Biz Broker Florida

Friday, August 31, 2012

Find Out if You Got What it Takes to Own a Business

Take This Test to See if the Shoe Fits.

According to Fortune Magazine, nearly 80% of the 400 richest Americans have earned their wealth through business ownership. This may help to explain the tremendous interest in entrepreneurial pursuits today.

Another explanation may lie in the way corporate America works. When corporate America downsizes, a key strategy involves the discharge of middle-aged managers at the peak of their earning power. These high-priced executives are generally replaced by younger counterparts hungry for promotions. They are willing to work long hours for less money in order to achieve that goal.

In any event, more and more people are looking to themselves for the answer to future employment these days. There is an emergence of a new breed of entrepreneur -- the "modified risk taker." The dictionary defines "Entrepreneur" as "a person who organizes, operates and assumes the risk for a business venture." This definition implies that the "classic entrepreneur" starts a business from scratch. Starting a business from scratch is a risky venture considering that nearly two thirds fail during their first three years of operation. The "modified risk taker" coming out of corporate America typically buys an existing business or franchise to bypass most of the start-up risk.

In order to further mitigate risk, all aspiring entrepreneurs should examine their strengths and weaknesses. Because not everyone is cut out to be an entrepreneur, see if your future includes walking the path to business ownership.

The following questions from the American Small Business Institute can help you see if you possess some of the more vital entrepreneurial traits:

Do you want to own a business bad enough to work long hours with no promise of immediate compensation?
Have you worked in a business similar to the one you want to buy or start?
Have you had any entrepreneurial training (formal or informal)?
Are you a self-starter?
Do you have the patience to work with and energize people, i.e., customers, employees, vendors, landlord, etc.?
Are you a leader?
Can you accept total responsibility for a job's success or failure?
Are you able to withstand stress?
Do you have a credible team of advisors?
Do you have a business, marketing, & budget plan?
Has the plan been critiqued by your team of advisors?
Can you make decisions quickly?
Do people consider you both trustworthy and creditworthy?
Can you stick with a task until completion?
Are you in good health?
Can you access additional capital beyond the initial start-up or acquisition costs (most businesses fail due to lack of capital).
Are you prepared to lower your standard of living while your business gets on its feet?
Have you done any research to determine the marketability of your product and/or service?
Have you shopped your competition to determined your competitive advantages?
Have you researched the availability of personnel and the skills necessary to staff your business?
Do you have a suitable location lined up?
Did you check to see if there were any laws (local, state or federal) that may hamper your ability to do business?
If you could make the same (anticipated) amount of money working for another business owner would you still proceed?
Do you have the support of your spouse or "significant other?"
Are you able to comprehend financial statements?

Score Yourself:

If you answered "yes" to 20 or more questions, you likely possess the proper mindset to be a "classic entrepreneur" and start a new business.

If you answered "yes" to at least 15 questions, you seem to fit the profile of a "modified risk taker" suggesting that you focus on the purchase of an existing business or franchise.

And, if you answered "yes" to much fewer than 15 questions, you may want to reconsider business ownership, keep your money in safe investments, and keep your day job.

Written by Certified Business Brokers (CBB)

For a complimentary consultation:
Contact Cecil Williams (cecil@bizbrokerflorida.com) or call at 888-925-5055 ext.206. Visit my personal website to search for business for sale in Florida www.bizbrokerflorida.com Also, visit our Florida Business Exchange website at www.fbxbrokers.com

A Business For Sale is More Valuable When the Owner is Replaceable

Most potential buyers would be averse to purchasing a business if the owner's shoes are too big to fill or if the owner's hand would be too difficult to unravel from the operation. When preparing to sell or build value in a business, the owner should not be so involved in the business that it would be difficult for would-be buyers to see the business as being productive under new ownership. Buyers want the owner to be replaceable.

A business is more valuable when perceived risk is low. A business is less risky when it is making money without its owner's involvement in daily operations. Three things about value:

Value is dependent on risk
Value is not about what the business is worth in the current owner's hands, but in someone else's.
The more dependent the business is on its owner, the higher its risk, and the lower its value.

Therefore, to achieve a higher value, it is important to have systems running the business and an experienced staff running those systems. An enterprise with infrastructure guiding its revenue-generating capacity is much more appealing than one with a singular person holding the key to the revenue engine. The owner should be free to work "On" the business instead of "In" the business.

Systems and Procedures

Documentation of standard policies, employee records, systems, procedures and controls demonstrate that the business can be maintained profitably after the sale. Business systems include the computerized and manual procedures used in the business to generate its revenue and control expenses. It outlines the methods used to track how customers are identified and how products or services are delivered. The following are examples of business systems that enhance business value.

Personnel recruitment, training and retention
Human resource management (an employee manual)
New customer identification, solicitation, and acquisition
Product or service development and improvement
Inventory and fixed asset control
Product or service quality control
Customer, vendor and employee communication
Selection and maintenance of vendor relationships
Business performance reports for management

Staff

Buyers count on taking over a business with an in-place staff that can provide continuity and assist in the growth of the business. If a company’s success is reliant on capable, well-trained employees – not the owner – it means the business will not be negatively impacted under new ownership.

This is an excerpt from one of our business listings currently on the market that is a prime example of the replaceable owner.

"This well-reputed firm has long-term expert personnel, technicians, an office manager, and a bookkeeper that run daily office operations leaving an energetic new owner free to market, network, and build additional recurring revenue streams onto what has already been established in this fine enterprise."

Thursday, August 30, 2012

Selling A Business...What You Should Know

You've put your blood, sweat and tears into building your business, and now it's time to sell your business.This video was created to help you begin building your knowledge on the sales process. But you will have many questions that can be answer during a confidential consultation.

Remember, knowledge is critical to ensuring that you are able to sell your business on your term and receive an acceptable return on the investment you made in building your business.

For a complimentary consultation:
Contact Cecil Williams (cecil@bizbrokerflorida.com) or call at 888-925-5055 ext.206. Visit my personal website to search for business for sale in Florida www.bizbrokerflorida.com Also, visit our Florida Business Exchange website at www.fbxbrokers.com

Five Basic Considerations for Business Buyers

When buying a business, you are buying its future based on its past performance. Your decision to purchase a business will probably be one of most risky decisions you’ll ever make, and will affect your family, life style and finances. Here are five basic areas of consideration that can minimize your risks and uncertainties.

1. Which business opportunity matches your knowledge, experience and passion? Is the business for sale profitable? Is there room for growth? Consider products or services that generate sales and attract repeat customers. What are the recurring expenses associated with running the business? Can you lower costs to increase your profit margin? How is the business compared to the competition?

2. How much does the business cost? How much of this can you raise on your own? What are your borrowing requirements? Choose a company with a healthy cash flow so you will not be in debt for long. Only borrow the amount that you can afford to pay.

3. Investigate the business for sale. Make sure there are no problems in the transfer of existing contracts with suppliers, landlord, etc. to you.

4. Study how you will structure your company. Will you invite partners or go solo?

5. How much time will you spend in running the business? Do you know enough about this business to run it? How will your family life be affected?

I stronger encourage buyers to develop a firm business plan as a road map to their financial goals.

Did you have any questions?

For a complimentary consultation:
Contact Cecil Williams (cecil@bizbrokerflorida.com) or call at 888-925-5055 ext.206. Visit my personal website to search for business for sale in Florida www.bizbrokerflorida.com Also, visit our Florida Business Exchange website at www.fbxbrokers.com

So You Want to be Your Own Boss – Buy an Existing Business

The boomer generation spans many years creating a unique situation in the business world. Aging boomers are looking toward retirement, while many younger boomers find they’re ready to be their own boss. For those younger boomers, and others looking to be a business owner, buying an existing business is a great option.

But be aware that buying a business is a timely process. Some buyers never find the right opportunity, while others spend too much time exploring too many options.

Consider a step-by-step approach to get you where you want to be – owning your own business.

Ask yourself some important questions – Why do I want to be an owner? What types of activities do I like? What lifestyle is important for me? You’ll also want to be sure to include your family as part of the assessment.
Line up a team of professional advisors – Alert your attorney, accountant and financial advisors that you are looking for a business. Be sure to contact business intermediaries who represent businesses within your targeted market. They’ll work with you to let you know about available companies that meet your criteria and qualifications.
Consider your financial situation – Be sure to carefully consider how much money you need and how much you want to earn. Your expectations need to be realistic and something that can be achieved by the type of business you are searching for.
Develop a personal financial statement – The personal financial statement should show your assets and liabilities and possibly include a supporting statement from your banker or accountant. Be prepared to share this document with the business intermediary who is working with the seller. If you are planning to work with other investors, identify them and create a group financial statement.
Create a profile – Sellers want to be sure their business will continue to be successful. They want to find a buyer who has experience and will take care of the company’s employees. Really, you are selling yourself to the current business owner(s) and the professional team that represents the seller.
Establish your criteria for acquisition – It’s important to define the parameters of your search. Include geographic requirements and criteria on the transaction size. Having set criteria will help you demonstrate your commitment to finding the right business for you.

If you are interested in buying an existing business, you want the business intermediary to be selling you to the seller. It’s important that you demonstrate that you’re a qualified, motivated buyer. Being prepared and serious about your search is an important initial step.

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The International Business Brokers Association is the largest international, non-profit association operating exclusively for the benefit of people and firms engaged in the various aspects of a business brokerage and mergers and acquisitions. IBBA has1,950 members worldwide, with corporate headquarters in Chicago, Illinois.
©2007 International Business Brokers Association (IBBA) all rights reserved Permission to reuse any or all of this material should be directed to the IBBA at 888-686-4442 and is restricted to IBBA members.

For a complimentary consultation:
Contact Cecil Williams (cecil@bizbrokerflorida.com) or call at 888-925-5055 ext.206. Visit my personal website to search for business for sale in Florida www.bizbrokerflorida.com Also, visit our Florida Business Exchange website at www.fbxbrokers.com

Creative Financing for Buyers Looking to Purchase a Business

The evaporation of small business capital markets and other economic factors have made creative financing the norm for today's business buyer. During these turbulent times there are a number of creative financing options that you can consider.

Seller Financing - Increasingly, buyers and lenders are looking to the seller for financing as they try to put a transaction together. In such a scenario, the seller will hold a note at an agreed upon interest rate for a specific term or amortization – generally ranging from five to 10 years. The terms of the sale may include a balloon payment three to five years after the purchase date. It’s a way of giving the buyer time to get up and running and to establish a successful track record with the business. Seller financing makes the bank more comfortable with the transaction. Lenders know they have a seller who has a vested interest in the success of the business rather than one who will take their money and run.

SBA Loans - In sales of a business, conventional loans usually aren’t available, so a buyer may want to consider going to a Small Business Administration (SBA) lender, which has a number of loan options. The SBA guarantees a portion of the loan. The buyer pays an SBA loan fee that allows them to get funding for a loan the bank couldn’t do conventionally. If an SBA guaranteed loan goes into default, the SBA will pay the lending institution up to 75 percent of any deficit left after liquidating the collateral. There have been several changes to the Small Business Administration's lending guidelines and standard operating procedures in 2009. You will want to speak with an advisor who is familiar with these recent changes.

Earnouts - Earnout financing involves a certain dollar amount agreed on by the buyer and seller to be paid to the seller based on the performance of the company after the transaction is completed. Earnouts can be structured in a variety of ways and can be based on different financial benchmarks such as a company’s revenues, gross profits or net income. Earnout financing is often used for companies that are in a turn around situation or when buyers are purchasing on potential, rather than on historical cash flow.

Mezzanine Financing - In mergers and acquisitions, mezzanine financing is another alternative for a buyer looking for capital where the financing package may include interest rates of 20 to 30 percent. The lenders in this situation are typically high net worth individuals who are expecting a larger return on their investment. They are lending in a junior lien or a position behind the bank and seller financing. The loans are typically made with limited sources of collateral, thus the request for higher interest rates. Again, this financing is often used in funding goodwill or reputation in an acquisition.

Funding Scenario - In a million dollar transaction, the buyer would be expected to have a 20 percent down payment. The seller may hold an additional 10 to 20 percent in seller financing, and the lending institution would offer a combination of conventional or SBA financing to cover the difference, depending on collateral available. A buyer and the lending institution must evaluate a company’s cash flow and determine if it is adequate to cover their debt service and provide a reasonable return on their investment. Lending institutions will also be examining whether a buyer’s coverage ratio, or excess cash flow after all debt is paid, is adequate to cover their needs.
Even if you’ve been affected by a downturn in the economy in some parts of the country, don’t let that stop you from considering your acquisition options. Creative financing tactics are becoming more common.

Talk with a business intermediary representing the company you are considering purchasing. They’ll know if the owner is willing to consider seller financing, earnouts or other creative financing ideas. Based on your available capital, the business broker should be able to tell you whether you’ll be considered for the purchase and may also provide you references to various lenders that are familiar with financing the purchase of a business.

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The International Business Brokers Association is the largest international, non-profit association operating exclusively for the benefit of people and firms engaged in the various aspects of a business brokerage and mergers and acquisitions. IBBA has 1,950 members worldwide, with corporate headquarters in Chicago, Illinois.|

©2011 International Business Brokers Association (IBBA) all rights reserved. Permission to reuse any or all of this material should be directed to the IBBA at 888-686-4442 and is restricted to IBBA members.

For a complimentary consultation:
Contact Cecil Williams (cecil@bizbrokerflorida.com) or call at 888-925-5055 ext.206. Visit my personal website to search for business for sale in Florida www.bizbrokerflorida.com Also, visit our Florida Business Exchange website at www.fbxbrokers.com

Who Will Buy My Business? | Free Enterprise

Who Will Buy My Business?

About 30% to 40% of business owners will sell to one or more family members, 15% to 20% will sell to qualified key managers (because family members are not interested), and 15% to 20% will sell to an outsider. The pricing and terms of the sale can be totally different for these three types of buyers.

Read: Who Will Buy My Business? | Free Enterprise

For a complimentary consultation:
Contact Cecil Williams (cecil@bizbrokerflorida.com) or call at 888-925-5055 ext.206. Visit my personal website to search for business for sale in Florida www.bizbrokerflorida.com Also, visit our Florida Business Exchange website at www.fbxbrokers.com