be reimbursed to that partner, at
an agreed on rate, prior to any profit sharing from the partners.<o:p></o:p></span></div>
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<b><span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;">Issue: </span></b><span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;">It's 3 years later, the business is wildly
successful, Bill and Mary are happy as clams. The have a Christmas party with
the employees but driving home some guy falls asleep at the wheel, crosses the
center line and crashes into Mary's car. Mary is in coma and, if she ever
recovers, she will be unable to work in the business again. Because of the
medical costs the family needs money fast and the family wants to sell Mary's
interest in the business. Bill would like to help but neither he nor the
business has the cash to buy out the value of Mary's interest and Bill doesn't
want Mary's interest sold to someone else.<o:p></o:p></span></div>
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<b><span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;">Solution: </span></b><span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;">Businesses can buy insurance that will
"buyout" the other partners interest in circumstances like this. This
type of insurance is commonly called business buyout insurance. Talk to your
commercial insurance broker for your options. It is important to have a
mechanism in the LLC that states HOW the business value will be determined so
that adequate insurance can be purchased. You don't need to know the value at
the time of the partnership agreement if you have a formula to determine the
value if the need for a forced buyout occurs.<o:p></o:p></span></div>
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<span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;">I could go on forever but the above 4 issues are examples of
things to think through. I'm sure you can think of more as well. A good
business attorney will also be helpful. You need to take the time to go through
the issues and consider the solutions long before you have the problems.<o:p></o:p></span></div>
<div class="MsoNormal" style="text-align: justify; text-justify: inter-ideograph;">
<span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;">If you
have any business partnership concerns or issues please feel free to drop me a
question in the comment section and I'll take a shot at providing a possible
solution.</span><o:p></o:p><br />
<span style="color: #262626; font-family: "Arial","sans-serif"; font-size: 14.0pt;"><br /></span>
<span style="color: #262626; font-family: Arial, sans-serif;"><span style="font-size: 19.09090805053711px;"></span></span><br />
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BizBuyerhttp://www.blogger.com/profile/15901148990548855057noreply@blogger.com0tag:blogger.com,1999:blog-4930705704386238360.post-66350760362893310772012-07-29T15:30:00.002-05:002013-02-10T10:12:38.544-06:00Business Owners and the Personal GuaranteeOften when people go into business or start a small business they really don't think through the details of what they are doing day-to-day as it relates to the long term health of the business or their personal financial health.<br />
<br />
A classic example is the <a href="http://www.businessdictionary.com/definition/personal-guarantee.html" target="_blank">Personal Guarante</a>e. When you go into business you will need to make financial commitments to various parties like landlords, vendors, etc. Most of these commitments are promises to pay. The real question is "Who is promising to pay?" Is it your company that is promising to pay or is it you personally that is promising to pay...or is it <b>BOTH</b>.<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEipZoL09_vaTKtFZrEH-Hex0KCdMnsEky9iYB3KO-D2AhYNWc2kU17wmhCKCceHKdaXJw0Nt0vYMGytQxWfWVRbwH_2ptoC41CLh6-1QZk2C-E6Q2k6GT1FCP2WUhyphenhyphenbSZF0dU5LKkS5F2Oe/s1600/pic.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="148" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEipZoL09_vaTKtFZrEH-Hex0KCdMnsEky9iYB3KO-D2AhYNWc2kU17wmhCKCceHKdaXJw0Nt0vYMGytQxWfWVRbwH_2ptoC41CLh6-1QZk2C-E6Q2k6GT1FCP2WUhyphenhyphenbSZF0dU5LKkS5F2Oe/s200/pic.png" width="200" /></a></div>
<br />
When you go into business did you form a corporation? LLC? Hopefully you did because those things can give you some legal protections that, if something goes wrong, you'll wish you had.<br />
<br />
<a name='more'></a><br />
<br />
A personal guarantee from the small business owner is often requested/demanded by vendors and landlords when new start-up business gets started or even with established businesses. The idea is the the landlord or vendor doesn't want to rely solely on your business (corporation or LLC) to pay a debt. If the business fails they want the business owner, YOU, to be personally on the hook for the obligation.<br />
<br />
Before you sign a personal guarantee make sure you understand what that means and consult with an attorney, these things can be tricky. I would also recommend that as a business owner you avoid a personal guarantee whenever you can. Nearly all vendors/landlords say that the personal guarantee is required and standard but believe me...they are not always required.<br />
<br />
If you have signed a personal guarantee you may have the opportunity to withdraw it after you have some experience with the vendor or when the time comes for a lease renewal. Keep track of any and all personal guarantees you sign. You don't want an obligation you forgot about to bite you somewhere down the road.<br />
<br />
Don't just automatically sign a personal guarantee, push back and avoid it if possible.<br />
<br />
Also, keep track of every personal guarantee you sign because someday you may need to cancel or withdraw it.<br />
<br />
Finally, seek advice from an business attorney before signing any material contracts or personal guarantees.<br />
<br />
<span style="color: blue;"><b>Additional Resources</b></span><br />
<span style="color: blue;"><b><br /></b></span>
<span style="color: blue;"><b></b></span><br />
<span style="color: blue;"><b><iframe frameborder="0" marginheight="0" marginwidth="0" scrolling="no" src="http://rcm.amazon.com/e/cm?t=sunbeltbusine-20&o=1&p=8&l=as1&asins=047012508X&nou=1&ref=tf_til&fc1=000000&IS2=1&lt1=_blank&m=amazon&lc1=0000FF&bc1=000000&bg1=FFFFFF&f=ifr" style="height: 240px; width: 120px;"></iframe></b></span><br />
<div>
<span style="color: blue;"><b><br /></b></span></div>
<br />
<span style="color: blue;"><b><br /></b></span>
<span style="color: blue;"><b>Here's an article you might find useful regarding business partners:</b></span><br />
<div style="text-align: center;">
<span style="color: blue;"><b><a href="http://hub.me/acHM6">Make sure your business won't die if your partnership hits the rocks.</a></b></span><br />
<span style="color: blue;"><br /></span>
<b><span style="color: #134f5c;"><a href="http://buyabiz.hubpages.com/hub/Lets-Play-A-Game-What-Price-Did-This-Business-Sell-For" target="_blank">What Did This Business Sell For? Test your knowledge of small business value</a></span></b><br />
<b><br /></b>
<b><a href="http://hub.me/acD6G" target="_blank">Are You Sure You Want a Business Partner?</a></b></div>
BizBuyerhttp://www.blogger.com/profile/15901148990548855057noreply@blogger.com2tag:blogger.com,1999:blog-4930705704386238360.post-82289716868876620432012-06-10T10:43:00.001-05:002013-02-17T10:26:48.103-06:00Using Credit Cards for your Small Business Financing<script type="text/javascript"></p>
<p>
window.google_analytics_uacct = "UA-10255021-2";</p>
<p>
</script>I see many, many small businesses that use the business owners' personal credit cards to finance their business. Although this is often an easy source of cash it can be a terrible way to manage and grow your small business.<br />
<br />
Often the biggest issue we see is that the business owner doesn't understand the relationship between the interest expense on the credit card debt as it relates to the net profits the business generates. We regularly see businesses where they are guaranteed to lose money on the sale of an item which the business owner set the price. Meaning the business owner thought he had priced the product to make a profit but in fact the price guaranteed a loss.<br />
<br />
<a name='more'></a><br />
<br />
Here are some problems you might want to try to avoid. Here's an example of what we see.<br />
<br />
John owns a small sign business let's call it SignCo. John started the business in his garage a few years ago and now he's opened a shop in a small retail center. When John started the business he was a sole proprietor but last year he formed an LLC when he moved into his retail space. To get the retail space looking good John needed to buy some shelving, signs, cash register, chairs, etc. SignCo is too new and a bank won't give the business a loan but John has personal credit cards and he puts his purchases on those cards. John has total of $20,000 on his credit cards and his interest rate is 18%.<br />
<br />
John put together a budget for SignCo and he wants a 10% profit after operating expenses. <br />
<br />
SignCo's average sale is $100. How much does SignCo need to sell each month just to pay the interest on John's credit card debts?<br />
<br />
The answer $3,000 per month or 30 signs per month just to pay the interest on John's credit cards. That's $36,000 per year or 360 signs to pay the interest. It will take the sale of another $200,000 to pay the principal!<br />
<br />
The math: $20,000 x 18% = $3,600/yer interest divided by 12 months = $300 per month @$10 profit per sign that's 30 signs per month just to pay the interest.<br />
<br />
The point is you need to understand the relationship between your profits and your debt costs before you make a decision to borrow money from anyone, including yourself.<br />
<br />
Here are associated articles <a href="http://buyabiz.hubpages.com/hub/Start-a-Small-Business-Like-Youve-Done-It-Before">"How to Start a Business like you've Done it Before"</a> and <a href="http://sunbelttexas.blogspot.com/2012/07/business-owners-and-personal-guaranty.html">Business Owners and the Personal Guarantee</a><br />
<br />
Finally, too many small business owners also fail to realize that personal credit card interest may not be tax deductible without some tricky accounting and documentation. If a business owner is running up his personal credit cards and then paying them off from his income from the business he is likely losing a substantial tax deduction, assuming he's actually making a profit.<br />
<br />
A very helpful book on managing small business finances:<br />
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<b>Another article you may find useful:</b><br />
<b><a href="http://buyabiz.hubpages.com/hub/Inventory-cash-management">Understanding the Inventory to Cash Cycle in Your Small Business</a></b><br />
<br />
<a href="http://amzn.to/QN5QRr">Build a Business that Can be Sold - What makes a business valuable to a buyer?</a><br />
<br />
<a href="http://buyabiz.hubpages.com/">Article Library - Buying , Selling and Running a Business</a><br />
<br />
<a href="http://hub.me/acIOR" target="_blank">Can Owning a Small Business Make You Wealthy?</a><br />
<br />
<a href="http://hub.me/aedwD" target="_blank">What's the Value of This Business? Here's a little game, takes 2 minutes</a><br />
<br />BizBuyerhttp://www.blogger.com/profile/15901148990548855057noreply@blogger.com2tag:blogger.com,1999:blog-4930705704386238360.post-75078142204844918192012-05-28T07:44:00.000-05:002012-08-09T13:15:52.860-05:00If you ever thought you can turn your hobby into a business.......Many people we encounter think that starting a business based on a hobby is a good idea...it rarely is.<br />
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Maybe they've read too many "Do what you love" seminar headlines. The reality is, it's either a business or a hobby and never both.<br />
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This recent article in the Wall Street Journal gives you a look into one persons attempt to turn their hobby into a business.<br />
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<div style="text-align: center;">
<span style="font-size: large;"><b><a href="http://online.wsj.com/article/SB10001424052970204369404577208811394364448.html?mod=small_business_newsreel" target="_blank">Point. Set. Match. I Lose!</a></b></span><br />
<span style="font-size: large;"><br /></span>
<div style="text-align: left;">
This article published in The Wall Street Journal Small Business Management Section.</div>
</div>BizBuyerhttp://www.blogger.com/profile/15901148990548855057noreply@blogger.com0tag:blogger.com,1999:blog-4930705704386238360.post-11438505129213446982012-05-24T06:24:00.000-05:002013-03-30T08:06:11.254-05:00Small Business Purchase Due DiligenceBuying a small business has many challenges not the least of which is the due diligence process prior to the purchase. Most small business owners run their business with no thought of selling it. Their record keeping and bookkeeping are done for their needs and there is no thought given to how a buyer would view their information.<br />
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When buying a small business Due Diligence has 3 basic areas of focus. Two of the three require the assistance of the seller:<br />
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<ol>
<li>Industry Due Diligence: The seller is often the worst source for this information. Many small business owners have no real idea of the industry outside the 4 walls of their business. Get what you can from the seller but be prepared to conduct your industry due diligence with outside resources. Most industries have Trade Associations that can be a good source of information. Here's a link to a <a href="http://www.usa.gov/directory/tradeassc/index.shtml" target="_blank">Directory of Trade Associations</a></li>
<li>Business Operational Due Diligence: This is where the seller has the most information. They usually can give you, the business buyer, every detail of the business process. During due diligence focus on understanding why the seller does something their way. Also, you will likely find that the business seller has not documented their processes very well or more likely at all. When discuss operations with the seller try to take all the notes you can so that you can get focused on the critical areas you need to understand. You'll have plenty of time later to figure out if you want to change something. Keep in mind that you will be replacing the owner so spending time focusing on what the seller actually does day to day is important. You might want to start a specific list and identify evey seller's duty - daily, weekley, monthly, annually.</li>
<li>Financial Due Diligence: This is the wild card. Different seller's are all over the place on this. I've seen million dollar businesses run from a shoe box and $50,000 businesses with perfect accounting. Don't focus on how they keep their books, just focus on how you can determine from their books if the information is reasonably accurate and you can determine how much money the business is actually making. Most small business financial due diligence starts with bank accounts. Do the deposits made at the bank equal the sales reported for the business? If not, why? Once you pull on that thread it will lead you to other questions.</li>
</ol>
We have a saying in our business, "There are good businesses with bad books, good businesses with good books, bad businesses with bad books and bad businesses with good books". Make sure your due diligence helps you determine which kind of business you are evaluating. Understand the bookkeeping situation but don't let that automatically disqualify a business for possible purchase.<br />
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Keep in mind that your goal is to <a href="http://buyabiz.hubpages.com/hub/Want-to-Buy-a-Business" target="_blank">buy a good business</a>, not just buy a good bookkeeping system.<br />
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Related Posts:<br />
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<ul>
<li><a href="http://buyabiz.hubpages.com/hub/What-do-you-buy-when-you-buy-a-business" target="_blank">What Do You Buy When You Buy a Business?</a></li>
</ul>
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Excellent Book about Managing Small Business Finances:</div>
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<a href="http://www.amazon.com/gp/product/047012508X/ref=as_li_tf_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=047012508X&linkCode=as2&tag=sunbeltbusine-20">Small Business Financial Management Kit For Dummies</a><img alt="" border="0" height="1" src="http://www.assoc-amazon.com/e/ir?t=sunbeltbusine-20&l=as2&o=1&a=047012508X" style="border: none !important; margin: 0px !important;" width="1" /><br />
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Excellent Document Shredder for Confidential Disposal of Sensitive Materials<br />
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BizBuyerhttp://www.blogger.com/profile/15901148990548855057noreply@blogger.com1tag:blogger.com,1999:blog-4930705704386238360.post-19000608829694689902012-04-22T07:41:00.002-05:002012-07-29T15:40:16.895-05:00Options for Small Business AccountingOver the years I have tried a variety of small business accounting solutions. A huge leap forward for small businesses is the cloud based small business accounting software. Based on my experience a small business' best option is a "cloud" based solution. A cloud based small business accounting package has some significant advantages and a few disadvantages.<br />
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Advantages:<br />
<ul>
<li>Your software is always the current version</li>
<li>You can allow direct access to your outside CPA. This may be the best feature since it allows you to very efficiently book the entries that I used to wait til the end of the month (or quarter, or year, or when the taxes get done). Now when we have something odd to book we simply call the CPA, we login together and the CPA shows us the proper booking, What used to go on someone's "to-do" list is now done correctly the first time.</li>
<li>You can access your bookkeeping and accounting records from anywhere. Small business owners often complain about being tied down in their chair at the office but you don't need to be.</li>
<li>You can outsource many activities which a remote user can do part time and at a lower cost because they can access your accounting system. This could save you hiring a full time person or trying to train people to do complex jobs part-time.</li>
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Disadvantage:</div>
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<li>There's a monthly subscription fee depending on the level of service you choose.</li>
<li>Getting your CPA to use something other than Quick Books might be a challenge. But remember, you have to use the system everyday. If you find a system that works better for you than Quick Books have a discussion with your CPA about the benefits to you.</li>
</ul>
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Although Quick Books is the most widely used and certainly a safe choice, I find the Quick Books "on-line" version to be slow and cumbersome. </div>
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<span style="background-color: white;">There is also the option of outsourcing virtually all of your bookkeeping to a company. If you want to see what services an outsourced bookkeeping company provides go to </span><a href="http://growthforce.com/" style="background-color: white;" target="_blank">GrowthForce</a><span style="background-color: white;"> they are experts at outsourcing small business accounting services.</span><br />
<br />
Other related posts:<br />
<br />
<ul>
<li><a href="http://buyabiz.hubpages.com/hub/What-do-you-buy-when-you-buy-a-business" target="_blank">What Do You Buy When You Buy a Business?</a></li>
<li><a href="http://sunbelttexas.blogspot.com/2012/06/using-credit-cards-for-your-small.html" target="_blank">Using Personal Credit Cars to Finance a Small Business</a></li>
</ul>BizBuyerhttp://www.blogger.com/profile/15901148990548855057noreply@blogger.com0tag:blogger.com,1999:blog-4930705704386238360.post-80937026308942615082012-04-19T20:33:00.000-05:002012-04-20T17:24:50.951-05:00Here's the Cheapest Small Business start-up Experience You Can BuyHere's a great book about starting a business. A real life recount of the ups and downs and lessons learned the expensive way.<br />
<br />
This book will give you the cheapest experience you can buy. Learning from others start-up business mistakes is always better, and lest costly, than learning from your own.<br />
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<iframe src="http://rcm.amazon.com/e/cm?t=sunbeltbusine-20&o=1&p=8&l=as1&asins=0814401678&nou=1&ref=tf_til&fc1=000000&IS2=1<1=_blank&m=amazon&lc1=0000FF&bc1=000000&bg1=FFFFFF&f=ifr" style="width:120px;height:240px;" scrolling="no" marginwidth="0" marginheight="0" frameborder="0"></iframe><br />BizBuyerhttp://www.blogger.com/profile/15901148990548855057noreply@blogger.com1tag:blogger.com,1999:blog-4930705704386238360.post-91239544291470180512012-04-15T12:48:00.001-05:002012-04-15T13:09:08.023-05:00What on earth is a coverage ratio in financing with an SBA Loan?When dealing with financing of various sorts you will come across the term "coverage ratio". It my be in the context of "Interest coverage ratio" or "debt coverage ratio" or some other similar nomenclature.<br />
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Here's the basic concept of a coverage ratio. The coverage ratio is designed to determine what margin for error there is in a borrower's ability to pay back the debt.<br />
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Let's use an example assuming you are buying a business, here are some basics:<br />
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<ul>
<li>Business Purchase Price $500,000</li>
<li>Seller's Discretionary Earnings (SDE) $175,000 (Seller's discretionary earnings is the business earnings before Interest, Depreciation, Taxes, Amortization and Owner's Compensation).</li>
<li>Down payment Buyer has available $100,000</li>
<li>SBA Loan $400,000 financed for 10 years @ 7% = $4,644 per month payment which = $55,750 per year.</li>
<li>Salary the Buyer needs from business to pay living expenses $100,000.</li>
</ul>
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<b><u>Coverage Ration Calculation </u></b></div>
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SDE $175,000</div>
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Salary needed $100,000</div>
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Available for Debt Service $75,000</div>
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Amount of Debt service $55,750</div>
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Coverage ratio is 1.35 Amount available for debt service divided by actual debt service.</div>
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Generally speaking when seeking an SBA Loan the coverage ratio required will be between 1.25 and 1.4.</div>
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<br /></div>BizBuyerhttp://www.blogger.com/profile/15901148990548855057noreply@blogger.com0