Business brokers and other professional intermediaries use business valuation rules of thumb to help sellers price their businesses for sale. These "rules" are very useful for appraising nearly every small business, however they are gross simplifications and should only provide a general idea of a suitable price range for a particular business.
If a rule of thumb is used to value a business, some type of earnings multiplier makes the most sense to prospective buyers. It directly addresses the buyer's motive to make money to achieve a return on investment. Sales multiples mean nothing unless they can be translated into earnings.
Two areas of confusion are inappropriate comparisons to investment real estate or to stock market earnings multiples. Real estate is often priced at 8 to 10 times its net operating income. Stock market prices are often as much as, or even more than, 20 times earnings. These two comparisons do not work for small businesses primarily because the risk of owning a small, closely-held, privately owned business is thought to be much higher than owning either real estate or publicly held stock. A business has lower liquidity than real estate and stock, and running a small business is also a lot tougher than managing an office building or a stock portfolio.
For more information
GO HERE
Thursday, March 04, 2010
Tuesday, April 07, 2009
Buying An Existing Business Part IX of IX
Tips and Definitions
This final part is devoted to some business definitions, some business tricks and overcoming the usual arguments of buying am existing small business.
The Usual Suspects:
1. "Starting a business from scratch is less expensive than buying an existing business."
This is most common argument. I personally have started several business and purchased several business. My believe is that in the long run I spent more time and money on the startups.
Consider just the cost of advertising to bring a startup to the same level of income as an existing business.
Add to this the time you must spend, not to mention the loss of earnings, setting up vendors, finding a location, negotiating a lease, hiring and training employees.
This is just the beginning of the hundreds of details you will need to tend to that are already in place with an existing business.
2. "Very few sellers sell a successful business."
Folks this is just not true. Business are sold all the time for a variety of reasons. Many are sold for poor health. retirement, death, burn-out and partnership breakup. You, the buyer, must just look carefully at the reasons for the sale. Don't take anyone's word.
3. "Seller may become a competitor"
Solution: Get a covenant not to compete. Non-competitive covenants are designed to prevent sellers from participating in a competitive business for a period of time and within a radius of specified miles.
These are the three major concerns. There are other arguments that will be discussed at length in a future report.
A Few Definitions
"Adjusted Operating Income (AOI)" -- Used in a cash-flow valuation and recasting of profit and loss statements.
"Confidentiality Agreement" -- The promise that you'll use the information only to make a decision about buying said business.
"Due Diligence" -- The due diligence is the time when you’ll have access to the company’s books and records.
"Existing" -- For purposes of this ebook we define "existing" as a business that is up and running, offers a product and/or service, has a physical location, and financial records.
"Goodwill" -- An intangible asset which provides a competitive advantage, such as a strong brand, reputation, or high employee morale. In an acquisition, goodwill appears on the balance sheet of the acquirer in the amount by which the purchase price exceeds the net tangible assets of the acquired company.
"Letter Of Intent" -- A business purchase letter of intent is really a non-binding agreement that says "I would like to buy your business for an asking price of $xxxx, but first I want to take a closer look at your business".
"Seller's Discretionary Cash (SDC)" -- Profit and loss line items added to the bottom line. Used in a cash-flow valuation.
"Small Businesses"-- Rather than define "Small Businesses" based on annual sales, number of employees, or other quantitative measures, Let's define a small business as one with only one level of management, namely you, the owner. This definition may not be perfect but for purposes of our discussion it better sums up what most small businesses really are.
Conclusion
My advise when buying a any business is to be cynical and pessimistic. Accept nothing on faith. Look for trouble before it finds you.
For more information
GO HERE
DISCLAIMER: The purpose of the information contained within this Blog is to provide general guidelines for various subjects of interest. Your use of this information is at your own risk. Each user of this Blog should consult a qualified professional who understands the user's particular factual situation before making decisions, and PRO-BIZ marketing, LLC makes no express or implied representations or warranties. PRO-BIZ marketing, LLC does not guarantee the completeness, accuracy or timeliness of this informationa
This final part is devoted to some business definitions, some business tricks and overcoming the usual arguments of buying am existing small business.
The Usual Suspects:
1. "Starting a business from scratch is less expensive than buying an existing business."
This is most common argument. I personally have started several business and purchased several business. My believe is that in the long run I spent more time and money on the startups.
Consider just the cost of advertising to bring a startup to the same level of income as an existing business.
Add to this the time you must spend, not to mention the loss of earnings, setting up vendors, finding a location, negotiating a lease, hiring and training employees.
This is just the beginning of the hundreds of details you will need to tend to that are already in place with an existing business.
2. "Very few sellers sell a successful business."
Folks this is just not true. Business are sold all the time for a variety of reasons. Many are sold for poor health. retirement, death, burn-out and partnership breakup. You, the buyer, must just look carefully at the reasons for the sale. Don't take anyone's word.
3. "Seller may become a competitor"
Solution: Get a covenant not to compete. Non-competitive covenants are designed to prevent sellers from participating in a competitive business for a period of time and within a radius of specified miles.
These are the three major concerns. There are other arguments that will be discussed at length in a future report.
A Few Definitions
"Adjusted Operating Income (AOI)" -- Used in a cash-flow valuation and recasting of profit and loss statements.
"Confidentiality Agreement" -- The promise that you'll use the information only to make a decision about buying said business.
"Due Diligence" -- The due diligence is the time when you’ll have access to the company’s books and records.
"Existing" -- For purposes of this ebook we define "existing" as a business that is up and running, offers a product and/or service, has a physical location, and financial records.
"Goodwill" -- An intangible asset which provides a competitive advantage, such as a strong brand, reputation, or high employee morale. In an acquisition, goodwill appears on the balance sheet of the acquirer in the amount by which the purchase price exceeds the net tangible assets of the acquired company.
"Letter Of Intent" -- A business purchase letter of intent is really a non-binding agreement that says "I would like to buy your business for an asking price of $xxxx, but first I want to take a closer look at your business".
"Seller's Discretionary Cash (SDC)" -- Profit and loss line items added to the bottom line. Used in a cash-flow valuation.
"Small Businesses"-- Rather than define "Small Businesses" based on annual sales, number of employees, or other quantitative measures, Let's define a small business as one with only one level of management, namely you, the owner. This definition may not be perfect but for purposes of our discussion it better sums up what most small businesses really are.
Conclusion
My advise when buying a any business is to be cynical and pessimistic. Accept nothing on faith. Look for trouble before it finds you.
For more information
GO HERE
DISCLAIMER: The purpose of the information contained within this Blog is to provide general guidelines for various subjects of interest. Your use of this information is at your own risk. Each user of this Blog should consult a qualified professional who understands the user's particular factual situation before making decisions, and PRO-BIZ marketing, LLC makes no express or implied representations or warranties. PRO-BIZ marketing, LLC does not guarantee the completeness, accuracy or timeliness of this informationa
Thursday, April 02, 2009
Buying An Existing Business Part VIII of IX
Valuing A Business
There are three basic approaches to valuing a small business: assets, market comparisons, and earnings,.
Buyers and sellers are adversaries; sellers want to sell the business for as much as they can and buyers want to pay as little as they need to. What process then should you use to value a small business?
The assets approach is useful but mostly when the value of the earnings is less than the value of the assets or when the earnings are in a downward trend with a doubtful future. Then the value of the assets becomes significant, particularly the liquidation value.
The market comparisons approach is to compare the subject business with businesses recently sold of similar location, type, and size. The idea is to adjust the actual sale prices and terms to align with the subject. This method is commonly used in real estate appraisals. It may also be used for franchises that are in many ways common. This approach, however, does not work well for small businesses in general because of their lack of commonality and also because the data needed to make market comparisons—actual sale prices and terms—are not usually a matter of public record. The market approach, therefore, is not very useful to small business valuation.
The value of a small business, and therefore its selling price, only makes sense when it's based on the cash flow or earnings approach. The cash flow approach is the one most important for valuing small businesses for the purpose of buying and selling. Using this approach, there are two methods of appraising: capitalization of earnings and preparation of cash-flow projections.
For more information regarding the cash-flow projections method:
GO HERE
DISCLAIMER: The purpose of the information contained within this Blog is to provide general guidelines for various subjects of interest. Your use of this information is at your own risk. Each user of this Blog should consult a qualified professional who understands the user's particular factual situation before making decisions, and PRO-BIZ marketing, LLC makes no express or implied representations or warranties. PRO-BIZ marketing, LLC does not guarantee the completeness, accuracy or timeliness of this information.
There are three basic approaches to valuing a small business: assets, market comparisons, and earnings,.
Buyers and sellers are adversaries; sellers want to sell the business for as much as they can and buyers want to pay as little as they need to. What process then should you use to value a small business?
The assets approach is useful but mostly when the value of the earnings is less than the value of the assets or when the earnings are in a downward trend with a doubtful future. Then the value of the assets becomes significant, particularly the liquidation value.
The market comparisons approach is to compare the subject business with businesses recently sold of similar location, type, and size. The idea is to adjust the actual sale prices and terms to align with the subject. This method is commonly used in real estate appraisals. It may also be used for franchises that are in many ways common. This approach, however, does not work well for small businesses in general because of their lack of commonality and also because the data needed to make market comparisons—actual sale prices and terms—are not usually a matter of public record. The market approach, therefore, is not very useful to small business valuation.
The value of a small business, and therefore its selling price, only makes sense when it's based on the cash flow or earnings approach. The cash flow approach is the one most important for valuing small businesses for the purpose of buying and selling. Using this approach, there are two methods of appraising: capitalization of earnings and preparation of cash-flow projections.
For more information regarding the cash-flow projections method:
GO HERE
DISCLAIMER: The purpose of the information contained within this Blog is to provide general guidelines for various subjects of interest. Your use of this information is at your own risk. Each user of this Blog should consult a qualified professional who understands the user's particular factual situation before making decisions, and PRO-BIZ marketing, LLC makes no express or implied representations or warranties. PRO-BIZ marketing, LLC does not guarantee the completeness, accuracy or timeliness of this information.
Tuesday, March 31, 2009
Buying An Existing Business Part VII of IX
Due Diligence
The phrase is composed of two words. “due” which the dictionary defines as “proper or adequate” and diligence, which is defined as “degree of care or caution expected of a person. Especially as a party to an agreement.”
The due diligence phase is the time when you will have access to the company’s books and records.
Once a price and terms are agreed upon by the buyer and seller due diligence should be performed. At this point the buyer should give the seller a down payment, and the seller should remove the business from the market during this critical period.
This critical investigation period can last up to four weeks for most small businesses. Keep in mind, however, the time period is negotiable.
A proper due diligence period goes beyond the financials. At a minimum you should also investigate the assets, the customers, the suppliers, the employees, the competition, the market, the industry, the sales strategy, marketing possibilities, contracts, legal issues, and so on. When you have finished your due diligence you should feel comfortable that you and the business are a match, and if something needs fixing you can fix it at a reasonable cost.
Now is the time you should get your accountant to help you identify risk areas. I’ve been in negotiations with business sellers for many years and have been forced to "walk" on several transactions because I found out the numbers were not real. I often had to be very creative during the due diligence process to find the real profit or loss of the business.
Take your time and analyze whatever documents are made available. Below is a small sample of a few items to look for:
Organizational Documents
Financial Statements
Tax Returns
Canceled Checks
Employment Contracts
All Outstanding Litigation If Any
All Contracts And Outstanding Orders
Computer Systems, Software And Other Technology
Issues Regarding Environmental Problems
Payroll Records
Staff Files And The Staff Manual
Copies Of Pension And Profit-Sharing Plans
Union Contracts, If Relevant
Contracts And Leases
Having completed your research and confirmed that the information provided to you is true and correct, you have one of two choices. You can accept the seller's offer and move on or you can rewrite your offer.
DISCLAIMER: The purpose of the information contained within this Blog is to provide general guidelines for various subjects of interest. Your use of this information is at your own risk. Each user of this Blog should consult a qualified professional who understands the user's particular factual situation before making decisions, and PRO-BIZ marketing, LLC makes no express or implied representations or warranties. PRO-BIZ marketing, LLC does not guarantee the completeness, accuracy or timeliness of this information.
For More Information Go Here
The phrase is composed of two words. “due” which the dictionary defines as “proper or adequate” and diligence, which is defined as “degree of care or caution expected of a person. Especially as a party to an agreement.”
The due diligence phase is the time when you will have access to the company’s books and records.
Once a price and terms are agreed upon by the buyer and seller due diligence should be performed. At this point the buyer should give the seller a down payment, and the seller should remove the business from the market during this critical period.
This critical investigation period can last up to four weeks for most small businesses. Keep in mind, however, the time period is negotiable.
A proper due diligence period goes beyond the financials. At a minimum you should also investigate the assets, the customers, the suppliers, the employees, the competition, the market, the industry, the sales strategy, marketing possibilities, contracts, legal issues, and so on. When you have finished your due diligence you should feel comfortable that you and the business are a match, and if something needs fixing you can fix it at a reasonable cost.
Now is the time you should get your accountant to help you identify risk areas. I’ve been in negotiations with business sellers for many years and have been forced to "walk" on several transactions because I found out the numbers were not real. I often had to be very creative during the due diligence process to find the real profit or loss of the business.
Take your time and analyze whatever documents are made available. Below is a small sample of a few items to look for:
Organizational Documents
Financial Statements
Tax Returns
Canceled Checks
Employment Contracts
All Outstanding Litigation If Any
All Contracts And Outstanding Orders
Computer Systems, Software And Other Technology
Issues Regarding Environmental Problems
Payroll Records
Staff Files And The Staff Manual
Copies Of Pension And Profit-Sharing Plans
Union Contracts, If Relevant
Contracts And Leases
Having completed your research and confirmed that the information provided to you is true and correct, you have one of two choices. You can accept the seller's offer and move on or you can rewrite your offer.
DISCLAIMER: The purpose of the information contained within this Blog is to provide general guidelines for various subjects of interest. Your use of this information is at your own risk. Each user of this Blog should consult a qualified professional who understands the user's particular factual situation before making decisions, and PRO-BIZ marketing, LLC makes no express or implied representations or warranties. PRO-BIZ marketing, LLC does not guarantee the completeness, accuracy or timeliness of this information.
For More Information Go Here
Saturday, March 28, 2009
Buying An Existing Business Part VI of IX
Finding The Right Business
There are different ways to find and purchase a small business. You might seek out business brokers that specialize in selling small businesses; you can search the Internet, look in the Newspaper Classified Advertising under business for sale, ask friends or even drive around searching for a business.
Here is a list of additional resources:
The Yellow Pages
The Public Library
Business Opportunities Advertisements
Trade Magazines
Trade Organizations
Suppliers
Bank Trust Departments.
Accountants
Commercial Real Estate Firms
The Secretary Of State
Attorneys
Place Your Own Advertisement
Professional Business Brokers
A few words regarding Professional Business Brokers:
Using a Professional Business Broker to discover businesses for sale, reduces the buyer’s time and effort to do that work, and also reduces the loss of enthusiasm caused by failures and rejections. The Professional Business Broker also finds businesses that the buyer might never locate through his/her own efforts.
Moreover, if the buyer is not sure of the type of business being sought the broker can make suggestions. Here, however, I must warn you: not all brokers are good judges of buyers’ qualifications. The problem, therefore, is you could waste time pursuing an unsuitable business.
And finally, you don't have to limit your search to businesses that have been listed for sale. Should you find a business that you might be interested in owning, seek out the owner and let him/her know your interested in purchasing the business.
You can find many small businesses sale. You can find many great deals. Finding them is not the problem. I have found thousands in my 25 years as a Professional Business Broker. The big problem is making certain that the business will do what the seller says it will do.
DISCLAIMER: The purpose of the information contained within this Blog is to provide general guidelines for various subjects of interest. Your use of this information is at your own risk. Each user of this Blog should consult a qualified professional who understands the user's particular factual situation before making decisions, and PRO-BIZ marketing, LLC makes no express or implied representations or warranties. PRO-BIZ marketing, LLC does not guarantee the completeness, accuracy or timeliness of this information.
There are different ways to find and purchase a small business. You might seek out business brokers that specialize in selling small businesses; you can search the Internet, look in the Newspaper Classified Advertising under business for sale, ask friends or even drive around searching for a business.
Here is a list of additional resources:
The Yellow Pages
The Public Library
Business Opportunities Advertisements
Trade Magazines
Trade Organizations
Suppliers
Bank Trust Departments.
Accountants
Commercial Real Estate Firms
The Secretary Of State
Attorneys
Place Your Own Advertisement
Professional Business Brokers
A few words regarding Professional Business Brokers:
Using a Professional Business Broker to discover businesses for sale, reduces the buyer’s time and effort to do that work, and also reduces the loss of enthusiasm caused by failures and rejections. The Professional Business Broker also finds businesses that the buyer might never locate through his/her own efforts.
Moreover, if the buyer is not sure of the type of business being sought the broker can make suggestions. Here, however, I must warn you: not all brokers are good judges of buyers’ qualifications. The problem, therefore, is you could waste time pursuing an unsuitable business.
And finally, you don't have to limit your search to businesses that have been listed for sale. Should you find a business that you might be interested in owning, seek out the owner and let him/her know your interested in purchasing the business.
You can find many small businesses sale. You can find many great deals. Finding them is not the problem. I have found thousands in my 25 years as a Professional Business Broker. The big problem is making certain that the business will do what the seller says it will do.
DISCLAIMER: The purpose of the information contained within this Blog is to provide general guidelines for various subjects of interest. Your use of this information is at your own risk. Each user of this Blog should consult a qualified professional who understands the user's particular factual situation before making decisions, and PRO-BIZ marketing, LLC makes no express or implied representations or warranties. PRO-BIZ marketing, LLC does not guarantee the completeness, accuracy or timeliness of this information.
Thursday, March 05, 2009
Buying An Existing Business Part V of IX
Financing The Purchase
You've made the decisions to buy an existing small business, now you need to figure out how to finance it. When financing the small business you have three choices: pay all cash (not a good idea), third party financing or seller financing.
From a buyer's point of view seller financing is the preferred way to go. It is a positive sign when the seller offers to finance a portion of the purchase price. It means you are buying a business and paying for part of it out of business. More importantly it means the seller is confident you will succeed and repay him.
Many existing business buyers make an effort to keep the down payment as small as possible in order to retain more money for operational reserves. The sellers, however, may require a down payment of 50% or more, and that is often a good reason to seek out other sources of financing.
It may now be time to seek the help of an experienced commercial business loan officer.
Choose an experienced commercial loan officer. The best choice may be an SBA loan facilitator who already knows about federal small business administration loans -- not one you have to train yourself.
SBA lenders and commercial loan and mortgage originators with inside knowledge who can actually package and present federal business loans in government format service a diverse group of businesses that are often overlooked by most banks. Many banks and lending institutions are just not dealing with the real needs of small business. Using a commercial mortgage broker can often save you time and aggravation because they know how to prepare your loan request in government format and understand what it is that the SBA requires.
When applying for a business loan be prepared. This means providing a well thought-out package, including a business plan with at least three years worth of financial projections and financial statements so that the underwriter can reach an informed decision in a reasonable period of time.
Your loan package should always be concise and complete. A complete package gives your lending company or the SBA the impression that you are a professional, and they will view your package more favorably as a result.
Lenders will carefully examine your financial statement and business projections. As a borrower, you must be fully prepared to answer questions about them. Personal guarantees of the buyers or other principals usually are required,
Alternative Sources Of Capital
The Small Business Administration (SBA), suggests the following sources of capital in addition to banks:
Friends, Relatives, Individuals
Savings And Loan Associations Insurance Companies
Finance Companies
Mortgage Companies
Small Business Investment Companies
Venture Capital Firms
State Government Financing Sources
Pension Funds
Government Agencies (Such As SBA)
Private Foundations
Seller's Bank
For More Help And Resources Visit Our Website.
GO HERE: PRO BIZ USA
You've made the decisions to buy an existing small business, now you need to figure out how to finance it. When financing the small business you have three choices: pay all cash (not a good idea), third party financing or seller financing.
From a buyer's point of view seller financing is the preferred way to go. It is a positive sign when the seller offers to finance a portion of the purchase price. It means you are buying a business and paying for part of it out of business. More importantly it means the seller is confident you will succeed and repay him.
Many existing business buyers make an effort to keep the down payment as small as possible in order to retain more money for operational reserves. The sellers, however, may require a down payment of 50% or more, and that is often a good reason to seek out other sources of financing.
It may now be time to seek the help of an experienced commercial business loan officer.
Choose an experienced commercial loan officer. The best choice may be an SBA loan facilitator who already knows about federal small business administration loans -- not one you have to train yourself.
SBA lenders and commercial loan and mortgage originators with inside knowledge who can actually package and present federal business loans in government format service a diverse group of businesses that are often overlooked by most banks. Many banks and lending institutions are just not dealing with the real needs of small business. Using a commercial mortgage broker can often save you time and aggravation because they know how to prepare your loan request in government format and understand what it is that the SBA requires.
When applying for a business loan be prepared. This means providing a well thought-out package, including a business plan with at least three years worth of financial projections and financial statements so that the underwriter can reach an informed decision in a reasonable period of time.
Your loan package should always be concise and complete. A complete package gives your lending company or the SBA the impression that you are a professional, and they will view your package more favorably as a result.
Lenders will carefully examine your financial statement and business projections. As a borrower, you must be fully prepared to answer questions about them. Personal guarantees of the buyers or other principals usually are required,
Alternative Sources Of Capital
The Small Business Administration (SBA), suggests the following sources of capital in addition to banks:
Friends, Relatives, Individuals
Savings And Loan Associations Insurance Companies
Finance Companies
Mortgage Companies
Small Business Investment Companies
Venture Capital Firms
State Government Financing Sources
Pension Funds
Government Agencies (Such As SBA)
Private Foundations
Seller's Bank
For More Help And Resources Visit Our Website.
GO HERE: PRO BIZ USA
Wednesday, February 18, 2009
Buying An Existing Business Part IV of IX
Your Business Plan
A good business plan is clear and concise document and it lays out your goals and plans.
Every business needs a business plan and every business needs to keep their business plan current. It will serve as your guide to reaching your goals and getting what you want from your business.
A business plan is usually essential early in the process of purchasing a small business.
A good business plan will define your small business’ specific mission and objectives, ownership, market, sales focus, management team, financials, and strategy. Because of the uncertainty involved in the purchase of an existing business, the business plan is particularly important.
At this point we merely set some goals. Later, after zeroing in on the specific business we are buying, a more detailed plan will be constructed.
Taking the time to put your business plan together requires your thinking about how you're going to operate your business and what you want from your customers.
Many business plans have a similar outline and contain similar information about a business, your business plan, however, should be unique to your business.
If you have a existing business selected you may be able to start with the information from the present business owner. In fact there may already be a prepared business plan that will save you much time.
Below is a brief outline of what a business plan should include. Use this outline for information only. For a detailed business plan for your business visit the SBA on line and PaloAlto Software for some excellent samples.
SBA on line:
SBA Home:
PaloAlto Software:
Who To Involve:
During this process of preparing your business plan you should get your lawyer and accountant involved in this process.
For more help and resources visit our website.
GO HERE: PRO BIZ USA
A good business plan is clear and concise document and it lays out your goals and plans.
Every business needs a business plan and every business needs to keep their business plan current. It will serve as your guide to reaching your goals and getting what you want from your business.
A business plan is usually essential early in the process of purchasing a small business.
A good business plan will define your small business’ specific mission and objectives, ownership, market, sales focus, management team, financials, and strategy. Because of the uncertainty involved in the purchase of an existing business, the business plan is particularly important.
At this point we merely set some goals. Later, after zeroing in on the specific business we are buying, a more detailed plan will be constructed.
Taking the time to put your business plan together requires your thinking about how you're going to operate your business and what you want from your customers.
Many business plans have a similar outline and contain similar information about a business, your business plan, however, should be unique to your business.
If you have a existing business selected you may be able to start with the information from the present business owner. In fact there may already be a prepared business plan that will save you much time.
Below is a brief outline of what a business plan should include. Use this outline for information only. For a detailed business plan for your business visit the SBA on line and PaloAlto Software for some excellent samples.
SBA on line:
SBA Home:
PaloAlto Software:
Who To Involve:
During this process of preparing your business plan you should get your lawyer and accountant involved in this process.
For more help and resources visit our website.
GO HERE: PRO BIZ USA
Wednesday, February 04, 2009
Buying An Existing Business Part III of IX
Your Business Goals
Earl nightingale defined success as "the progressive realization of a worthy GOAL or ideal"
What is the definition of a goal? It has been defined as a specific and measurable result that you want to achieve within a given time frame. A goal directs you to your destination or desired result - in this case the result you want from your business.
All of your goals should be SMART, this is an acronym for:
Visualizing the end result is important, it will help make the goal real for you.
We need a dream, a vision, and it must be long term. We need to be able to see beyond the next year or so. Have a passion, believe in our vision, otherwise how can we convince others to believe in us?
Think about what you ultimately want from your business. Will you want to sell it or arrange for a family member to take over and leave a legacy? Write down what your business will look like.
Visualize things like your products/services, size of the business, your markets, your people, reasons people want to buy from you, the image of the company - internal and external, how involved do you want to be?
Why do we have goals? Goals give us focus and direction. They allow us to translate what we dream about into reality."
When we set goals we need to think of what we are trying to do. Think also at how it will make us feel to achieve these things.
Write your goals down. Research has shown that only 3% of people write their goals down, and on average these people earn 10 times those who don’t have goals.
Remember your first business goal is getting a GREAT business at a GREAT price!
Here are a few suggestion for you think about:
Of the many reasons one may have for owning a business—enjoyment of the daily affairs of ownership counts most towards sustaining a balance of pleasure and profit.
In conclusion, I hope you are beginning to get a picture of what you are going to do.
Will you be doing something that you enjoy? If you fail to answer "yes" to this question, then why be thinking of doing it? If you enjoy what you're doing it will be a lot easier and you will have a better chance of success than someone who doesn't.
Once you have a clear picture in your mind about what you want to do think about what you want from the business and what you want to achieve. This will be different for everybody, we all have our own goals and ideas so don"t worry about what anyone else thinks or wants. Are you looking for an income, a high profile, a good reputation, or any combination of these and other things?
Think about how long you want to do it for, and how you will get out of it when that time arrives. Think about whether you will sell the business, pass it on to your family, or just close it down.
It is important that you understand the concepts in this chapter because they effect how you plan and structure your business.
For more help and resources visit our website.
GO HERE: PRO BIZ USA
Earl nightingale defined success as "the progressive realization of a worthy GOAL or ideal"
What is the definition of a goal? It has been defined as a specific and measurable result that you want to achieve within a given time frame. A goal directs you to your destination or desired result - in this case the result you want from your business.
All of your goals should be SMART, this is an acronym for:
- S pecific
- M easurable
- A ttainable
- R elevant
- T imed
Visualizing the end result is important, it will help make the goal real for you.
We need a dream, a vision, and it must be long term. We need to be able to see beyond the next year or so. Have a passion, believe in our vision, otherwise how can we convince others to believe in us?
Think about what you ultimately want from your business. Will you want to sell it or arrange for a family member to take over and leave a legacy? Write down what your business will look like.
Visualize things like your products/services, size of the business, your markets, your people, reasons people want to buy from you, the image of the company - internal and external, how involved do you want to be?
Why do we have goals? Goals give us focus and direction. They allow us to translate what we dream about into reality."
When we set goals we need to think of what we are trying to do. Think also at how it will make us feel to achieve these things.
Write your goals down. Research has shown that only 3% of people write their goals down, and on average these people earn 10 times those who don’t have goals.
Remember your first business goal is getting a GREAT business at a GREAT price!
Here are a few suggestion for you think about:
- Why do you want your own business?
- What do you want from the business?
- What are your reasons for going into business?
- What level of profit do you need to meet your financial responsibilities?
Of the many reasons one may have for owning a business—enjoyment of the daily affairs of ownership counts most towards sustaining a balance of pleasure and profit.
In conclusion, I hope you are beginning to get a picture of what you are going to do.
Will you be doing something that you enjoy? If you fail to answer "yes" to this question, then why be thinking of doing it? If you enjoy what you're doing it will be a lot easier and you will have a better chance of success than someone who doesn't.
Once you have a clear picture in your mind about what you want to do think about what you want from the business and what you want to achieve. This will be different for everybody, we all have our own goals and ideas so don"t worry about what anyone else thinks or wants. Are you looking for an income, a high profile, a good reputation, or any combination of these and other things?
Think about how long you want to do it for, and how you will get out of it when that time arrives. Think about whether you will sell the business, pass it on to your family, or just close it down.
It is important that you understand the concepts in this chapter because they effect how you plan and structure your business.
For more help and resources visit our website.
GO HERE: PRO BIZ USA
Wednesday, January 28, 2009
Buying An Existing Business Part II of IX
Before you begin looking for a business, ask yourself these two important questions:
"What can I bring to a business?"
"What do I want to get back?"
Time spent now answering these two questions will save you time and money later.
QUALIFICATIONS
Most buyers purchase a business because they have a skill which they hope to turn into an income. In most of cases, however the buyer will have little or no prior business experience.
My advise is don't consider a businesses you have no understanding of. The business you purchase needs to fit your personal skills and lifestyle.
There are several factors contributing to a buyer's qualifications to own and operate a business. These include the following:
Education
Experience
Special Training
Experience In The Type Of Business Being Purchased
Self-Motivated
Responsible
Energetic
Independent
Realistically Confident
Willing To Risk
Accomplishments
Health
Commitment
Business Management
I suggest you write down your response to each item on this list. You should get into and keep the habit if writing things down.
Successful experience in the type of business being purchased is perhaps the most important because it helps the buyer solve problems peculiar to the business and the knowledge of how to best solve them.
Below is a brief Attitude Questionnaire. (Please answer the questions as truthfully as possible. Mark them using a scale of 1 to 10, 1=never, 10=always.)
1. I arrive at meetings and social events on time.
2. I follow up when I say I will do something.
3. I make an effort to fix mistakes that I make.
4. I double-check my work before I declare it finished.
5. I am a self-starter.
6. I am willing to put in the effort and energy it takes to start a business.
7. I do not get overwhelmed when there are several things that need my attention.
8. I am willing to educate myself in order to learn any necessary skills.
9. I am willing to work hard and smart.
10.I know how to prioritize my work and my life or am willing to learn.
PREPARATION
Successful business buyers know that in order to get a great deal, they have to impress the seller with their preparation.
Below are the two documents that are a must if you want to impress a seller and get their attention:
Your Financial Statement
and Your Resume
When you find the business you want you will be asking for financial details of the business ans also requesting some sensitive information regarding the operation of the company. If you are prepared to hand over to the seller Your Financial Statement and You Resume you will find the seller much more receptive to your request.
Also, before you start looking for your business there are, at a minimum, the following questions to consider:
What will the Business Structure be? You should think about whether your company will be a sole proprietorship, partnership or corporation.
Where do I plan to Locate the Business? You should give some thought as to whether you are going to work out of your home or rent space.
Will I be needing Employees? Will need to hire employees or will I keep the present employees?
How do I plan to Finance the purchase? More on this subject in a later article.
For more help and resources visit our website.
GO HERE: PRO BIZ USA
"What can I bring to a business?"
"What do I want to get back?"
Time spent now answering these two questions will save you time and money later.
QUALIFICATIONS
Most buyers purchase a business because they have a skill which they hope to turn into an income. In most of cases, however the buyer will have little or no prior business experience.
My advise is don't consider a businesses you have no understanding of. The business you purchase needs to fit your personal skills and lifestyle.
There are several factors contributing to a buyer's qualifications to own and operate a business. These include the following:
Education
Experience
Special Training
Experience In The Type Of Business Being Purchased
Self-Motivated
Responsible
Energetic
Independent
Realistically Confident
Willing To Risk
Accomplishments
Health
Commitment
Business Management
I suggest you write down your response to each item on this list. You should get into and keep the habit if writing things down.
Successful experience in the type of business being purchased is perhaps the most important because it helps the buyer solve problems peculiar to the business and the knowledge of how to best solve them.
Below is a brief Attitude Questionnaire. (Please answer the questions as truthfully as possible. Mark them using a scale of 1 to 10, 1=never, 10=always.)
1. I arrive at meetings and social events on time.
2. I follow up when I say I will do something.
3. I make an effort to fix mistakes that I make.
4. I double-check my work before I declare it finished.
5. I am a self-starter.
6. I am willing to put in the effort and energy it takes to start a business.
7. I do not get overwhelmed when there are several things that need my attention.
8. I am willing to educate myself in order to learn any necessary skills.
9. I am willing to work hard and smart.
10.I know how to prioritize my work and my life or am willing to learn.
PREPARATION
Successful business buyers know that in order to get a great deal, they have to impress the seller with their preparation.
Below are the two documents that are a must if you want to impress a seller and get their attention:
Your Financial Statement
and Your Resume
When you find the business you want you will be asking for financial details of the business ans also requesting some sensitive information regarding the operation of the company. If you are prepared to hand over to the seller Your Financial Statement and You Resume you will find the seller much more receptive to your request.
Also, before you start looking for your business there are, at a minimum, the following questions to consider:
What will the Business Structure be? You should think about whether your company will be a sole proprietorship, partnership or corporation.
Where do I plan to Locate the Business? You should give some thought as to whether you are going to work out of your home or rent space.
Will I be needing Employees? Will need to hire employees or will I keep the present employees?
How do I plan to Finance the purchase? More on this subject in a later article.
For more help and resources visit our website.
GO HERE: PRO BIZ USA
Wednesday, January 21, 2009
Buying An Existing Business Part I of IX
So, you want to be the boss!
You decided you want to be in business for yourself! Now you want to know the best way to get started!
There are three main options for getting into a small business:
1. Starting A Business From Scratch.
2. Buying A Franchise, Dealership or Distributorship.
3. Buying An Existing Business.
This article focus' on option 3. Buying An Existing Business!
Welcome to Part I of "Buying An Existing Small Business"!
Let's face it buying an existing business is peppered with problems that can cause financial loss and sleepless nights.
You have many things to think about and often it may seem impossible to get the right business at the right price.
Caution should be exercised throughout this whole process, not only because it will help you to find the business that is right for you, but it will also help you to avoid being taken advantage of by unscrupulous sellers.
Being a professional business broker for more than 25 years, I can tell you that when done properly and with patience buying an existing small business is the way to go. If you follow the steps presented in this and future articles you will have a far greater chance of
finding the right business and at the right price.
Keep in mind this material deals ONLY with the buying of an "Existing Small Business".
Lets begin by examining some of the advantages and disadvantages.
ADVANTAGES
Immediate Benefit -- Someone else has already gotten the company started, and a successful system for running the business is in place.
Training -- The seller will more-than-likely provide you with his/her knowledge and experience.
Quick Cash Flow -- Existing inventory that can generate income from day one.
Existing Customer Base -- Customers and suppliers are already in place.
Existing Employees -- You will have trained employees who are familiar with the business.
Easier Financing -- Financing may be easier to obtain because the business has a track record and trading history. Bankers and investors generally feel more comfortable dealing with a business that has a proven track record. It should also be noted that more often than not seller's will carry a contract if they have a sizable down payment and a confidence in your ability to run a successful operation.
Less Risky -- In most cases, buying an existing business is far less risky than starting from scratch.
Location -- You can see what you are getting for your money. A lease on the premises has been negotiated and necessary equipment installed.
Goodwill-- Name and location are established.
DISADVANTAGES
Cost -- Buying a business may require more up-front cash than start-ups.
Obsolete Goods -- Inventories and/or equipment may be obsolete.
Customers May Leave -- There may be personality conflicts
Employees May Leave -- There may be personality conflicts.
Business May Be Overpriced -- A sound valuation includes the elements of
common sense, informed judgment and reasonableness.
Goodwill -- Goodwill comes at a price. It is the equity value of intangible assets, and should be based upon earning capacity.
Problems -- There may be inherent problems in the business, some of which may not be apparent until after the sale. Be sure to find out why the owner is selling. Folks, there will always be unknowns: new competitors and the economy may falter. Thorough assessment of the risks and opportunities will help you to make the right choice.
With an existing business there will almost always be surprises. You can reduce the potential for surprises by paying close attention to all the steps outlined in this article.
In following articles I plan to show you how to avoid these disadvantages. Remember, the steps involved in purchasing a business are similar to those you need to take whenever you make any major purchase. You need to locate some good businesses to buy, and then research your choice thoroughly before deciding to go forward with the transaction.
For more help and resources visit our website.
GO HERE: PRO BIZ USA
You decided you want to be in business for yourself! Now you want to know the best way to get started!
There are three main options for getting into a small business:
1. Starting A Business From Scratch.
2. Buying A Franchise, Dealership or Distributorship.
3. Buying An Existing Business.
This article focus' on option 3. Buying An Existing Business!
Welcome to Part I of "Buying An Existing Small Business"!
Let's face it buying an existing business is peppered with problems that can cause financial loss and sleepless nights.
You have many things to think about and often it may seem impossible to get the right business at the right price.
Caution should be exercised throughout this whole process, not only because it will help you to find the business that is right for you, but it will also help you to avoid being taken advantage of by unscrupulous sellers.
Being a professional business broker for more than 25 years, I can tell you that when done properly and with patience buying an existing small business is the way to go. If you follow the steps presented in this and future articles you will have a far greater chance of
finding the right business and at the right price.
Keep in mind this material deals ONLY with the buying of an "Existing Small Business".
Lets begin by examining some of the advantages and disadvantages.
ADVANTAGES
Immediate Benefit -- Someone else has already gotten the company started, and a successful system for running the business is in place.
Training -- The seller will more-than-likely provide you with his/her knowledge and experience.
Quick Cash Flow -- Existing inventory that can generate income from day one.
Existing Customer Base -- Customers and suppliers are already in place.
Existing Employees -- You will have trained employees who are familiar with the business.
Easier Financing -- Financing may be easier to obtain because the business has a track record and trading history. Bankers and investors generally feel more comfortable dealing with a business that has a proven track record. It should also be noted that more often than not seller's will carry a contract if they have a sizable down payment and a confidence in your ability to run a successful operation.
Less Risky -- In most cases, buying an existing business is far less risky than starting from scratch.
Location -- You can see what you are getting for your money. A lease on the premises has been negotiated and necessary equipment installed.
Goodwill-- Name and location are established.
DISADVANTAGES
Cost -- Buying a business may require more up-front cash than start-ups.
Obsolete Goods -- Inventories and/or equipment may be obsolete.
Customers May Leave -- There may be personality conflicts
Employees May Leave -- There may be personality conflicts.
Business May Be Overpriced -- A sound valuation includes the elements of
common sense, informed judgment and reasonableness.
Goodwill -- Goodwill comes at a price. It is the equity value of intangible assets, and should be based upon earning capacity.
Problems -- There may be inherent problems in the business, some of which may not be apparent until after the sale. Be sure to find out why the owner is selling. Folks, there will always be unknowns: new competitors and the economy may falter. Thorough assessment of the risks and opportunities will help you to make the right choice.
With an existing business there will almost always be surprises. You can reduce the potential for surprises by paying close attention to all the steps outlined in this article.
In following articles I plan to show you how to avoid these disadvantages. Remember, the steps involved in purchasing a business are similar to those you need to take whenever you make any major purchase. You need to locate some good businesses to buy, and then research your choice thoroughly before deciding to go forward with the transaction.
For more help and resources visit our website.
GO HERE: PRO BIZ USA
Sunday, November 02, 2008
Finding The Right Broker!
Finding The Right Broker!
QUESTIONS TO ASK A BUSINESS BROKER
What Is Your Background And Experience?
Are You A Member Of A Trade Association?
Do You Hold Any Accreditations?
What services do you provide?
Who Do You Represent?
WHAT TO EXPECT FROM A BROKER
Screening businesses for you. Good brokers turn down many of the businesses they are asked to sell, whether because the seller won't provide full financial disclosures or because the business is overpriced. Going through a broker helps you avoid these bad risks.
A Professional Business Broker begins by finding out about your skills, interests and financial situation The Broker then helps you select the right business for you. With the help of a Professional Business Broker, you may discover that a small business you had never considered is the ideal one for you.
A Professional Business Broker help both buyer and seller to stay focused on the transaction and helps smooth over any problems that may arise. Buying and selling a small business is an emotional experience for both the buyer and seller.
The Professional Business Broker know the latest laws and regulations affecting everything from licenses and permits to financing and escrow. They also know the most efficient ways to cut through red tape, which can slash months off the buying process. Working with a broker reduces the possibility that you might forget some crucial form, fee or step in the process.
SOME SERVICES OFFERED!
Collect And Analyze Financial And Other Data.
Prepare Answers To Buyers’ Questions.
Write Letter Of Intent For Buyer Based On Buyer's Terms.
Mediate The Negotiation.
Assist Buyer In Applications For Permits.
Assist Buyer In Applications For Insurance.
Mediate Conflicts, If Any, Between Buyer And Seller.
Provide And Receive Guidance To And From Attorneys And Accountants.
Hold Deposits In A Trust Account.
Prepare A Closing Statement.
Help Setup Escrow.
Arrange And Attend The Closing.
Perform Various Post-Closing Services.
Coordinate All Of The Above Including The Whole Transaction.
Maintain Files For Future Reference.
SOME FINAL TIPS
Timing is everything, and that is no more true than when applied to the decision to buy/sell a business.
Set a top price in your mind, that you can afford.
The key to your successful search for the right business is to first determine what type of business, is right for you.
In most instances the broker works for the seller’s best interest.
Brokers practices full disclosure to the seller.
Confidentiality should be maintained throughout the buying process.
Buying and selling a business is different than buying and selling any other major asset. This is because a business is more than an income earning asset. It is a lifestyle as well, and therefore, the decision to buy or sell it can be highly emotional.
WHY IS THE SELLER SELLING?
Retirement
Partnership Dispute
Diminished Interest In The Business Due To Boredom Or Frustration
Illness Or Death Of One Of The Principals
Sales & Earnings Have Plateaued Because The Company Lacks Working Capital
Business is Losing Money
What Is Your Background And Experience?
Are You A Member Of A Trade Association?
Do You Hold Any Accreditations?
What services do you provide?
Who Do You Represent?
WHAT TO EXPECT FROM A BROKER
Screening businesses for you. Good brokers turn down many of the businesses they are asked to sell, whether because the seller won't provide full financial disclosures or because the business is overpriced. Going through a broker helps you avoid these bad risks.
A Professional Business Broker begins by finding out about your skills, interests and financial situation The Broker then helps you select the right business for you. With the help of a Professional Business Broker, you may discover that a small business you had never considered is the ideal one for you.
A Professional Business Broker help both buyer and seller to stay focused on the transaction and helps smooth over any problems that may arise. Buying and selling a small business is an emotional experience for both the buyer and seller.
The Professional Business Broker know the latest laws and regulations affecting everything from licenses and permits to financing and escrow. They also know the most efficient ways to cut through red tape, which can slash months off the buying process. Working with a broker reduces the possibility that you might forget some crucial form, fee or step in the process.
SOME SERVICES OFFERED!
Collect And Analyze Financial And Other Data.
Prepare Answers To Buyers’ Questions.
Write Letter Of Intent For Buyer Based On Buyer's Terms.
Mediate The Negotiation.
Assist Buyer In Applications For Permits.
Assist Buyer In Applications For Insurance.
Mediate Conflicts, If Any, Between Buyer And Seller.
Provide And Receive Guidance To And From Attorneys And Accountants.
Hold Deposits In A Trust Account.
Prepare A Closing Statement.
Help Setup Escrow.
Arrange And Attend The Closing.
Perform Various Post-Closing Services.
Coordinate All Of The Above Including The Whole Transaction.
Maintain Files For Future Reference.
SOME FINAL TIPS
Timing is everything, and that is no more true than when applied to the decision to buy/sell a business.
Set a top price in your mind, that you can afford.
The key to your successful search for the right business is to first determine what type of business, is right for you.
In most instances the broker works for the seller’s best interest.
Brokers practices full disclosure to the seller.
Confidentiality should be maintained throughout the buying process.
Buying and selling a business is different than buying and selling any other major asset. This is because a business is more than an income earning asset. It is a lifestyle as well, and therefore, the decision to buy or sell it can be highly emotional.
WHY IS THE SELLER SELLING?
Retirement
Partnership Dispute
Diminished Interest In The Business Due To Boredom Or Frustration
Illness Or Death Of One Of The Principals
Sales & Earnings Have Plateaued Because The Company Lacks Working Capital
Business is Losing Money
About the Author:
Bob Macek is a business consultant specializing in small mid-size businesses. He has been a Professional Business Broker since 1982.
If you have questions regarding the purchase or sale of small, mid-size companies. Contact Bob at: mailto:bob@probizusa.com
Sunday, October 26, 2008
Finding The Right Business!
Finding The Right Business!
There are different ways to find and purchase a small business. You might seek out business brokers that specialize in selling small businesses; you can search the Internet, look in the Newspaper Classified Advertising under business for sale, ask friends or even drive around searching for a business.
Here are some additional resources:
The Yellow Pages
The Public Library
Business Opportunities Advertisements
Trade Magazines
Trade Organizations
Suppliers
Bank Trust Departments.
Accountants
Commercial Real Estate Firms
The Secretary Of State
Attrneys
Place Your Own Advertisement
And finally, you don't have to limit your search to businesses that have been listed for sale. Should you find a business that you might be interested in owning, seek out the owner and let him/her know your interested purchasing the business.
You will find there are many small businesses out there for sale. There are also many great deals. Finding them is not the problem. I´ve found thousands in my 25 years as a Business Broker. The big problem is making sure they do what they say they do.
Using a Professional Business Broker to discover businesses for sale, reduces the buyer´s time and effort to do that work, and also reduces the loss of enthusiasm caused by failures and rejections. The Professional Business Broker also finds businesses that the buyer might never locate through his/her own efforts. Moreover, if the buyer is not sure of the type of business being sought the broker can make suggestions. Here, however, I must warn you: not all brokers are good judges of buyers´ qualifications. The problem, therefore, is you could waste time pursuing an unsuitable business.
In my next blog I be sharing my thought regarding "Finding The Right Broker".
About the Author:
Bob Macek is a business consultant specializing in small mid-size businesses. He has been a Professional Business Broker since 1982.
If you have questions regarding the purchase or sale of small, mid-size companies contact Bob at: bob@probizusa.com
Here are some additional resources:
The Yellow Pages
The Public Library
Business Opportunities Advertisements
Trade Magazines
Trade Organizations
Suppliers
Bank Trust Departments.
Accountants
Commercial Real Estate Firms
The Secretary Of State
Attrneys
Place Your Own Advertisement
And finally, you don't have to limit your search to businesses that have been listed for sale. Should you find a business that you might be interested in owning, seek out the owner and let him/her know your interested purchasing the business.
You will find there are many small businesses out there for sale. There are also many great deals. Finding them is not the problem. I´ve found thousands in my 25 years as a Business Broker. The big problem is making sure they do what they say they do.
Using a Professional Business Broker to discover businesses for sale, reduces the buyer´s time and effort to do that work, and also reduces the loss of enthusiasm caused by failures and rejections. The Professional Business Broker also finds businesses that the buyer might never locate through his/her own efforts. Moreover, if the buyer is not sure of the type of business being sought the broker can make suggestions. Here, however, I must warn you: not all brokers are good judges of buyers´ qualifications. The problem, therefore, is you could waste time pursuing an unsuitable business.
In my next blog I be sharing my thought regarding "Finding The Right Broker".
About the Author:
Bob Macek is a business consultant specializing in small mid-size businesses. He has been a Professional Business Broker since 1982.
If you have questions regarding the purchase or sale of small, mid-size companies contact Bob at: bob@probizusa.com
Friday, July 11, 2008
Ready To Be A Small Business Owner?
This is a question you must ask yourself and give an honest and accurate answer to before you can begin your journey towards part-time work or complete self-employment. There is a lot to building your own small business and you need to be committed to this action from the start to make a go of it.
Only you can answer this question. Your success doesn't depend on whether you do this work part or full-time. The success will come from identifying your end-goal and working towards it, no matter what it is.
You must believe that you have the ability to accomplish the end objective you've laid out. If you lack this self- confidence, there is a better than even chance you won't make your goal. Positive motivation is the stuff of winners. Winners can create a successful small business on any scale they choose. If it's to earn a couple of hundred dollars extra per week, great! Go for it! If it's to earn six figures and working at it full-time then aim for this goal.
Think positively and set the wheels in motion. Map out a game plan that includes daily, weekly and monthly objectives. The smaller your ambition, the shorter the list. But it doesn't matter. Strive to achieve the level of success you know you want. That's the bottom line.
Establish your limits early. Are you willing to work weekends? Are you able to travel? If married, what are yourspouses feelings? These are the types of questions you need to ask and answer in order to develop a proper game plan. Without this information, you will be operating without really knowing where you're headed and what track you're on.
Do you need any additional training? Make this assessment carefully, because you may not yet be ready to proceed if you still feel that you need some schooling. Build this into your initial game plan. Knowing what you need is as important as knowing where you ultimately want to go.
Education is as important as anything else in running a business and you'll need to keep abreast of the latest small business developments.
There are three main options for getting into a small business.
1. Starting A Business From Scratch.
2. Buying A Franchise, Dealership or Distributorship.
3. Buying An Existing Business.
In our next report we focus' on option 3. Buying An Existing Business!
Only you can answer this question. Your success doesn't depend on whether you do this work part or full-time. The success will come from identifying your end-goal and working towards it, no matter what it is.
You must believe that you have the ability to accomplish the end objective you've laid out. If you lack this self- confidence, there is a better than even chance you won't make your goal. Positive motivation is the stuff of winners. Winners can create a successful small business on any scale they choose. If it's to earn a couple of hundred dollars extra per week, great! Go for it! If it's to earn six figures and working at it full-time then aim for this goal.
Think positively and set the wheels in motion. Map out a game plan that includes daily, weekly and monthly objectives. The smaller your ambition, the shorter the list. But it doesn't matter. Strive to achieve the level of success you know you want. That's the bottom line.
Establish your limits early. Are you willing to work weekends? Are you able to travel? If married, what are yourspouses feelings? These are the types of questions you need to ask and answer in order to develop a proper game plan. Without this information, you will be operating without really knowing where you're headed and what track you're on.
Do you need any additional training? Make this assessment carefully, because you may not yet be ready to proceed if you still feel that you need some schooling. Build this into your initial game plan. Knowing what you need is as important as knowing where you ultimately want to go.
Education is as important as anything else in running a business and you'll need to keep abreast of the latest small business developments.
There are three main options for getting into a small business.
1. Starting A Business From Scratch.
2. Buying A Franchise, Dealership or Distributorship.
3. Buying An Existing Business.
In our next report we focus' on option 3. Buying An Existing Business!
Tuesday, June 24, 2008
Are You Ready For Franchising?
Follow These Steps Before You Buy.
From the desk of Bob Macek
Franchising. Just saying the word has an almost soothing quality to it as it rolls off the tongue.As a concept, franchising is suppose to provide business owners a sense of comfort and ease, knowing that behind your new venture are people with years of tried-and-true business experience waiting to share it with you.
Franchising is a business network that allows people to share a brand identification, a successful method of doing business, and a proven marketing and distribution system.
A franchise is supposed to do one thing and one thing only and that is to reduce your risk of failure.
But franchising isn't for everyone. In fact business owner "wannabees" should think carefully before spending many months and much cash on securing a franchise that either isn't right for them or really provides no extra benefits.
The No. 1 question a person should ask themselves before going the franchise route is what will they get for their money?
Depending on the size of the franchise fee and royalties, which vary greatly among franchises, a potential franchisee should be concerned about a wide range of things including: the area covered by the franchise agreement, amount of training and materials provided for managers and employees, help with advertising, equipment packages and financing options. Of all of those, financing options, can speak volumes about the company.
One should always be skeptical of franchisors who won't finance at least part of the business. It doesn't show much faith in the business or the potential franchisee. But the franchisor also wants a potential franchisee to show faith in the business and persistence in their dream of owning a business. That's part of the reason behind making an anxious entrepreneur jump through a hundred hoops, sometimes before a company will even consider a potential franchisee.
Keep the following steps in mind when you consider becoming a franchisee:
SELF-EVALUATION. Ask yourself whether you are willing to make the sacrifices of long hours, hard work and financial uncertainty needed to make a franchise work? Do you enjoy working with people? Are you a good supervisor? Or are you simply attracted by the idea of making easy money. Good franchisors will make sure you answer these questions about yourself.
INVESTIGATE THE FRANCHISE. Do what most people do when making a major purchase such as a home or car: compare. Talk to one franchisor then talk to a similar franchisor. Talk with the franchisees from the company or similar category. The Federal Trade Commission will be helpful in obtaining information on where and how to start. Their Franchise Opportunities Handbook, from which some of this information was taken, is a good place to start
KNOW THE MARKET. Drive the streets and talk to the people where you plan to locate your franchise. Look and listen for what products and services are needed and check out the competition. How the area is growing and what may be needed in the future?
READ CAREFULLY AND STUDY DISCLOSURE STATEMENTS. The franchisor is required by law to provide to the prospective franchisee an offering circular or prospectus. If they do not, then ask for one. These statements contain information ranging from a description of the business to lawsuits, previous bankruptcies, financing assistance, restriction on the goods or services franchisees can sell and training programs. After studying the statement, contact a few of the franchisees that will be listed.
OBTAIN PROFESSIONAL ADVICE. While your banker will have some helpful advice about putting together a solid business plan and other financial options, reputable legal counsel and accountants will help you evaluate your risk and opportunities.
--------------------------------------------------------------------------------
About the Author:
Bob Macek is a business consultant specializing in small mid-size businesses. He has been a Professional Business Broker since 1982.
If you have questions regarding the purchase or sale of small, mid-size companies contact Bob at: bob@probizusa.com
From the desk of Bob Macek
Franchising. Just saying the word has an almost soothing quality to it as it rolls off the tongue.As a concept, franchising is suppose to provide business owners a sense of comfort and ease, knowing that behind your new venture are people with years of tried-and-true business experience waiting to share it with you.
Franchising is a business network that allows people to share a brand identification, a successful method of doing business, and a proven marketing and distribution system.
A franchise is supposed to do one thing and one thing only and that is to reduce your risk of failure.
But franchising isn't for everyone. In fact business owner "wannabees" should think carefully before spending many months and much cash on securing a franchise that either isn't right for them or really provides no extra benefits.
The No. 1 question a person should ask themselves before going the franchise route is what will they get for their money?
Depending on the size of the franchise fee and royalties, which vary greatly among franchises, a potential franchisee should be concerned about a wide range of things including: the area covered by the franchise agreement, amount of training and materials provided for managers and employees, help with advertising, equipment packages and financing options. Of all of those, financing options, can speak volumes about the company.
One should always be skeptical of franchisors who won't finance at least part of the business. It doesn't show much faith in the business or the potential franchisee. But the franchisor also wants a potential franchisee to show faith in the business and persistence in their dream of owning a business. That's part of the reason behind making an anxious entrepreneur jump through a hundred hoops, sometimes before a company will even consider a potential franchisee.
Keep the following steps in mind when you consider becoming a franchisee:
SELF-EVALUATION. Ask yourself whether you are willing to make the sacrifices of long hours, hard work and financial uncertainty needed to make a franchise work? Do you enjoy working with people? Are you a good supervisor? Or are you simply attracted by the idea of making easy money. Good franchisors will make sure you answer these questions about yourself.
INVESTIGATE THE FRANCHISE. Do what most people do when making a major purchase such as a home or car: compare. Talk to one franchisor then talk to a similar franchisor. Talk with the franchisees from the company or similar category. The Federal Trade Commission will be helpful in obtaining information on where and how to start. Their Franchise Opportunities Handbook, from which some of this information was taken, is a good place to start
KNOW THE MARKET. Drive the streets and talk to the people where you plan to locate your franchise. Look and listen for what products and services are needed and check out the competition. How the area is growing and what may be needed in the future?
READ CAREFULLY AND STUDY DISCLOSURE STATEMENTS. The franchisor is required by law to provide to the prospective franchisee an offering circular or prospectus. If they do not, then ask for one. These statements contain information ranging from a description of the business to lawsuits, previous bankruptcies, financing assistance, restriction on the goods or services franchisees can sell and training programs. After studying the statement, contact a few of the franchisees that will be listed.
OBTAIN PROFESSIONAL ADVICE. While your banker will have some helpful advice about putting together a solid business plan and other financial options, reputable legal counsel and accountants will help you evaluate your risk and opportunities.
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About the Author:
Bob Macek is a business consultant specializing in small mid-size businesses. He has been a Professional Business Broker since 1982.
If you have questions regarding the purchase or sale of small, mid-size companies contact Bob at: bob@probizusa.com
Monday, October 16, 2006
The American Dream
Your Own Business
From the desk of Bob Macek
Most of us, sometime in our lives have dreamed of owning our own business.Being the boss! Giving up the security of a regular paycheck for the excitement of Entrepreneurship. For the purpose of this discussion,an entrepreneur is defined as a person who organizes, manages and assumes responsibility for a business
There is, in fact, in America today, a trend for more, and more people in all walks of life and from all age groups to own and operate their own business.
Annually, according to Forbes, three and one-half million businesses change hands. This figure breaks down to approximately 13,500 businesses changing hands every working day.
The reasons for this career change from employee to employer are varied as the numbers who make the switch. For some It is disillusionment with corporate life. For others it is the built-in tax advantages. For some it is the discovery that working for others does not offer the security and opportunity for personal growth they once hoped for.
However, before you join the millions who have embarked on this quest of owning a business, there are many questions you must ask yourself. Here are just a few:
What type of business do I want?
How much am I prepared to invest?
How much income must the business generate?
Where do I want the business located?
Who will assist me in running the business?
How much time can I devote to the business?
Should I keep my job until the business is profitable?
Where do I begin looking?
These and many more questions should be asked when deciding to own your own business.
In this article I will discuss the pros and cons of three approaches to owning your own business: the start up, the franchise, and the existing business.
Let's first look at the odds for success in these three separate categories. The U.S. Department of Commerce notes that statistically the entrepreneur, who starts a business from scratch, has a 91 percent chance of failure within the
first two years. A full 65 percent will be out of business within five years.
The person purchasing a solid, well conceived franchise has a better than 90 percent chance of success, and the purchaser of a successful, existing business is given an 80 percent chance of continued success.
From these statistics it would seem a prudent person would be wise to purchase a franchise or an existing business rather than start-a business from scratch.
Yet many will travel uncharted waters because they do not wish to purchase "Blue Sky" or "Good Will", which is almost always a part of the purchase price of a solid franchise or a successful, existing business. Others may start up a
business because their idea is unique and nothing like it exists in their particular area.
Before we examine the franchise and existing business opportunities, let's look briefly at a few of the challenges facing the entrepreneur who starts from scratch.
High on his/her list of priorities should be location, advertising and marketing and financing. These three areas require time, money and expert planning. Most entrepreneurs starting a business have little expertise in these three
areas.
They choose the wrong location, spend, too little or too much on the wrong kind of advertising, and have insufficient capital to carry their business through the critical start-up period. This is why many of that 91 percent of start-ups
fail within the first two years of business.
The solid, well conceived franchise opportunity supports the franchisee in at least two of the above mentioned areas. Most have a regional operations manager who assists with site selection, using market studies on traffic counts, and
patterns, zoning and demographics to find the optimum location. The franchisor will employ a professional advertising and marketing staff to provide proven promotional materials, sales and marketing techniques.
In the area of financing, the franchisor may even offer help to the prospective franchisee. Many will go out of their way to assist you in getting the financing you need. Some may lend you the entire amount, with payments coming out of the
income from the franchise operation. Others will carry part of the financing and find you a lender to finance the balance.
Although franchising has enjoyed exceptional growth, and the failure rate is less than 10 percent, many who dream of owning their own business reject the restrictions and limitations often imposed on them by (be franchisor.
This brings us to the third category: the successful existing business.
The three problems we have been discussing — location, advertising and marketing and financing — have been addressed and solved by the present owner. The purchaser of a business in this category knows beforehand that the product or
service has been proven in the present location.
He knows, also that the advertising and marketing strategy has proven successful. Finally, because majority of the existing businesses sold are seller financed, and because they have a positive cash flow, the buyer will need little more than a down payment.
In conclusion, remember there are risks in any business venture. The bankruptcy courts are full of those who tried and failed.
Owning and operating your own business takes many hours of hard work. There islittle time for family, friend and vacations.
There is little security and no guarantee of success. However, for many there is noother way. Owning your own business is still the American Dream!
Sunday, July 10, 2005
10 Commandments For Buying A Business
I. Thou Shalt Not Be Greedy!
Sellers deserve a fair price for the years they have spent developing their business. Be prepared to pay for the goodwill of the business.
II.Thou Shalt Have A Good Reason For Buying!
Buying a business is hard work! It takes a commitment! Spend time deciding why you want the responsibility of owning a business.
III.Thou Shalt Provide Background Information!
Be prepared with a resume and financial statement. Remember, the seller will most likely be your banker and will want to know that you can run the business successfully.
IV.Thou Shalt Keep An Open Mind!
There are no perfect businesses.
V.Thou Shalt Keep In Mind Tax Benefits!
Remember tax benefits are realized from intangible as well as tangible assets.
VI.Thou Shalt Offer A Reasonable Down Payment!
A low down payment indicates a lack of commitment. When sellers question commitment, serious negotiations are in jeopardy.
VII.Thou Shalt Realize Businesses Are Priced On Profits!
A business making huge profits with few assets could save you money later in capital outlay for expansion.
VIII.Thou Shalt Remember Time Is Of The Essence!
After all parties have agreed upon price and terms it is important to quickly proceed toward closing.
IX. Thou Shalt Be Prepared To Meet Your Landlord!
Landlords usually have little to gain by cooperation. Therefore, come to meetings armed with resume and financial statement.
X.Thou Shalt Avoid Surprises!
Disclose pertinent information early and avoid surprises that might destroy your credibility.
About The Author
Bob Macek has been a Professional Business Broker since 1982. He's the founder of PRO-BIZ marketing, LLC. He's been marketing businesses on the internet since 1995. If you have questions regarding the purchase or sale of small, mid-size companies contact Bob at: PRO BIZ USA
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