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¿Listo Para Renunciar A Su Trabajo?

duda@fcbb.com — Wed, 27 Sep 2023 04:54:11 GMT

¿Es ahora el momento adecuado para que compres un negocio?

Use su plan de impuestos diferidos 401k para comprar un negocio, obtenga más información.

¿Cuándo tiene sentido renunciar a su trabajo y usar el fondo de su plan de jubilación para comprar un negocio?

Esta es una pregunta que muchos empleados se hacen regularmente.

¡Estas son algunas de las señales de que es hora!

Estás aburrido de lo que estás haciendo, ya que no hay desafío en tu trabajo.
Sus ingresos no son de la cantidad que usted cree que debería ser.
Su empleador es de propiedad familiar, por lo que no puede subir demasiado en la escalera.
Está cansado de mudarse y quiere estabilizarlo a usted y a su familia.
Temes los lunes por la mañana.

Estas son solo algunas de las razones para considerar "retirarse" y tomar su 401K (libre de impuestos y multas) y usar el dinero para comprar un negocio existente.

First Choice Business Brokers recibe muchas llamadas de personas posiblemente en su posición, sin embargo lo que no nos sorprende es que el negocio que están considerando comprar no está relacionado con su puesto de trabajo actual.

Muchas veces una persona quiere que un negocio haga algo que sienta que disfrutará y le dé el estilo de vida que desea.

¿Estás listo para el desafío?

¿Por Qué Un Vendedor Vendería Un Negocio Rentable?

duda@fcbb.com — Wed, 27 Sep 2023 04:30:20 GMT

Estrategias inteligentes de planificación de salida del vendedor

Descubra las razones por las que un vendedor vendería lo que parece ser un gran negocio rentable.

Es un hecho conocido que muchos empresarios habían comenzado otros negocios antes de entrar en el negocio que se ha convertido en un éxito.

Muchos empresarios exitosos también hacen algo más que la mayoría de los dueños de negocios no hacen, planean una estrategia de salida.

Entonces, la pregunta es por qué la persona que está operando un negocio que está funcionando con éxito y ganando dinero buscaría una estrategia de salida.

Las razones típicas son para planificar una estrategia de salida o considerar vender son (y no en ningún orden de importancia): 1. El propietario ha alcanzado el objetivo que quería lograr; 2. El propietario ha encontrado otra idea que quería perseguir; 3. Aburrimiento o agotamiento; 4. No es financieramente gratificante; o 5. No es emocionalmente satisfactorio. 6. Necesidad de un nuevo reto.

Por lo tanto, es bueno saber que muchos empresarios que están ocupados construyendo su negocio también están considerando su estrategia de salida.

Como propietario de un negocio, ¿conoce su estrategia de salida y estará preparado?

Los compradores buscan negocios que puedan proporcionar dos componentes principales, uno es el ingreso sostenible y el segundo es el potencial de crecimiento. Después de veinticuatro años de reunir a compradores y vendedores, descubrimos que si estos dos ingredientes están en el negocio que un comprador está investigando, las posibilidades de que el comprador haga una oferta son muy altas.

Si está considerando vender su negocio en el futuro, asegúrese de que un comprador pueda verificar sus ingresos. La mayoría de los compradores se alejarán de una transacción si no se pueden verificar los ingresos. Su Broker de First Choice Business puede aconsejarle con más detalle sobre lo que un comprador necesitará de usted cuando esté listo para vender.

¿Qué Es La Parálisis De Análisis?

duda@fcbb.com — Wed, 27 Sep 2023 04:21:31 GMT

Cómo puede perderse una "gran" oferta al analizar en exceso.

Aprenda por qué debe arriesgarse y tomar una decisión.

En el corretaje de negocios, vemos muchos compradores potenciales que han decidido que quieren seguir su sueño de ser dueños de su propio negocio. Estos compradores potenciales le pedirán a su agente que se comunique rápidamente con ellos cuando surja un "trato caliente" ya que están listos para comprar.

Sorprendentemente, vemos pasar seis o incluso nueve meses con docenas de presentaciones de oportunidades de negocio hechas y avisos de "trato caliente" enviados al comprador para encontrar que este comprador ansioso está afectado por la"parálisis del análisis". Este comprador ha perdido las posibles "ofertas calientes" frente a otros compradores que han aprovechado estas oportunidades.

¿Qué es la "parálisis de análisis" En pocas palabras, la incapacidad de tomar una decisión. Los compradores quedan tan atrapados en la revisión y el análisis de tantas empresas que el proceso en sí se convierte en su negocio, siempre preguntándose si la próxima oportunidad será un mejor ajuste o un negocio más fuerte, etc. Algunos compradores ejercen una presión extraordinariamente grande sobre sí mismos para comprar el negocio "correcto" que pierden la oportunidad correcta debido a la parálisis del análisis. De hecho, hemos escuchado a los compradores decir: "¿Puedo hacer este negocio todos los días por el resto de mi vida"? Por supuesto, es una pregunta razonable, sin embargo, esta pregunta también puede hacer que cada negocio parezca abrumador y pone mucho estrés indebido en el comprador. Sí, por supuesto, desea que la compra de negocios sea lo más adecuada posible, sin embargo, también recuerde que si no es la opción correcta, tiene la oportunidad de vender ese negocio y pasar a otras empresas.

Nuestro consejo de muchos años de experiencia es que los compradores mantengan una mente abierta a diferentes oportunidades, es posible que se sorprenda de cuál es el negocio adecuado para usted. También es importante que los compradores obviamente hagan su debida diligencia, sin embargo, esos mismos compradores también deben darse cuenta de que otros compradores de negocios también están mirando las oportunidades que surgen y esos compradores pueden no verse afectados por la "parálisis del análisis". ¡Prepárate para saltar cuando llegue el negocio correcto!

¿Listo Para La Jubilación Pero No La Mecedora?

duda@fcbb.com — Tue, 26 Sep 2023 05:50:05 GMT

Ideas para mantener tu cerebro activo después de la jubilación

Por qué la vida no termina con la jubilación laboral

Como Business Brokers durante más de 24 años, escuchamos una y otra vez a personas que desean retirarse de sus trabajos corporativos y asumir una nueva oportunidad en la vida con la propiedad de un negocio. Estamos orgullosos de haber sido parte de estos eventos que cambian la vida y estamos aquí para ayudarlo a encontrar el "negocio del próximo capítulo" perfecto.

Después de pasar años trabajando en un trabajo, finalmente llega el día de la jubilación. ¡Bien!

Muchos médicos creen que una persona que deja de usar su poder cerebral es un gran candidato para la enfermedad de Alzheimer. La solución es muy sencilla. El jubilado debe tomar un pasatiempo que requiere poder mental o considerar deber un negocio. Muchas de las personas que contactan con nuestras oficinas son jubilados que aún son jóvenes y activos y quieren controlar su futuro.

Hoy, muy afortunadamente, vivimos en un mundo donde los 65 años todavía se consideran jóvenes. La esperanza de vida de un hombre en 1958 se consideraba de 72 años. Hoy en día, según la Tabla Uniforme de Esperanza de Vida 2013, un hombre de 70 años tiene una esperanza de vida de 27 años adicionales.

¿Qué significa esto? Significa que nunca es demasiado tarde para convertirse en trabajador por cuenta propia al ser dueño de su propio negocio. Esto puede darle la oportunidad de esperar disfrutar de su jubilación posterior al trabajo en una nueva carrera en la que usted dicta su éxito. First Choice Business Brokers tiene una gran selección de muchos negocios a la venta y uno de estos podría adaptarse a sus necesidades.

Due Diligence ¿Qué Significa Para El Vendedor?

duda@fcbb.com — Tue, 26 Sep 2023 05:46:04 GMT

La preparación del vendedor facilita la diligencia debida

Pasos para que los vendedores se preparen para el eventual proceso de diligencia debida.

El Comprador ha hecho una oferta sobre su negocio y en el Acuerdo de Compra establece que necesita diez días para completar su debida diligencia en su negocio, ¿qué debe hacer usted como vendedor?

El comprador querrá ver sus estados financieros y declaraciones de impuestos si aún no se han proporcionado.

Consejo # 1 cuando le da la lista de negocios a su Broker; trate de dar los últimos 3 años de sus pérdidas y resultados, balances y declaraciones de impuestos. Esto no solo ahorrará mucho tiempo y le mostrará al Comprador que usted es franco con sus documentos.

El Comprador querrá validar los ingresos y gastos que ha mostrado en sus pérdidas y pérdidas y resultados para que comprendan completamente los ingresos reclamados en el negocio.

Consejo # 2 es una gran idea dar una explicación por escrito a su agente de cualquier "agregar respaldos" para que el Comprador no esté tratando de adivinar cómo llegó a sus cifras.

A menos que el Comprador entienda cómo llegó a sus cifras de ingresos, él o ella seguirá pidiendo más pruebas de ingresos.

Consejo # 3 Cuanta más información (mantenimiento de registros) proporcione a su Broker por adelantado, menos información tendrá que seguir pidiendo el Comprador. Trate de proporcionar tanta documentación (informes de impuestos sobre las ventas, etc.) a su Broker. Recuerde que dependiendo de la época del año, el Comprador querrá obtener información financiera actualizada.

Consejo # 4 Trate de mantener su grabación actualizada. Muchas transacciones se han perdido debido a que el Vendedor no informa al Comprador de ningún cambio importante en el ingreso bruto o neto.

Due Diligence ¿Qué significa para el Comprador?

Muchos compradores piden la debida diligencia en un negocio al hacer una oferta, pero no están seguros de lo que esto abarca.

El Vendedor debe proporcionar al Comprador, sus declaraciones de ingresos y posiblemente sus declaraciones de impuestos.

La diligencia debida generalmente no incluye ninguna contingencia que deba completarse, como licencias, acuerdos de empleados u otros elementos similares.

Intente armar una lista de los elementos que desea revisar para que no esté pidiendo constantemente elementos adicionales. El Vendedor habrá sido informado por el Broker de que tendrá que suministrar a un comprador ciertos artículos.

Como Comprador, usted tiene la obligación de revisar los documentos suministrados por el Vendedor o hacer que su asesor profesional revise los documentos. Desafortunadamente, no puede solicitar o confiar en su Broker para completar su diligencia debida por usted.

Una vez que reciba los documentos solicitados, deberá tomar una decisión dentro del período de tiempo establecido en el Acuerdo de compra.

Si decides que necesitas más documentación para respaldar los ingresos que el Vendedor está reclamando, intenta hacerlo lo antes posible ya que tienes ciertas limitaciones de tiempo para obtener estos documentos. Está bien pedirle al Vendedor que explique ciertos gastos o cambios en los ingresos netos del Vendedor.

Finalmente, asegúrese de comprender completamente los ingresos y gastos del negocio antes de seguir adelante.

Una vez que libere su Diligencia Debida, usted está declarando que está satisfecho de que las cifras que le dio el Vendedor parecen ser correctas y que está avanzando en la transacción.

Añadir Espaldas: ¿Qué Son?

duda@fcbb.com — Tue, 26 Sep 2023 05:40:53 GMT

Comprender el verdadero ingreso neto del vendedor

Una comprensión más profunda de qué gastos del vendedor se pueden agregar de nuevo a la línea de fondo de manera realista.

El posible comprador de un taller de reparación de automóviles en venta en California notó, mientras realizaba due diligence, que un asistente de oficina figuraba en la nómina. Pero había visitado el negocio como cliente y nunca había visto a nadie trabajando en la oficina.

Al preguntar sobre esto, se enteró de que se estaba pagando un "salario" de $ 1,500 por mes a la cuñada del vendedor, y que ella figuraba como asistente de oficina, pero en realidad no trabajaba en la compañía.

Eso es un "add-back" y debe incluirse con los ingresos netos que dijo el vendedor.

El comprador estaba preocupado por este descubrimiento. También fue confusa la afirmación del vendedor de que los gastos de automóviles, como la gasolina y el seguro cobrados como costos comerciales, deberían agregarse nuevamente a las ganancias.

Estos son solo dos ejemplos de las muchas preguntas y fuentes de confusiones que pueden surgir al tratar de comprender los costos reales involucrados con la operación de un negocio. La confusión se produce porque muchos, si no la mayoría de los vendedores, intentan mostrar la menor cantidad de ingresos posible para reducir los impuestos que deben pagarse. Luego, cuando llega el momento de vender, el propietario del negocio tiene el objetivo opuesto, querer mostrar la mayor cantidad de ganancias posible para justificar el precio que se pide para el negocio.

La forma típica de resolver este dilema es que el vendedor señale los costos cobrados a la empresa pero que no son realmente necesarios para operar.

Buenos ejemplos de estos gastos son los gastos personales del propietario pagados a través del negocio, entre otros artículos.

Estas explicaciones, sin embargo, a veces plantean más preguntas de las que responden.

Cuando el comprador que estaba investigando el negocio Investigó lo que decía el vendedor, se enteró de que aunque no había nadie físicamente presente en la oficina durante el horario comercial, era necesario tener a alguien que se encargaba del trabajo de oficina. La cuñada venía por las tardes o los fines de semana para equilibrar la chequera de la compañía, verificar que todas las piezas ordenadas se cargaran contra las órdenes de reparación, comparar los estados de cuenta de los proveedores con las facturas individuales, manejar las responsabilidades de nómina e impuestos sobre las ventas y encargarse de las tareas relacionadas.

Y si bien era cierto que el vendedor estaba cobrando al negocio por sus gastos personales de automóvil, también era el hecho de que el automóvil se usaba para actividades comerciales necesarias, como recoger piezas y llevar a los clientes a su hogar u oficina.

Un estado de pérdidas y ganancias ajustado bien preparado anticipa las preguntas del comprador y define claramente qué gastos en el estado operativo son y cuáles no son necesarios para una gestión eficiente del negocio.

Pero no todos los vendedores saben cómo proporcionar esa información de una manera que sea fácil de entender. Y no todos están dispuestos a participar en una divulgación completa y completa.

Depende del comprador cuidadoso cuestionar cada elemento en el estado de ingresos y gastos. Y para hacer preguntas como:

- ¿Es necesario cada gasto detallado para operar el negocio correctamente?

- ¿El total listado para cada artículo es el gasto real, o es el costo real más bajo o más alto que lo que se ha ingresado en los libros?

El comprador de negocios inteligentes no acepta, sin lugar a dudas, las cifras enumeradas en el P&L y las finanzas de una empresa que se está considerando, pero investiga un poco para saber qué representan realmente las cifras.

Parte del trabajo de Business Brokers es interrogar al vendedor sobre cada artículo para determinar si el gasto es un "verdadero gasto comercial" o es un gasto que es necesario para administrar el negocio.

Un Business Broker competente revisará los P & L del vendedor y "refundirá" los números agregando los "gastos no esenciales" que se pagaron a través del negocio para llegar a un ingreso neto ajustado para el negocio.

Los compradores encontrarán que el 98% de los propietarios de pequeñas empresas tienen algún tipo de adición y no deben alejarse del negocio si están satisfechos con las explicaciones del vendedor de las "adición".

¿Tu Negocio Se Trata De Ti?

duda@fcbb.com — Tue, 26 Sep 2023 05:21:19 GMT

Mirar su negocio a través de los ojos del comprador

Ideas para despersonalizar su negocio y hacerlo más deseable para los compradores.

Muchos vendedores sienten que su negocio debe reflejar su propio toque personal y, de alguna manera, eso puede ser bueno, sin embargo, no cuando está vendiendo su negocio.

Hay muchos vendedores que "personalizan" demasiado su negocio, lo que hace que sea demasiado sobre ellos como propietarios de negocios para que un comprador se vea a sí mismo en el negocio. Los compradores a menudo tienen la preocupación de que el negocio depende del vendedor y cuando está tratando de vender su negocio, esto funcionará en su contra.

Incluso hemos visto a lo largo de los años muchos escenarios diferentes que con pequeños ajustes se podrían haber evitado problemas. Por ejemplo, teníamos un restaurante de lujo donde los propietarios etiquetaban cada elemento del menú con sus propios nombres, por ejemplo, Mary's Meat Loaf o Ricky's Ribs. ¿Qué sucede cuando un comprador se hace cargo de ese negocio? ¿Mantienen los elementos del menú como Mary's Meat Loaf a pesar de que su nombre es Sue? Si cambian los nombres de los elementos del menú, hay un costo para que los menús se vuelvan a imprimir y, lo que es más importante, los clientes pensarán que las recetas ahora son diferentes y que no pueden pedir su comida favorita. Incluso es una buena idea mirar alrededor de su negocio con ojos frescos. ¿Su negocio está cubierto con artículos personales como fotos familiares o fotos de su último viaje de pesca, o incluso recuerdos de logros? Los premios para un restaurante o servicios comerciales son excelentes, pero demasiados artículos personales pueden restar valor a la hora de vender.

Eche un vistazo a su negocio a través de los ojos de un comprador. Podría tener un negocio muy exitoso que sea de propiedad familiar con demasiada personalización personal. Cuando llega el momento de vender, esto asustará a los compradores potenciales porque creen que los propietarios están tan vinculados con sus clientes o clientes que el negocio perderá ingresos una vez que el negocio cambie de manos.

Los vendedores de este restaurante en particular habían intentado previamente vender su negocio sin éxito. Nos dimos cuenta cuando tomamos el listado que nos estaban contratando por nuestra experiencia y, a menudo, por consejos de sentido común. Inmediatamente sugerimos que los vendedores hicieran cambios en su menú para eliminar sus nombres de cada artículo. El resultado fue que vendimos el negocio en un período de tiempo muy corto. Su negocio fue realmente exitoso, pero los compradores no pudieron ver más allá de toda la personalización con este pequeño cambio, su negocio se volvió mucho más vendible, lo que, por supuesto, resultó en vendedores y compradores felices.

Un comprador potencial debe creer que el negocio que se ofrece es transferible sin una pérdida importante de negocio debido a la relación de los vendedores después de que se completa la transacción.

Como Business Brokers, siempre aconsejamos a los propietarios de negocios que están considerando vender que despersonalicen su negocio antes de que se comercialice el negocio. Entonces, ¿cómo elimina el propietario del negocio la personalización, como una gran cantidad de fotos familiares, etc., sin alertar a todos de que están considerando vender? Un método que hemos presenciado es que el dueño del negocio considera alguna remodelación o pintura "pequeña" donde él o ella necesita quitar artículos.

La conclusión es que si está considerando vender su negocio, hable con su profesional de First Choice para revisar si su negocio no solo es vendible y deseable, sino también si su negocio está listo para vender desde cómo lo verá el comprador. Asegúrese de que el comprador no sienta que su negocio es "Todo sobre usted".

Vender O No Vender, ¿Esa Es La Pregunta?

duda@fcbb.com — Tue, 26 Sep 2023 05:16:49 GMT

¡No esperes hasta que sea demasiado tarde!

Los dueños de negocios se enfrentan a un dilema de si deben vender y, de ser así, ¿cuándo es un buen momento?

¿Deberían los dueños de negocios vender cuando su negocio está en auge, cuando el negocio está disminuyendo o cuando están cansados y agotados?

Después de 24 años de vender negocios, definitivamente podemos afirmar que el mejor momento para vender es cuando el negocio está en una tendencia al alza. Este es el momento en que los compradores están dispuestos a pagar el precio más alto.

Desafortunadamente, muchos dueños de negocios esperan hasta que su negocio esté disminuyendo cuando deciden que ya es suficiente y quieren poner su negocio a la venta. Los compradores generalmente no pagarán el mejor dólar si ven que el negocio está disminuyendo durante un período de tiempo. Los vendedores quieren vender en el potencial, sin embargo, los compradores solo pagarán por lo que pueden ver para obtener ingresos y la tendencia de ingresos en el momento en que el negocio está disponible.

Su First Choice Business Broker puede ofrecerle las experiencias de nuestros 24 años de negocios de venta. Cuando llegue el momento de considerar la venta, estaremos aquí para usted. Mientras tanto, mantenga su negocio funcionando fuerte para que la "tendencia" de su negocio a los ojos de un comprador sea estable o en una tendencia al alza. Durante el proceso de venta, nos encargaremos de los compradores entrantes y usted cuidará de su negocio para que pueda capturar el precio más alto por sus esfuerzos duramente ganados.

¿Cuál Es El Valor De Su Negocio?

duda@fcbb.com — Tue, 26 Sep 2023 05:06:51 GMT

Descubra cómo un Business Broker valorará su negocio.

Trabajar con un Business Broker profesional puede ayudar a poner un precio realista a su negocio para la venta.

Muchos vendedores, antes de reunirse con un Business Broker, tienen una idea en su mente de cuánto deben pedir por su negocio.

Su CPA o su amigo o su agente de bienes raíces pueden haber ofrecido sugerencias. Entonces, en el momento en que se reúnen con su Business Broker y el Broker ofrece un precio de venta sugerido, los vendedores a veces responderán con la cifra en dólares que su CPA, amigo o agente de bienes raíces pensó que deberían vender.

La situación de los Business Brokers es cómo y le dirán al vendedor que el precio será demasiado alto para su negocio.

La mayoría de los Business Brokers profesionales explicarán la realidad de un negocio sobrevalorado, incluido el hecho de que los negocios sobrevalorados ayudan a las empresas a precios razonables del mismo tipo a vender realmente.

El propietario de un negocio debe entender que un Business Broker está valorando el negocio de manera lógica y realista en función de las ventas y la experiencia pasadas, mientras que un vendedor mira el negocio emocionalmente.

El arte de valorar un negocio es solo eso, es un arte y no una ciencia. Un negocio vende por lo que un comprador dispuesto pagará y lo que un vendedor dispuesto aceptará.

Otra opción es obtener una valoración externa por un costo de alrededor de $3,000.00. A veces, estas valoraciones externas son teóricas y no un análisis de precios de mercado y pueden no valer la pena el costo.

Para obtener más información sobre cómo se valora un negocio, comuníquese con su profesional de First Choice Business Broker cuya única posición es listar y vender negocios a tiempo completo.

¿Por Qué Alguien Compraría Un Negocio Para Trabajar 60 Horas A La Semana A $ 16 / Hora?

duda@fcbb.com — Tue, 26 Sep 2023 04:46:26 GMT

Te preguntas: "¿Podré vender mi pequeña empresa?" ¿La llave? Comprender cómo un comprador verá su negocio.

¿Por qué alguien compraría un negocio para trabajar 60 horas a la semana a $ 16 / hora?

Le hice esa pregunta a la dueña de un negocio después de que ella dijo que su negocio debería valer $ 150,000 para un comprador potencial. Ella creía que, a pesar de que tenía que trabajar sin parar por un salario exiguo solo para mantener vivo su negocio. Ella pensó que esos resultados serían deseables para un comprador. Se equivocó. Un comprador no va a ver la imagen; un comprador va a ver la realidad, y su realidad no se veía bien.

Te preguntas: "¿Podré vender mi pequeña empresa? ¿La llave? Comprender cómo un comprador verá su negocio.

¿Son deseables sus resultados?

Los propietarios de pequeñas empresas trabajan duro

El trabajo duro es parte de lo que significa ser propietario de una pequeña empresa. A veces son días de 18 horas, 7 días a la semana. Sin disculpas. Sin excusas. Si no estás dispuesto a hacer el trabajo, olvídate de comprar un negocio. Enorgullértese de ese trabajo y de lo que ha construido, pero comprenda que el trabajo duro no garantiza que haya creado ningún valor en el negocio, o que pueda venderlo algún día.

Los estudios muestran que solo el 30% de las empresas que figuran en el mercado abierto realmente venden.

La dueña del negocio asume que sus años de sacrificio crearon automáticamente valor. Tenía un negocio real que incluía ingresos, gastos, equipos, empleados y una lista de clientes. Ella tenía todas las piezas, pero las partes no se combinaban para crear resultados que iban a atraer a un comprador.

¿Qué queremos decir con deseable?

No hay truco. Simplemente queremos decir deseable. Necesitas tener resultados que alguien más quiera. Resultados que son atractivos. Resultados que hacen que un comprador diga: "Ojalá este fuera mi negocio".

Con demasiada frecuencia, los dueños de negocios creen que hay una ecuación de valor secreta buscada por los compradores de negocios. Quería dejar su negocio porque el trabajo era demasiado duro y el salario demasiado bajo, pero todavía creía que alguien querría comprar lo que ella llamaba su "ancla de barco".

Nadie quiere comprar su dolor. Si desea poder vender su negocio, sus resultados deben ser deseables.

Dos áreas importan cuando se trata de la conveniencia de sus resultados.

Aumente las ganancias discrecionales de su vendedor (SDE)

SDE es el beneficio financiero de ser el operador propietario a tiempo completo de su negocio. (Si no entiendes qué es SDE, hablemos. Es un concepto crítico).

¿Produce SDE de $ 50,000, $ 90,000 o $ 250,000 por año? Más es mejor y hace que su negocio sea más fácil de vender.

SDE es su resultado clave. Aumentar su SDE es la mejor manera de mejorar sus probabilidades de vender su negocio. Nada más se acerca.

Mejore su trabajo

¿Qué significa ser el dueño de tu negocio? ¿Querrá un comprador llenar tus zapatos después de aprender lo que haces en un día promedio?

¿Tienes un buen trabajo? ¿Tiene independencia, flexibilidad, trabajo agradable, beneficios o cualquiera de las muchas otras cosas que hacen que un trabajo sea "bueno" según los estándares objetivos? ¿O tienes que trabajar 14 horas al día, en condiciones horribles para producir una ganancia escasa?

Usted es el dueño del negocio smal l. Entendemos que a veces hay que hacer tareas desagradables. Pero si su trabajo se vuelve insoportable, debe comprender que nadie más querrá hacerlo, y mucho menos pagarle por la oportunidad de hacerlo. Cuanto más atractivo sea su trabajo, más deseables serán sus resultados.

Estas dos cosas

Mira tu SDE y tu trabajo. Cuando los combinas, ¿crean resultados que un comprador desearía? ¿Puede alguien mirar estos dos resultados de su negocio y decir: "Quiero esa vida"?

Eche un vistazo implacable a su negocio: ¿son deseables los resultados que produce?

Si puede mejorar estas dos medidas, mejorará drásticamente su capacidad para vender su negocio.

Contacta con nosotros

El flujo de caja es clave para vender un negocio

duda@fcbb.com — Tue, 26 Sep 2023 04:35:53 GMT

A la mayoría de los vendedores les preocupa que hayan infravalorado su negocio o que los compradores no quieran pagar el mejor dólar. Es por eso que el flujo de efectivo es la clave para las ventas comerciales.

NO Bebés Feos... Siempre Y Cuando Su Negocio Tenga Flujo De Caja

Vender un negocio o empresa es una experiencia emocional. No es raro que los vendedores sientan una amplia gama de emociones que incluyen duda, anticipación y, más comúnmente, miedo. A la mayoría de los vendedores les preocupa que hayan infravalorado su negocio o que los compradores no quieran pagar el mejor dólar. Es por eso que el flujo de efectivo es la clave para las ventas comerciales. Puede actuar como una falla a prueba de fallas para hacerle saber exactamente cuánto vale su negocio y cuánta compensación debe recibir.

Todo el mundo sueña con recibir una oferta que exceda el valor del negocio y eso podría suceder si el negocio se encuentra en lo que se ha convertido en bienes raíces de primera calidad o si el valor en efectivo proyectado es mucho mayor que el valor actual. Salvo esos escenarios, hay tres enfoques para calcular las valoraciones de las empresas, incluidas las valoraciones basadas en el mercado, en los activos y en los ingresos.

Una de las funciones clave de un business broker o profesional de fusiones y ades es determinar la metodología de valoración que arroja la luz más brillante sobre su negocio.

Valoración basada en el mercado

Este tipo de valoraciones son generalmente más fáciles de calcular porque generalmente solo implican comparaciones con las ventas de empresas similares. Los factores que se tienen en cuenta utilizando este enfoque incluyen el precio de las ganancias, el rendimiento del capital, el precio del valor contable, el rendimiento de los activos y el valor de la empresa, las ganancias discrecionales del vendedor (SDE) o el EBITDA. Este es un acrónimo que representa las ganancias antes de intereses, impuestos, depreciación y amortización y demuestra la eficiencia a corto plazo de una empresa. Estos números ayudan a identificar empresas similares para que se puedan alcanzar valoraciones similares.

Las ganancias discrecionales del vendedor con un múltiplo de mercado aplicado es la metodología más común utilizada para las empresas de Main Street, empresas con ingresos anuales de menos de $ 5 millones.

Valoración basada en activos

Tal como suena, una valoración basada en activos implica determinar el valor contable de una empresa y luego deducir los pasivos o deudas. Los activos deben incluir artículos tangibles como muebles, maquinaria y edificios y propiedades, y objetos intangibles como secretos comerciales, patentes y marcas comerciales. Determinar el valor de los activos intangibles puede requerir la ayuda de un tasador experimentado.

Valoración basada en los ingresos

Las empresas que tienen un potencial sustancial de crecimiento generalmente utilizan valoraciones basadas en los ingresos, que se calculan a partir de las ganancias proyectadas. Ver cuánto dinero se espera que gane el negocio hace que un negocio en venta sea mucho más atractivo para los compradores potenciales. Las dos formas de este método de valoración son el flujo de caja descontado (DCF) y la capitalización de las ganancias.

1. El flujo de efectivo descontado se determina encontrando el flujo de efectivo estimado de la empresa y luego restando el costo promedio de capital. Por lo general, se calcula para un período de un año basado en la suposición de que el negocio continuará creciendo después de eso.

2. El método de capitalización de ganancias utiliza el flujo de caja pasado confirmado de la empresa y lo divide por la tasa de capitalización. Es especialmente útil para identificar los riesgos y el potencial de la empresa para obtener un retorno de la inversión. Las empresas orientadas a servicios se benefician del uso de este método.

Preparación

Para llegar a estas valoraciones, hay pasos que los propietarios de negocios pueden tomar para asegurarse de que están determinando los valores razonables antes de establecer un precio final para el negocio, que incluyen:

preparar al menos tres años de estados financieros, incluido el SDE, o las ganancias discrecionales del vendedor, lo que le dará al comprador una mejor comprensión del valor del negocio,
establecer el valor de todos los activos materiales e inmateriales,
incluyendo múltiplos de precios y otros factores que podrían afectar el futuro del negocio, como los auges de la industria, la falta de financiamiento del propietario y los cambios en las relaciones con los proveedores, también conocidos como "riesgo del propietario",
utilizar "comps" o las ventas de empresas comparables para calcular los precios de venta,
Mejorar el valor del negocio mediante la renovación de los arrendamientos, la actualización de las políticas de los empleados y la oferta de financiamiento puede hacer que su negocio se vea más atractivo que otros.
obtener una valoración formal de un tasador profesional que proporcionará no solo información sino también objetividad.

Vender su negocio de una manera que lo beneficie requiere una valoración precisa del flujo de efectivo del negocio. El uso de un profesional externo, como un Business Broker, garantizará que su negocio se valore objetivamente y en línea con las condiciones actualizadas del mercado.

La Mayoría De Los Compradores De Negocios No Completan Una Transacción

duda@fcbb.com — Tue, 26 Sep 2023 04:18:45 GMT

¿Solo 1 de cada 15 posibles compradores de pequeñas empresas realiza una transacción?

¿Sabía que solo 1 de cada 15 posibles compradores de pequeñas empresas realiza una transacción? Si bien esta estadística es reveladora, cuando se investiga un poco, estos números son comprensibles.

Hay varias bases de datos de negocios en venta que se utilizan para vender miles de negocios cada año. El problema es que por cada 300 listados, solo alrededor de 100 (un tercio), se venderán.

¿Las principales razones por las que las empresas no se venden? Todavía no están listos para ser puestos en el mercado, pero todavía están en la lista, o el negocio es tan problemático que nadie quiere comprarlo.

Al buscar un negocio para adquirir, encontrará que hay un sinfín de problemas, que van desde:

Problemas de concentración de clientes
Finanzas dudosas
Problemas de renovación de arrendamientos

Estos problemas, junto con otros, son suficientes para ahuyentar a cualquier comprador potencial. La clave es encontrar un negocio que valga la pena comprar, pero esto es más fácil decirlo que hacerlo.

Entonces, ¿por qué tantas personas que buscan comprar una pequeña empresa no están pasando por la transacción? He aquí por qué los números son tan sombríos.

La mayoría de los compradores no saben qué tipo de negocio es mejor para ellos

Las razones más comunes por las que los compradores individuales no pueden comprar un negocio es simplemente porque no saben qué tipo de negocio es el adecuado para ellos. Al comprar un negocio, es importante saber qué tipo de negocio puede operar con éxito.

¿Qué es lo que mejor sabes hacer? ¿Con qué habilidades tienes más conocimiento y experiencia? ¿Son ventas? ¿Operaciones y logística? ¿Marketing? Piensa en lo que eres bueno.

Al mismo tiempo, considera las cosas que no haces bien. Comprar un negocio que requiere las habilidades que no tienes es un desastre desde el inicio. No seas algo que no eres. No mires la adquisición de un negocio como una oportunidad para aprender sobre la marcha.

Los préstamos de compra de negocios son escasos

Comprar un negocio es muy diferente de comprar una propiedad. Debido a que los activos duros son limitados, los posibles compradores deben usar activos personales como garantía para el préstamo. Al mismo tiempo, los bancos y otros prestamistas no están abriendo la bóveda para financiar un préstamo de adquisición de negocios.

Aunque hay muchos programas respaldados por el gobierno, hay ciertos criterios que deben cumplirse.

Al comprar una pequeña empresa, siga la ruta de financiamiento del vendedor. Si un vendedor se niega a financiar una parte de la venta, considere retirarse del acuerdo, ya que esto indica una falta de confianza en el negocio y su futuro.

Atascado en encontrar el negocio perfecto

El hecho es que no existe tal cosa como un negocio perfecto. Todos vienen con sus propios riesgos y defectos. Como comprador, si estás obsesionado con encontrar el negocio perfecto, estarás buscando (y esperando) para siempre.

Al comprar una pequeña empresa, determine el nivel de riesgo e incertidumbre que está dispuesto a aceptar. Como empresario, debes tener expectativas razonables. Si aún no lo has hecho, acepta que el negocio perfecto no existe.

Los buenos negocios tienen un precio

Como con cualquier cosa en la vida, obtienes lo que pagas. Prepárese para pagar un costo superior por un negocio sólido que tenga valor. Si bien debe negociar el mejor trato, siempre debe estar dispuesto a pagar por el valor.

Aunque tiene un costo más alto, no hay nada mejor que un negocio con una base sólida y un historial de transacciones. Bajo su propiedad, puede esperar que el negocio continúe prosperando.

Sin experiencia de compra

Todo el mundo tiene que comenzar desde algún lugar, pero la razón más importante por la que la mayoría de los compradores de negocios no pueden completar una transacción es porque son primerizos. El proceso de adquirir y administrar un negocio es cualquier cosa menos fácil o simple.

¿Sabes qué preguntas hacerle a un vendedor de negocios? ¿Sabes cómo investigar un negocio y su historia? ¿Qué hay de compilar una valoración precisa?

Al comprar un negocio, no puede confiar en un Business Broker, contador o abogado para hacer su trabajo como posible propietario.

Reflexiones finales

Comprar un negocio es una gran decisión que puede tener un impacto duradero. Si se hace bien, hay un potencial infinito de crecimiento y ganancias. Si se hace mal, la desventaja es nada menos que horrible.

Si está considerando comprar un negocio por primera vez, investigue. Y lo más importante, superar las estadísticas.

Cómo Los Business Brokers Se Pagan A Sí Mismos

duda@fcbb.com — Tue, 26 Sep 2023 04:18:43 GMT

Vender un negocio es complicado. Un Business Broker puede ser el experto para ayudarlo a vender su negocio.

¿Estás buscando vender tu negocio? ¿Quizás está llevando a cabo una valoración comercial para posicionar su negocio para una venta o fusión? Muchas empresas recurren a abogados en busca de ayuda, sangrando dinero para pagar la tarifa por hora.

Un Business Broker es una solución excelente y asequible cuando su negocio necesita los servicios de un intermediario. Su experiencia, conocimiento y potencial de creación de redes significa que el costo inicial es rápidamente absorbido por el retorno positivo de la inversión.

Cómo se realiza la diligencia debida

Hacer la debida diligencia para una pequeña empresa lleva tiempo completarse. Esto es así porque el proceso implica revisar los registros financieros de la empresa, hacer referencias cruzadas y garantizar que todo sea como se indica.

Sin embargo, como comprador de negocios, no debe realizar la debida diligencia por sí mismo. Debe contratar profesionales como un contador y un abogado con experiencia en el campo. También debe ser parte del equipo revisando los documentos, pero permita que los expertos hagan su trabajo antes de realizar una compra. Considere hacer esto porque, como expertos, encontrarán información importante que se habría perdido.

Debe tener un compromiso con el vendedor en forma de un Acuerdo de compra o carta de intención para iniciar el proceso de diligencia debida.

El siguiente paso es revisar sus hallazgos con su equipo para asegurarse de que todas las partes críticas estén cubiertas. Sus equipos tendrán una lista de verificación propia, pero no está de más configurar su propia lista.

Una lista de verificación para la diligencia debida

Cuando realiza la diligencia debida, hay varios aspectos sobre la posible empresa que debe echar un vistazo. A continuación, encontrará problemas que debe tener en cuenta al realizar la diligencia debida.

• Due Diligence Financiera

La debida diligencia financiera, también conocida como diligencia debida para la contabilidad, pone el foco en la parte económica del negocio prospectivo. El énfasis se pone en activos, cuentas, pasivos, impuestos, tendencias históricas, entre otras cosas.

Debe observar los datos financieros pasados de la empresa, como el balance general, los estados de resultados y los estados de flujo de efectivo. También debe prestar mucha atención a las cuentas por cobrar, la ganancia bruta, la tasa de rendimiento de los productos ofrecidos y comprender el historial de inventario de la empresa.

• Aspectos legales de la debida diligencia

La debida diligencia legal muestra los aspectos legales de un negocio, como los contratos legales y cualquier otro documento que pueda tener riesgos ocultos para una demanda. Algunos contratos a los que debe prestar mucha atención son los arrendamientos, los acuerdos de distribución y compra, los contratos de venta comercial, los artículos de incorporación, el registro comercial, los derechos de autor, las marcas comerciales y los acuerdos de los empleados.

• Due Diligence para Operaciones

La debida diligencia operativa entra cuando desea hacer una investigación completa del negocio para ver realmente cómo funciona. Algunas operaciones incluyen el mercado de negocios, el modelo y sus competidores.

Debe poder identificar los patrones de los clientes, aprender cómo se realiza el marketing para el negocio, realizar un análisis de mercado, obtener comentarios de las personas, investigar para encontrar tendencias en el mercado y estudiar a los competidores.

Repercusiones de no llevar a cabo la debida diligencia

Puede terminar cometiendo un error al comprar un negocio sin hacer su debida diligencia. El dueño del negocio puede tratar de confundir los números para tratar de que usted compre. Si no hace su debida diligencia, puede terminar comprando un negocio que no está en buena posición financiera.

Comprar un negocio terrible le costará dinero porque ese negocio o producto puede hacer que gaste mucho dinero para revisarlo. También puede heredar deudas incobrables y demandas.

Conclusión

La diligencia debida es importante cuando planea comprar un negocio o producto. Puede evitar que gaste su dinero en algo que eventualmente lo dejará en una pérdida.

How To Make Your Small Business SBA-Loan Ready

duda@fcbb.com — Tue, 26 Sep 2023 03:23:18 GMT

When selling a small business, securing financing is often one of the biggest challenges for potential buyers.

When selling a small business, securing financing is often one of the biggest challenges for potential buyers. Many small business buyers turn to the Small Business Administration (SBA) loan programs to obtain the funding needed to purchase an existing business. As a small business owner preparing to sell your company, it pays to understand what you and buyers will face when seeking an SBA-backed loan. Follow these key steps to position your business for a smooth ownership transfer by leveraging SBA buyer financing:

Clean Up Financial Records

One of the first things any potential buyer and SBA lender will want to review is your business's financial statements from the past 3-5 years. This includes profit and loss statements, balance sheets, tax returns, accounts receivable/payable, and other documentation that provides insight into the company's financial health and performance.

Take time to organize financial records and ensure they are complete and accurate. Correct any accounting errors or discrepancies. Consider having your financial statements audited or reviewed by an independent accountant for large transactions. The cleaner the records, the better the chances of quickly securing SBA loan approval.

Value the Business

Lenders will require a valuation of the business based on its assets, earnings, cash flow, and liabilities. Be prepared to provide all necessary documentation to establish an accurate fair market value.

A business broker can provide a “Broker Opinion of Value” which will help align the list price with a formal appraisal during the loan underwriting process. Buyers and lenders will have confidence that the sale price reflects true market value, which is necessary for SBA loan approval.

Assess Seller Financing Options

Some buyers may request that the seller provide partial financing for the purchase. This is common with SBA loans, which require a minimum down payment from the buyer. As a seller, consider whether you are willing and able to accept a promissory note for a portion of the sale price.

If so, work with your accountant and advisor to structure the terms. Be clear on the percentage you are willing to finance, expected interest rate the payment schedule, and the collateral required. Specifying acceptable seller financing terms upfront can help facilitate the deal.

Clean Up Balance Sheet

An SBA loan application requires a prospective buyer to submit a projected forecast of revenue, expenses, and purchased vehicles and equipment. The buyer's projections must demonstrate the business's financial health and their ability to repay the loan.

As the current owner, you can help set up the buyer for SBA loan approval by "cleaning up" the company's balance sheet. Eliminate unessential assets, pay down debts and liabilities, correct overstated inventory or accounts receivable, and shore up operating capital prior to sale. This improves the outlook for the business under new ownership.

Allow Time for Due Diligence

The SBA loan process involves extensive due diligence by the lender and buyer to minimize risk before approving the substantial financing amount. As the seller, be prepared to provide the buyer and financing partners access to payroll records, facilities, books, records, and anything else requested that can impact the transaction.

Cooperating with due diligence requests and allowing sufficient time for the process to play out (currently approximately 60 days) will help avoid derailment of the sale.

Getting a new small business owner qualified for SBA financing takes substantial preparation by both the buyer and seller. As a seller, follow these key steps well in advance of listing your business for sale. This will help clear the path to a smooth ownership transfer using SBA loan programs. With proper planning, you can leverage SBA buyer financing to tap into the largest pool of qualified buyers for your small business.

Don't Scare Away Buyers: Keep Your P&L Business Only

duda@fcbb.com — Tue, 26 Sep 2023 03:20:32 GMT

When selling a business, it is crucial to provide potential buyers with an accurate profit and loss (P&L) statement that reflects the true financial performance.

When selling a business, one of the most important financial documents you will need to provide potential buyers is a profit and loss (P&L) statement. The P&L gives buyers a clear picture of the company's financial performance over time. It shows revenue, expenses, and net profit or loss for each period.

While compiling your P&L to share with potential buyers, it is crucial that you do not include any personal or discretionary expenses. Here are some key reasons why you should exclude personal expenses from a P&L statement for a business sale:

1. It provides an inaccurate financial picture. The goal of the P&L is to reflect the true financial performance of the business. If personal expenses like home insurance, rent, utilities, etc. are lumped in with legitimate business expenses, it distorts the accuracy of the operating expenses and net profit. This could cause buyers to draw incorrect conclusions about profit margins, costs, and earnings potential.

2. It complicates valuation. Experienced buyers and business brokers will recast the expenses on the P&L anyway to back out non-business expenses.

But you don't want to make them work too hard. Having personal and business expenses mixed together makes it much more difficult for buyers to separate what is relevant and value the business accurately.

3. It raises credibility concerns. Any sign that you, as the seller, are trying to manipulate or misrepresent the business's financials will set off alarm bells for buyers. Including personal costs intentionally makes it seem like you are trying to artificially inflate expenses to hide profits and reduce your tax burden. This could undermine your credibility.

4. It violates accounting standards. Keeping personal and business expenses completely separate is not just good practice; it is required by accounting rules like GAAP. Mixing the two together muddies the waters about what expenses are tied to business operations.

5. It complicates due diligence. During the buying process, the potential purchaser will conduct financial due diligence. Comingled personal and business expenses in your P&L will make it much harder for them to conduct an accurate review of the books and records. This could delay the sale timeline and ultimately kill the deal.

6. It can impact negotiations. If a buyer does notice inappropriate personal expenses lumped into the P&L, they may use this to negotiate a lower purchase price for the business. It could end up costing you big bucks in the end.

Keeping clean books and financial records is so important when selling a small business. The P&L statement provided to prospective buyers should contain only true business revenues and expenses that are essential to operations. Remove all discretionary (non-essential and personal) costs like:

- Personal vehicle costs

- Home mortgage payments

- Dining and Entertainment costs

- Personal travel

- Fitness or country club dues

Presenting a clear picture of profitability will go a long way toward building buyer confidence in your business. So be sure to scrub those P&Ls and keep your personal finances out of the business records. This will lead to a cleaner sale and help you get the maximum value for all your hard work in building your business over the years.

Passing The Torch: Rewarding Loyalty By Selling To Your Key Employees

duda@fcbb.com — Tue, 26 Sep 2023 03:17:11 GMT

Selling your business to employees can allow for continuity, inspire workers, and reward loyalty. However, employee buyouts have challenges, especially around financing.

For many business owners, selling their company to key employees might be an appealing exit option. Transferring ownership to those who have contributed to the company's development helps ensure continuity, inspire workers, and honor loyalty. Employee buyouts do, however, present some difficulties, particularly when money is required. Here are some important factors to think about when assessing the benefits and drawbacks of selling your company to employees.

Potential Advantages

- An engaged workforce. Owner-employees have a stake in the company's ongoing success. Employees are more likely to work harder and provide more creative ideas when they have a personal stake in the outcome.

- The continuation of business. The company's operations, strengths, shortcomings, and client relationships are already known to current personnel. When compared to selling to an outside buyer, this can help the transfer go more smoothly.

– Goodwill. Selling to staff members shows that you value and care about your employees efforts. It demonstrates your dedication to the legacy of the business. The surviving employees' morale and loyalty may increase as a result.

- Tax benefits. Selling to an employee stock ownership plan may allow you to postpone paying capital gains taxes (ESOP).

Potential Drawbacks

- Problems with financing. Employees might not have the money or resources necessary to buy you out. It may be complicated to put financing strategies in place.

- Diluted ownership. You might have to sell ownership gradually in order to keep the buyout within the means of the employees. Up until you totally cash out, your control is lessened.

- Difficulties in leadership. Employees might not yet possess the managerial and leadership abilities required of them. You might need to continue

serving in an advisory capacity.

- An increase in employee risk. Being an owner means that employees' means of support and retirement savings are now entwined with the company.

Financial ruin might befall employees if the business becomes unprofitable.

- Problems with value. Employees can use leverage to undervalue the business and offer lowball bids, putting the owner in a “hostage” situation.

Key Considerations

Start the process early if you're selling to employees to give yourself time for complicated financing schemes. Be open and honest about the company's activities and finances. Obtain expert appraisals, and set up the agreement so that you are fairly compensated and your employees are protected from unwarranted risk. Create a formal transition plan including ownership stakes, duties, and your role after the sale. Selling your company to employees can be advantageous for you and your personnel if done properly and in an open and honest manner. However, failing to assess the advantages and difficulties could jeopardize your legacy and the financial destiny of your employees.

Overpricing Your Business Can Hurt Your Chances Of Selling

duda@fcbb.com — Tue, 26 Sep 2023 03:14:34 GMT

Pricing a business for sale too high can deter buyers, miss the market, and appear desperate

When considering the pricing strategy for selling a business, it is important to be aware of the potential downsides associated with setting the price too high.

- Turning away potential buyers - Overpricing may deter buyers from even considering the business or making an offer. They may assume the seller is unwilling to negotiate or that the business is not accurately valued.

- Appearing desperate later - If the seller has to lower the price multiple times, it can seem like a red flag or sign of desperation to buyers.

- Losing negotiating power - Starting with an unrealistically high price leaves little room to negotiate. Buyers may make lower offers, knowing the seller will eventually accept less.

- Letting competition enter - An overpriced business stays on the market longer, allowing more competing businesses to become available to buyers.

- Wasting time and money - The costs of marketing and keeping the business running mount over an extended selling period. It also takes time away from the seller's other plans after the sale.

- Creating suspicion - Buyers may think something is fundamentally wrong with the business if the seller seems unreasonable in their pricing.

The optimal strategy is to price the business based on an objective valuation, taking into account its true worth from a buyer's perspective. Being flexible with some room for negotiation is also key. Selling quickly at a fair price is usually the seller's best move.

How To Find A Buyer For A Money Losing Business

duda@fcbb.com — Tue, 26 Sep 2023 03:12:21 GMT

Selling a barely profitable or money losing business can be a difficult undertaking. After all, why would anyone want to invest in a losing business? However, many businesses have hidden value that can make them appealing to buyers even if they are currently losing money.

In this article, I'll go through some of the hidden values that can be found in firms that are losing money. I will also discuss how to discover and showcase these values to potential purchasers.

What Exactly are Hidden Values?

Hidden values are assets or features of a company that are not readily evident. They can include items like:

Relationships with customers: A customer base can be an extremely valuable asset.
Brand Name: A well-known brand name can also be a significant asset.
Location: Even if the business is not currently profitable, a prime location can be a valuable asset.
Equipment: In some situations, a company's equipment might represent important assets.
Inventory: Ready-to-sell inventory can be beneficial to a buyer.
Intellectual Property: Patents, trademarks, copyrights, and other forms of intellectual property are examples of intellectual property.

How to Find Hidden Values

The first step in selling a losing business is to identify its hidden values. This can be accomplished by undertaking a detailed examination of the company's assets and liabilities. The market potential and competitive landscape of the company should also be considered.

Once you've identified your company's hidden assets, you must highlight them to potential buyers. This can be accomplished through marketing materials and a sales pitch. When speaking with potential purchasers, underline the importance of the company's intellectual property, client relationships, brand name, location, inventory, and equipment.

Suggestions for Selling a Losing Business

Get professional assistance when selling a money-losing firm. Selling a business is a complicated process that requires expert assistance from a business broker or other competent advisor.

Be reasonable in your expectations. Expect to receive a low price for your company, especially if it is currently losing money.

Be prepared to bargain. The buyer is likely to try to negotiate a lower price for your company. Prepare to negotiate and be open to making concessions.

Promote your company broadly. The more people who are aware of your company, the more likely it is that you will find a buyer.

Be patient. Finding a buyer for your business may take some time, especially if it is losing money. Don't give up; keep marketing your business until you find a buyer.

Conclusion

Selling a losing business can be difficult, but it is not impossible. You can boost your chances of finding a buyer and earning a fair price for your business by recognizing and emphasizing its hidden values.

Here are Some Other Suggestions for Selling a Barely Profitable or Money Losing Business:

Make sure that your finances are in order. Buyers will want to see that your company is well-managed and that you understand its financial performance. Consider creating a pro forma financial statement.

Prepare to respond to questions about why your company is losing money. Buyers will be interested in learning what caused the losses and what you did to address them.

Showcase the potential of your company. Even if your company is not lucrative now, you can show customers how it could be in the future. Highlight your company's strengths and growth possibilities.

If you follow these suggestions, you will be well on your way to selling your losing or barely profitable business and reaching your financial objectives.

Why Proof Of Funds Is Crucial In Buying A Business

duda@fcbb.com — Tue, 26 Sep 2023 02:05:42 GMT

Understanding the Seller's Perspective

Many business buyers object when required to submit Proof of Funds in order to obtain sensitive information on a business listing. "How do you expect a seller to offer financial, operational, and personnel details without knowing a buyer has the financial ability to execute a purchase?" I respond.

When purchasing a business, purchasers must produce proof of funds to demonstrate their financial capacity to execute the acquisition. Why do business sellers want proof of funds from prospective buyers? In this post, we will look at the most common reasons for this requirement and analyze why they are so crucial.

1. Confirm a buyer's financial capacity

The most obvious reason why business sellers require proof of funds is to confirm a buyer's financial ability to complete the purchase. Selling a business may be a time-consuming and often difficult process. It might take months or even years to complete a successful sale, from preparing the business for sale to promoting it to possible purchasers and completing the appropriate documentation.

Given the amount of time and effort involved, business sellers understandably want to guarantee that they are dealing with serious, financially competent purchasers who have the ability to complete the transaction. Verifying evidence of funds is an important stage in this process since it allows sellers to validate that prospective buyers have the financial means to complete the acquisition.

2. Guard against bogus offers

Business owners are concerned about the likelihood of bogus proposals. Unfortunately, there are scammers who make fake bids to buy a firm, sometimes with the objective of getting confidential information.

Business sellers might help protect themselves from fraudulent proposals by requiring evidence of cash. A genuine, legitimate buyer should have no issue giving evidence to establish their financial capabilities, however a fraudulent buyer is likely to refuse such a request.

3. Facilitate negotiations

Another reason why business sellers want proof of finances is to assist discussions. Negotiating the price of a business is a component of the sales process, and sellers want to verify that they are negotiating with serious and financially suitable purchasers.

By validating proof of money, business sellers feel more assured while negotiating with prospective buyers. If a buyer establishes their financial ability to finish the acquisition, it can help to make discussions go more smoothly and efficiently.

4. Accelerate the sales cycle

The process of selling a business can be lengthy, and business sellers want to close the sale as soon as possible. Demanding evidence of money is an efficient approach to expedite the sales process by screening out purchasers who are not financially qualified.

Once a business seller knows that a buyer has the requisite financial capacity, they can move more swiftly through the negotiation and closing stages of the transaction. As a result, the transaction can be completed more swiftly and with fewer difficulties.

5. Increase confidence and trust

Finally, company sellers want proof of cash because it improves confidence and trust in the sales process. When a buyer can produce documentation of their financial capabilities, it ensures the seller that the buyer is serious and dedicated to the transaction.

This enhanced confidence and trust can contribute to a smoother, more mutually beneficial transaction. Business sellers feel more secure pushing forward with the sale if they know they are dealing with a serious, committed buyer, and buyers can feel more confident in their capacity to complete the transaction.

In conclusion, proof of funds is an essential requirement set by business sellers when dealing with prospective buyers. By demanding proof of funds, business sellers can verify a buyer's financial capacity, protect against fraud, facilitate negotiations, speed up the sales process, and increase confidence and trust in the transaction. If you are interested in purchasing a business, be prepared to supply proof of funds as part of the sales process.

A Bad Lease Can Kill The Sale Of A Business

duda@fcbb.com — Tue, 26 Sep 2023 02:03:23 GMT

Does a lease impact the value of a business?

The answer is a resounding Yes.

Does a lease impact the value of a business?

The answer is a resounding Yes.

When you put your business on the market, potential buyers will perform due diligence on your business. One of the items requested is information on the current commercial lease your business has in place.

Leases can significantly impact the value of a business.

A good lease can enhance your business's overall value, and a bad lease can hurt the business value, frustrating the sales process and possibly killing the transaction. So, what can business owners do to avoid getting caught in the leasing trap?

Here are some important factors to consider in your lease to ensure it doesn't hurt your business value or impact the sales process.

The Length of Your Lease

The timeframe remaining on a lease can significantly impact your business's value. If the remaining term on a commercial lease is short (i.e., under five years), a risk may exist to the future operation of the business beyond the lease term.

Risks such as these often affect the value of a business.

To that end, the longer the timeframe remaining on a lease and renewal options , the better. It should come as no surprise that a longer lease increases your business's stability and value.

Exit, Exclusivity and Use Clauses

When negotiating a lease, it's prudent to include an option for getting out of the lease.

One such option is the exit clause. This clause allows you to exit your lease should a need arise without much red tape.

It's also prudent to understand exclusivity clauses.

An exclusivity agreement, also known as a lock-out agreement, is a provision within a commercial lease that prevents landlords from leasing to another tenant with the same business as you. It's a promise by the landlord that only you can engage in a particular business within the building or shopping center.

When signing the lease agreement, try to have assurance that you're the only one who can engage in your kind of business in writing. The last thing you want to see is a similar business opening nearby, stealing away your customers. This can put off potential buyers, should you ever want to sell the business.

The “use” clause may restrict the expansion of a business into new products or services. A use clause can be either a restriction on how you do business—telling you what you can't do—or a prescription, telling you what you must do. A common example is the salon which is restricted from adding nail care services or a restaurant from changing format. It is common for a “use” clause to stop buyers from purchasing a business.

Restoration Clause

One of the signs of a bad lease is a restoration clause.

A restoration clause legally obligates the lessee to restore the premises to the condition it was before the possession of the space by the tenant. This clause is often overlooked by business owners when signing the lease agreement but can prove very costly down the line should the landlord decide to exercise this right.

In cases involving hazardous materials, the estimated cost of remediation can exceed the value of the business. Potential buyers will, in most cases, steer away from companies with such leases as they are a business liability.

Transferring Your Lease

At some point in the future, you may want to sell your business.

It's important to examine the lease to ensure no clauses restrict your right to transfer the lease to a new owner.

One way is to discuss with the landlord before signing the lease agreement about the option to transfer the lease. While the landlord cannot prevent you from selling the business, they could add clauses that could end up discouraging the next tenant.

The Recapture Clause

Every lease contains an assignment clause, which determines when and how a lessee may assign a leasehold.

In most cases, a landlord will want assignments to be subject to their approval, so they often invoke a recapture clause if an assignment is requested.

A recapture clause is a provision that grants a landlord the right to terminate an entire lease or a portion of it. Trying to sell your business may trigger a landlord's right to recapture the property. Bad news for both the seller and the buyer!

For instance, if you (the seller) were paying rent of only $15 per square foot but the market rate has increased to $20. The potential buyer would expect to continue paying rent at the same rate specified on the lease.

However, the landlord may exercise their recapture rights and terminate the contract in order to charge the new tenant at the prevailing market rate. This may discourage the new buyer and probably terminate the sales process.

The solution? Remove the recapture.

When negotiating the lease, make sure there's no landlord right to recapture. Or, at the very least, limit their right to recapture.

Wrapping Up

Potential buyers will look at all aspects of your business, positive and negative, to determine whether it's a worthy investment. One area they will look into is the current commercial lease.

It's crucial to ensure you understand every section and clause in the lease, as some overlooked clauses can prove expensive down the line and even put buyers off. It is always wise to engage legal counsel and/or a Commercial Real Estate professional when negotiating contracts.

Seller Discretionary Earnings (SDE) Is The Key To Increasing The Value Of A Business

duda@fcbb.com — Tue, 26 Sep 2023 02:01:04 GMT

Many buyers will consider SDE when looking to buy a business as a common way to compare the value of two companies

Profitability is a key measurement of success, and there are several ways to determine whether or not a business is meeting planned goals. Seller Discretionary Earnings (SDE) is a primary profit measurement for small businesses — yet many owners overlook the key metric.

SDE refers to the total financial benefit that a single, full-time business owner gains from a business on an annual basis. Also known as adjusted cash flow or recast earnings, SDE is the most common measure of cash flow that highlights the value of a small business.

As a common way to compare the value of two companies, many buyers will consider SDE when looking to buy a business . So, what does SDE mean and why should small business owners focus on this metric?

The Main Purpose of an SDE

SDE is a common valuation metric for small businesses and lays the foundation for other valuation metrics. Most small business buyers and many lending institutions use SDE to make purchase and financial decisions.

Understanding SDE

SDE allows interested buyers to compare two businesses, providing common ground for assessment regardless of industry. It also offers a rough estimate of cash flow that can be used to pay back interest, cover debt or invest in necessary equipment after acquisition.

It’s important to note that SDE is not a measurement of profit and loss. Nor does SDE refer to the income that is reported during tax season. Instead, the term refers to the total benefit received by the owner of the company, regardless of how the finances are later utilized.

Buyers looking to purchase a business look at SDE to get an indication of the current earnings (and potential growth) of businesses on the market. Serving more than a single purpose, SDE can be used as an income-based and market-based valuation method.

SDE Calculation

There is a fairly straightforward calculation to use SDE as a valuation metric and typically involves the following considerations.

● Pre-tax net income

● Owner’s compensation

● Interest

● Depreciation

● Amortization

● Discretionary expenses

● Non-operating and non-recurring expenses

Benefits of a SDE Calculation

As an introduction to the value of a business, there are several reasons small businesses should focus on a SDE calculation.

Consider the following benefits of SDE.

● A commonly used method that is widely understood (and accepted) by buyers, sellers, and brokers

● Simple to calculate with a reduced risk of error, allowing for convenient comparisons

● Removes non-operating variables and non-cash expenses that will be irrelevant after an acquisition is made

While SDE is considered a rule of thumb for valuation measurement, a deeper dive into business financials is needed for enhanced accuracy.

How to Manage an SDE

As a small business owner wanting to sell, you need to consider your SDE and how it compares to other businesses. Responsibility for the discretionary cash flow falls on the shoulders of management.

As your SDE increases, so does the value of your business. As a business owner, there are two main ways to increase SDE.

Increase Sales

It may seem obvious, but one of the most effective ways to increase SDE is by boosting the bottom line. Increasing sales or prices directly reflect in an increase in SDE.

Another way to increase sales involves creating (and selling) new products and services that meet demand. If you choose this option, then make sure to pursue low-risk ventures to avoid the loss of cash flow.

Decrease Expenses

Decreasing expenses can increase your profit margin and has a direct impact on the SDE. Some of the most effective ways to lower financial expenditures include insurance policies, avoiding unnecessary debt, downsizing office space, and automating processes.

While decreasing expenses is a low-risk strategy for increasing SDE, it can be difficult if there aren’t any notable expenses to cut back.

An Accurate Representation of Your Business Value

If you can afford to sell your business and looking to put it on the market, then you need to make sure that your financials are presentable.

SDE is a measurement that will be considered along with other factors such as customer concentration, employee skill level, growth rates, systems, working capital requirements, and more. Even with SDE being used as an introductory measurement, additional methods should be focused on for the accuracy of valuation and an expert broker can help with the process.

Can You Afford To Sell Your Business?

duda@fcbb.com — Tue, 26 Sep 2023 01:57:23 GMT

Considerations before selling a business

CAN YOU AFFORD TO SELL YOUR BUSINESS?

Running a business is hard work and there’s a lot of sweat equity that goes into making a business successful. When the time comes to sell your business , there are many considerations to keep in mind, including making sure that it’s a smart financial decision.

You will not be able to pay for a fancy dinner and write it off as a business expense or book a vacation to Mexico on the business account. These lifestyle expenses will no longer be available if you sell your business - and this is just one consideration to keep in mind.

Let’s explore a few pros and cons of selling your business, as well as key questions to ask yourself before you make the decision.

Pros of Selling Your Business

People choose to sell their business for different reasons, whether it be retirement, relocation, or burnout. Regardless of the reason, you can benefit from the following advantages.

● Earn a high profit if the market trends and economic conditions are favorable

● Free time to pursue other projects and endeavors

● Profit can be spent to pay personal debts or fund time off

● Provide a way out of financial difficulties

Cons of Selling Your Business

If you plan to sell your business, then you may encounter a few challenges and difficulties. Before you make the decision, consider these disadvantages.

● Possible loss of a lucrative revenue stream if the business is profitable

● No more company expenses to claim

● Business sale negotiations can be time-consuming

● Tax impact must be considered

● A possible non-compete could limit future endeavors

Considerations Before Selling Your Business

Selling a business involves closing one chapter to begin another, and there are various financial, legal, and ethical considerations to keep in mind, such as the following.

Don’t Neglect Due Diligence

Conduct due diligence as needed. Due diligence is a reasonable and fair process that involves investigating and reviewing the details of the transaction. Be open to a possible buyer wanting to assess your business and mitigate risk.

There may be instances when certain risks or liabilities are brought to light, and these should be discussed in a mature and productive manner to make sure all parties leave the agreement satisfied.

Get a Realistic Value of Your Business

Is your business worth selling? Obtaining a realistic and current estimate of your business value is one of the first steps when determining whether you can afford to sell your business or not.

It’s worth building a long-term relationship with a business broker that offers insight on the value of your business, pinpointing whether you can afford to sell your business. The process goes beyond financial formulas and involves tallying the value of assets, analyzing the revenue, and studying market trends.

Hire the Help of Professional Business Brokers

Speaking of building a relationship with a broker, hiring expert buyer and seller services gives you the confidence to make decisions on whether you can afford to sell your business or not.

Licensed business brokers offer experience and focus, expert negotiating skills and access to a network of buyers. Rather than spending time and effort finding and negotiating a deal, a broker does the heavy lifting for you.

Consider Your Future Budget

Running a business is a form of income. Selling a business removes this income, so it’s important to consider your future income and how you will budget your lifestyle. If you plan to pursue a different business idea, then you need to have enough income to cover your expenses until it turns a profit. If you plan to retire, then you need to have enough assets to sustain your lifestyle, whether it be IRAs, annuities or investment savings.

In many instances, whether or not you can afford to sell your business will depend on the business value and how much profit the sale will turn out to be net of taxes.

Discuss the Transition Phase

There are different ways to sell a business and your decision could impact the affordability of the deal. For example, you need to consider the key employees and communities in which your business operates.

When planning the sale of a business and the affordability of the deal, consider phasing the transition, communicating strategy, and defining which assets are included in the deal.

Selling Your Business? Get in Touch!

Deciding to sell your business can be an intimidating process, especially if you’re considering retirement. Larry Goldstein of First Choice Business Brokers Las Vegas has the experience and understanding needed to assess the value of your business to make a confident decision.

Contact me at (702) 546-8844 or email LarryG@fcbb.com to find out more.

How Much Should A Small Business Owner Pay Themselves?

duda@fcbb.com — Tue, 26 Sep 2023 01:53:45 GMT

Many business owners overlook the importance of paying themselves

How Much Should a Small Business Owner Pay Themselves?

Running a small business presents a lot of financial challenges.

As an entrepreneur, you'll likely face many financial obligations, including paying bills, planning monthly budgets, making investment decisions, etc. One area, however, that many business owners overlook is paying themselves.

Did you know that 51% of small business owners pay themselves a salary? Or that 15% of entrepreneurs require a second job to make ends meet?

Experts recommend that small business owners pay themselves—either a monthly salary or an owner's draw. But how much should you pay yourself?

It can be a tough number to pin down—too much, and you'll compromise your company's financial health, too little, and you'll struggle to make ends meet.

If you're having difficulty determining how much to pay yourself, keep reading. This article will expound on the factors to consider when paying yourself and give you insights into when not to pay yourself.

Why It Matters to Pay Yourself as a Small Business Owner

As a small business owner, paying yourself might seem like a bad idea, especially if your business isn't performing well financially.

But experts recommend paying yourself first.

Here are the two key reasons why compensating yourself is critical for your company.

1. For Accurate Bookkeeping

Employee/owner salary represents a huge, deductible expense in a company's financial statement. So, if you're not allocating funds for your salary, your books won't accurately represent your company's financial health.

2. For Tax Benefits

Tax relief is another reason why paying yourself is crucial.

Depending on the structure of your company, you may qualify for a tax break if your salary is paid out of the company's net profit.

Tip: You should only pay yourself out of profits—not your revenue.

When Can You Start Paying Yourself?

When your business is not doing well financially, the business owner's salary should always be the last priority on the budget.

But as your business stabilizes, paying yourself becomes more feasible. To determine whether you're ready to start paying yourself, ask yourself these questions.

How is my business performing financially?
Is the revenue collected sufficient to meet the current financial obligations—i.e., pay vendors, bills, etc.?
Do I have steady projected revenue?

If you can answer 'Yes' to the last two questions, you can afford to pay yourself.

If not, you might want to hold on paying yourself until later when your business is performing well.

Ways to Pay Yourself

Business owners can get paid through a salary or an owner's draw.

1. Salary

With the salary method, you regularly receive a set salary just like any other employee.

Federal and state personal income taxes are automatically deducted from your salary. This is legally required for businesses that are structured as C-Corporation, S-Corporation, or an LLC taxed as a corporation.

On the bright side, earning a monthly salary provides proof of income, which can come in handy when applying for a mortgage or anything else-credit-related.

2. The Draw Method

Also known as owner's draw, this method is when a business owner takes money out of business for personal use.

It's the voluntary withdrawal of money from a business by the business owner to pay themselves. Assuming there are no co-owners, you're free to write yourself a check of whatever amount you deem necessary, based on your profit.

Draws can be a fixed amount paid regularly or can be taken on as situations demand. This payment method is ideal for sole proprietorships and partnerships. On the downside, the draw method requires more personal tax planning.

How to Decide How Much to Pay Yourself

Consider these factors when determining how much to pay yourself.

1. Business Structure

Your business structure determines whether you can take a monthly salary on an owner's draw. Do you run an LLC, a C-Corp, S-Corp, partnership, or a sole proprietorship?

Typically, if your business is a corporation or an LLC taxed as a corporation, you can take a salary and benefit from tax breaks. But if you run a sole proprietorship, partnership, or an LLC, you can take an owner's draw.

2. Business Stage

Many business owners don't take money in the startup and growth stages of a business.

But as soon as your business starts generating positive cash flows or is stable financially, consider paying yourself a salary. Doing so will also give you accurate insights into your business's operating expenses and financial health.

3. Forecasted Business Conditions

Before paying yourself, it's important to prepare a cash flow statement .

Do you have pending projects that will generate more revenue for the business in the future? What are your demand forecasts for the next few months?

If there are positive prospects for revenue generation in the near future, paying yourself becomes feasible. But if future demand and cash flows remain uncertain, paying yourself might strain your company's finances, forcing you to cut operational expenses, which isn't good for business.

How Much Salary Should You Pay Yourself?

Now that you know the options for paying yourself and the factors to consider before paying yourself, you face the big question: How much?

Or simply put, "what percentage of the profit should go towards paying myself.?"

The truth is, there is no one-size-fits-all formula for calculating what the business owner should receive as salary.

Committing to percentage-based formulas without considering the unique business circumstances can cause financial imbalances. Rather than paying yourself based on rigid rules, think of a holistic approach that addresses all your business needs.

For instance, the average American entrepreneur earns a median salary of $68,000 . Rather than taking a percentage of this amount as your salary, you should first ensure all the business financial obligations are met.

If you're taking an owner's draw, you should do so after deducting all the business expenses, including paying bills, vendors, employees, debts, etc. This ensures paying yourself will not cripple your business in any way.

In Summary

There are many advantages to running a business.

However, a major decision is how much to pay yourself as a small business owner. Compensating yourself is important for your business because it helps you maintain accurate financial records and gives you some tax advantages.

But it can be hard to determine how much funds to allocate to your salary. Experts recommend you adopt a holistic approach that addresses all your business needs before taking your cut from the net profit.

How To Finance The Purchase Of A Business

duda@fcbb.com — Tue, 26 Sep 2023 01:50:13 GMT

Buying an existing business rather than starting from scratch has several good reasons.

Many entrepreneurs are surprised to learn only about 50% of all startup businesses make it past their 5th birthday . Buying an existing business rather than starting from scratch has several benefits.

Buying an existing business provides Day 1 cash flow, removing the challenge of building a customer base. Furthermore, buying an established business often comes with trained employees, equipment, established vendor relationships and a well-known brand.

Purchasing a business is not without challenges. Financing the purchase may pose a problem to many buyers. What options are available to finance a purchase of a business? Where do you start? Keep reading to find out.

If you have identified a viable business and are looking forward to acquiring it, here are the various ways to finance the purchase.

1. Personal savings

The first and the most accessible source of financing your business purchase is using your own funds. Plus, using your savings eliminates the red tape and complex financing procedures associated with loan applications.

Personal savings are the easiest and cheapest method of financing your business purchase. If you have the money, consult your financial adviser before channeling all of it into a business acquisition. You can also consider borrowing from your family and friends if they're in a position to help you with the purchase.

2. Bank Loan

The most common form of financing is a bank loan.

However, commercial bank loans can be hard to secure. Most financial institutions require substantial collateral, an excellent credit score, and a solid track record of profits. Plus, banks prefer to lend to reputable individuals or companies with a track record of profit and stability.

Established banks offer loans at great rates after taking you through lengthy processes to check if you meet their set qualifications.

One advantage of using bank financing is that you can keep full control of the company you're purchasing. With some funding options, you'll be selling the company stock to investors to get immediate funding, which means you lose total control of the business.

3. Leveraged Buyout(LBO)

A leveraged buyout is typical in larger transactions.

With LBO, the acquired company's assets are used as collateral to secure a loan and pay the acquisition costs.

In principle, the financial arrangement is quite simple. Some of the business's assets are leveraged, such as inventory, property, and equipment, to help finance the acquisition. A leveraged buyout has its fair share of pros and cons. The key advantage of LBO is maximized return and minimum equity financing required.

On the downside, the business is highly leveraged with a high debt load. This gives owners little room to maneuver should they need more funding.

4. SBA Loan

Small Business Administration loans are loans advanced by the US government through the Small Business Administration.

The loan is issued by lenders such as banks with stringent lending requirements but with flexible, low-interest rates. These loans are advanced to individuals who need up to $5 million financing to acquire a business.

Acquiring an SBA loan is easier than a bank loan. These loans usually have competitive rates and favorable terms.

Note that the SBA-backed loans do not finance acquisitions 100% but can finance up to 90% of the value. In some cases, they can cover up to 95% of the acquisition costs. The buyer contributes the remaining funds.

The SBA has set minimum qualification guidelines for these loans. To qualify for an SBA loan, potential borrowers must:

Have a minimum credit score of at least 650
Be able to pay a 10% down payment
Provide three years of tax information
Provide personal financial information
Prove they have experience in the target business's industry

However, lenders have the freedom to add to these guidelines as they see fit.

5. Seller Financing

Selling a business is not an easy task.

Finding a buyer with cash to buy the business quickly is also not easy.

Typically, a buyer will struggle to get money to finance the purchase, while the seller will struggle to find a cash buyer.

Seller financing can save the day. With this approach, the seller offers the buyer a loan to cover part of the cost. The buyer makes a downpayment for the purchase, and then the loan from the seller covers the remaining amount and possible interest.

Seller financing is a great way to finance the purchase of a business because it helps complete the purchase without draining personal finances.

Sellers often offer better repayment terms than lenders and can finance up to 60% of the business value .

6. Debt Assumption

You can use debt assumption to finance a portion of a business acquisition.

By assuming the acquired company's debt, the buying company deducts the assumed liabilities from the agreed sales price before issuing payment. The process involves the creditor, the initial debtor, and the new debtor who wishes to assume the debt due.

Two concurrent transactions occur, canceling the original debtor's obligation and creating a new debt contract. The new contract is between the buyer, the assumer, and the creditor.

Conclusion

In today's competitive business landscape, many entrepreneurs prefer to purchase an existing business rather than going through the challenges of starting one from scratch.

Buying an existing business comes with many advantages including Day 1 cash flow, inventory, trained employees, existing vendor relationships and a well known brand.

Many financing options exist that can help you purchase a business. From SBA loans to bank loans, leveraged buyouts, and seller financing, many options exist when it comes to business purchase financing. Your choice of the best financing option will depend on your needs and the loan qualification requirements.

I hope this post will give you valuable insights into how to secure financing to purchase a business.

Using Financial Ratios To Increase The Value Of Your Business

duda@fcbb.com — Tue, 26 Sep 2023 01:43:43 GMT

Financial ratios give you visibility into your business’s performance and help you identify areas that need improvement

Using Financial Ratios to Increase the Value of Your Business

Numbers tell a story and most business buyers spend a great deal of time analyzing the financials of an acquisition target.

Do you actively “write” the financial story of your business or do you put your CPA or bookkeeper’s work in a drawer without in depth review?

If you're an entrepreneur or business owner, you need to know how your company is performing for several reasons.

First, failure to know the story behind the numbers can prove very costly down the line. Keep in mind that every cent you inject into your business ought to deliver returns that help you meet business expenses, pay salaries, and earn profits.

But how will you ensure that every dollar brings you a profit?

The ideal way is to analyze financial ratios to understand your business liquidity, operational efficiency, and productivity. Ratio Analysis is the fundamental way of understanding the financial state of your business.

The process starts by pulling data from your financial statements to compute various financial ratios. With that in mind, here are some of the financial ratios used in assessing business performance and navigating to success.

1. Net Profit Margin

To better understand the net profit margin, you first need to understand the net income.

Net income is the amount that remains after deducting business expenses. As business owners, you should check your net profit margin (Net Income / Revenue) because it determines your financial health. Understanding net profits margins can give you insights into how every dollar invested in your business translates into profit.

The Net Profit Margin value is arrived at using the formula; Net Income ÷ Revenue.

Keeping track of the rise and fall in net profit margins helps a company understand the viability of the current business practices.

For example, a company should check if enough profit is generated from the sales and whether the costs are contained. As a business owner, you must ensure that the net profit margin rises faster than operational and overhead costs.

2. Working Capital

Working capital is the ability of your business to pay liabilities using the current assets.

The working capital value is arrived at using the formula; Current Assets ÷ Current Liabilities.

The ratio depicts financial health and can be used to assess the ability of a company to pay its debts. For example, if a company has a current asset value of $1 million and a current liability value of $500,000, the working capital ratio would be 2:1.

Note that two companies might have the same working capital ratio, but if one has more cash, it would pay its debts quickly and expand the business.

2. Inventory Turnover

The inventory turnover ratio measures the rate at which inventory is used, sold, or replaced.

In this case, inventory may include all goods (raw or finished) that a business has in stock with the intent to sell. This ratio is calculated by dividing the cost of goods by the average inventory for the same period. A higher ratio translates to strong sales and a lower one to weak sales.

Inventory Turnover = Cost of Goods ÷ Average inventory

This ratio helps to compute the duration needed to sell goods at hand. The inventory turnover tells how fast the goods sell and can help the business owner understand the market demand. And understanding your current demand can help you plan for the future.

3. Receivables Turnover

How easily can your business liquidate its assets?

The receivables turnover ratio quantifies the effectiveness of a business in collecting money from its debtors. For instance, if a company is efficient in debt collection, it'll have a high receivable turnover ratio.

Receivables Turnover = Net Credit Sales ÷ Average Accounts Receivable

Tracking the business receivable turnover ratio helps assess the impact of advancing goods to clients on credit, and a measure of the business's productivity.

If your receivable turnover ratio is low, you should take appropriate actions to improve debt collection. Effective debt collection contributes to the success of a business venture.

How to Use Financial Ratios to Make Your Business More Profitable?

The above ratios can help identify and quantify business strengths and weaknesses. Understanding your company's strengths and weaknesses can help you make adjustments that will steer it down a profitable path.

Here are some tips on how to make your company more profitable with financial ratios.

1. Check on Relevant Ratios

Financial ratios are different, with each offering different business insight.

Depending on your business type, you should identify the ratios that impact your business and analyze them to ensure everything is working as it should.

For instance, if your business keeps raw or finished goods, you should analyze inventory turnover ratios to assess its efficiency in managing stock.

2. Regularly Monitor Results

After analyzing the relevant ratios, compare the results periodically to see the changes in business performance. If you realize a sharp rise in profits and then a decline, try to identify what might have changed and the necessary cause of action.

3. Use Ratios to Drive Strategy

The insights you get from your financial ratios should help you shape the direction of your business. Ask yourself:

Am I managing stock effectively?
What do the ratios tell me about debt management?
Is my business headed in the right direction in terms of profitability?

Make sure to use the insights from the ratios above to devise a working business strategy.

For instance, if you realize that you have a problem with receivables turnover, adopt better debt collection strategies. If your sales ratios show a backward trend, you may have to dig deeper into the causes and devise strategies to boost sales.

Wrapping Up

As a business owner, you must aim to make your business profitable at all times.

Financial ratios give you visibility into your business’s performance and help you identify areas that need improvement.

Many things change in the business arena, some of which are imperceptible to the naked eye. Financial ratios offer a great way of evaluating and assessing business performance by comparing various components in financial statements. Analyzing the information revealed by the ratios and evaluating changes over time help make changes that enhance business vitality.

Which Types Of Businesses Are Likely To Fail – And Which Will Succeed?

duda@fcbb.com — Tue, 26 Sep 2023 01:38:32 GMT

There are some businesses that appear almost doomed to fail from the beginning

Small businesses have a major contribution to the economy and individual prosperity. Some people leave jobs to launch their own business, to enjoy the many benefits that come with starting one, such as personal freedom and fulfillment of seeing your business succeed. Other people look for investment opportunities: businesses they can buy and oversee for a superior return on investment.

However, while a successful business can become very rewarding, it is important to keep in mind that not all businesses may prosper the way you expect them to. Business is not simple, and it takes determination to persevere when the going gets tough.

No matter how hard you try, however, there are some businesses that appear almost doomed to fail from the beginning – not due to mismanagement, but rather, as a result of the economy and inferior business concepts. In this article, a look at the types of businesses that might fail, and which are likely to succeed.

Business Failure and Survival Rates

According to data from the U.S. Bureau of Labor Statistics , one fifth of small businesses are set to fail within their first year. In a businesses’ fifth year, about 50% have failed, and towards their tenth year, only a third of businesses are left.

Some of the major examples of businesses that have a high

failure percentage are: information, mining, quarrying, oil, and gas industries. In the information industry 24.7% of new businesses failed within the first year in 2019, while the mining, quarrying, oil, and gas industry, the failure percentage rate was 23.8%.

Information businesses include publishing, software, film/video, audio/music, broadcasting, Internet publishing and data processing.

If you’re looking at business in a field that is new to you, here are some industries to be wary of.

Technology Consulting Business

Because of the numerous technological advancements being made from year to year, an information technology business would be many people’s first idea when thinking about starting a business.

However, despite the emerging technologies of today, IT consulting businesses have one of the highest failure rates. The reason for this may be because of the large number of big players in this niche. A new business will need an aggressive promotion and advertisement campaign to get seen, and will likely have to operate at lower prices to attract customers.

Independent Restaurants

If you don’t have a passion for cooking and service, restaurants may be a tough one to sustain. Independent restaurants are one of the businesses that suffer a higher than average failure rate, estimated to be about 60% over the last five years .

This is because restaurants have a lot of costs, and having a restaurant for a business means that there are many daily tasks to take care of: the continuous supply of food, the workers, the cooks, and just about everything else. Handling the inventory is already a big task in and of itself.

Aside from that, another aspect to focus on is establishing a brand for your restaurant. For a new unknown restaurant, that is one goal that must be attained – and it’s not always an easy road to get there.

The restaurant industry is not for the weak. Depending on the owner’s skills and experience, the business could either thrive or it could fail.

Retail Stores

While there are plenty of retail stores that make it big, there are also some that fail to keep up with the success of others. Retail stores may also be a challenge because of the large number of competitors around.

Apparel, shoes, goods, and grocery stores have a higher percentage of failure rate as opposed to other average small businesses. Physical stores also require a higher cost due to expenses such as rent, particularly if the location is in a highly desirable area.

Plumbing, Heating, Air Conditioning Services

Another business group that is highly likely to fail is plumbing, heating, and air conditioning services. Despite these business owners possessing a very large skill set, data still show that it is one of the highest business services with a high failure rate.

One reason for this is that while owners of these businesses have great skills, they often lack the capabilities of great management. Of course, just like any other business, technical skills aren’t always enough – good marketing and sales, financial management, and customer service also play a significant role.

Direct Sales Business

Businesses that rely on the business owner to directly sell services to the consumer also have a higher-than-average failure rate in the small business realm. It is worth noting that these types of businesses typically require just a small amount in start-up capital.

They often promise consumers or businesses quick results. However, they frequently attract business owners that have no patience in successfully starting a new business. Direct sales rely heavily on the owner’s determination and business acumen for success. Not a lot of business owners have these qualities, though, which leads the business to its failure.

More Successful Sectors

When it comes to new businesses, there are certain industries where a start-up is less likely to fail .

Statistics from 2019 show that businesses in the agriculture, forestry, and hunting industries have a 12.0% failure rate in the first year.

Following this is the real estate and rental industry at 14.7%. The retail trade industry also performs great in business with a failure percentage of only 15.3%. Arts, entertainment, and recreation industries as well accumulate a small failure rate of about 17.4%. Lastly, the manufacturing industry has only a 17.8% failure rate, meaning these businesses are likely to survive for a longer period.

The Hard Truth in Running a Business

Not a lot of people have what it takes to run a business. The truth is, depending on the management of a business and the business concept itself, it can either fail or thrive. While there are businesses in certain fields that have tendencies to fail, there are also the same businesses in that same exact field that enjoy great success.

There is always a set of abilities that contributes to the reason why businesses skyrocket. It is not all about trying, but trying efficiently and effectively is a must. Some of the reasons why businesses fail is lack of preparation, insufficient funding, or not creating a sellable business.

While the type of business also plays a big role in its success or failure, what indeed makes an impact is the management skill set of the owner.

How To Determine A Reasonable Price For Your Business

duda@fcbb.com — Tue, 26 Sep 2023 01:34:47 GMT

Getting an accurate understanding of the value of your business is a critical step that could help determine your next move

How to Determine a Reasonable Price for Your Business

Thinking of selling your business?

Knowing what your business is worth ahead of time could give you a chance to increase its value and better prepare for the exit.

Note that your business is worth only what someone is willing to pay for it.

Having an inflated price in your head can seriously delay or kill your exit strategy. But, knowing the things buyers consider when determining a reasonable price for a business can help you avoid nasty surprises when you put your business on the market.

Here are six factors to consider when pricing your business. Keep in mind that these are just guidelines, and the best way to get an accurate business valuation is to seek the help of a professional appraiser or intermediary such as a Business Broker.

1. Earning History

Earnings are always a top concern for most buyers.

A great place to start is your business's Earnings Before Interest and Tax (EBIT) . Any buyer will want to know this figure to determine your company's earning potential.

Buyers will also be interested in seeing how your business has been performing over the years, not just the current earnings.

Increased growth in revenue and profits over the past few years will affect the valuation positively. Conversely, declining revenue and profit trends could negatively affect the price. Your financial documents, such as balance sheets and P&L statements, can give you valuable insights into your company's financial history.

2. Concentration

Client concentration is a critical factor potential buyers will consider when determining the price to pay for your business. Savvy buyers typically use client concentration to project a business's future sales and performance.

For example, if your business is doing well, but 75% of your monthly sales come from 3 clients, this would negatively impact your business valuation. That's because the loss of one client could cause a significant dip in revenue and profits.

On the other hand, a diverse client base could impact your business valuation positively.

Similarly, product concentration can be a major valuation factor. If you only deal in one product, your business will not sell as high as a company that sells diverse products and appeals to diverse markets.

3. Size of Your Business

The size of your company is another factor to consider when valuing your business.

Buyers assume larger companies have fewer risks compared to smaller companies. For instance, a company that has managed to achieve $5 million or more in gross revenue while maintaining a benchmark is viewed as a better opportunity than a company of lesser size.

Plus, having more employees and revenue may be seen as a sign of stability. The buyer may interpret that the business has survived economic downturns and possesses the people and technology needed to maintain growth.

4. Growth Prospects

It's common for buyers and investors to project a company's future growth based on current and historical data. Your company's growth potential will depend on the current health of your business and the industry as a whole.

There are some business models with higher growth potential than others, which could increase the value of the business. But if you deal in industries that may soon become obsolete due to technological advances, don't expect the price to be competitive.

5. Market Demand

If what you do is high in demand, your business will fetch a high price.

Conversely, if your products or services are not selling, and you find yourself igniting price wars to win customers, you need to lower expectations if you hope to sell your business.

The industry in which a company operates will also be important in determining the valuation. If a company operates in a "hot industry," like Artificial Intelligence, it will definitely achieve a higher valuation than a company in a less-demanding industry.

6. Other "Intangibles" in the Business

The value of your business will also be affected by other "intangible" factors that are difficult to quantify. This may include:

Location – is it located favorably?
Competitiveness – is it favorably placed against competitors?
Brand image – What is the business reputation in the market?
Trademarks – Does it have intellectual property of great value?
Workforce – Is the management team and employees strong?
Automation – Does the company still rely on manual processes?
Marketing – How marketable is the business

You'll also want to consider the cost of capital since it has a direct correlation to the ROI buyers can achieve. Potential buyers consider paying less if capital is difficult to secure.

Summing Up

If you're considering selling your business, getting an accurate understanding of the value of your business is a critical step that could help determine your next move.

By taking these factors into account, you'll get a rough estimate of what potential clients will be willing to pay for your business.

Is Your Business Prepared For A Disaster?

duda@fcbb.com — Tue, 26 Sep 2023 01:29:36 GMT

Adverse weather or a cyber breach can affect any business

Is Your Business Prepared for a Disaster?

If the last two years have taught us anything, it’s that things can happen out of nowhere. From extreme weather events like a tornado and flash flood to cyberattacks to a global pandemic, nothing can be ruled out. For small businesses, this means there should be a greater emphasis on disaster preparedness and contingency planning.

What is a contingency plan?

A contingency plan is a set of protocols and tactics that businesses can use to survive disasters. These negative events could be anything from the death of a partner or key employee to natural disasters, a pandemic, or cyberattacks.

Businesses that have contingency plans have disaster preparedness that allows them to minimize or mitigate the impacts of negative events.

With a contingency plan, everyone in the business knows what they have to do in the likelihood of such an event. Instead of panicking, team members rely on an action plan to save critical assets.

This will allow them to focus on important tasks while avoiding duplication. Individuals would also know who’s in charge of what area, which will encourage better coordination and faster and more effective interventions.

How to prepare your business for disasters

Knowing that no business is immune to destabilizing events, disaster preparedness should be a strategic objective of all small businesses. You can follow these steps to prepare your small business for negative events.

1. Imagine scenarios

A pandemic would bring all physical retail transactions to a halt and disrupt supply chains. If it’s a natural disaster, you’re looking at delayed shipments and price rises. A cyber breach means you might lose all information stored online.

These realistic assessments will tell you what can go wrong. One way to do this is by looking at all the negative impacts of the last two decades with a particular focus on your industry.

2. Seek the service of experts

Disaster preparedness requires the service of those with specialty expertise. You don’t have to go too far to find them. These are your accountants, bankers, and attorneys who would have seen or studied industry-wide downturns.

You can also ask your old employees or consultants who specialize in your industry. These conversations will get you specific inputs on how to prepare various functions of your business.

3. Rehearse situations

Now that you know what can possibly go wrong, it would be of immense help if you can rehearse those scenarios. What if your office locality gets flooded? How will you access your digital information if all the systems are down?

Will these be short-term or long-term disruptions? Who would be in charge of managing those situations? These will help you create an action plan with specific tactics.

4. Think of business-specific scenarios

The next step is to come up with situations that would specifically affect your industry, locality, or economy. How would you handle the situation if your major supplier can’t deliver the goods for a month? What if your biggest client or customer can’t buy from you anymore?

Are there growing customer expectations around your industry regarding sourcing, packaging, or something else? These scenarios will help you create specific action plans.

5. Assign responsibilities

Whether it’s cyber security or fire drills, you will have to select key individuals to be in charge. Once you select them, it’s important to let them know what they have to do. Importantly, you will have to train your team members to prepare for and deal with negative events.

Who’s in charge of saving vital data? Who will coordinate with suppliers or retailers? Who will be the first point of contact for emergency responders?

6. Communicate the plan

A plan is useless unless everyone in the team knows about it. Once you develop action plans for various scenarios, you should diligently share those with your employees. You should ensure that it’s easy to understand and supported by necessary visuals or illustrations.

Small businesses should also share their plans with their business associates, vendors, retailers, accountants, attorneys, bankers, and consultants.

In short

Considering the hectic schedule of most small business owners, it’s not surprising that the vast majority don’t prioritize disaster preparedness. That’s primarily because most businesses think that an adverse weather event or a cyber breach are things that only happen to others. But as we have learned, they can affect anyone, and disaster preparedness is key to managing those challenges.

Should You Buy A Business Or Start A Business?

duda@fcbb.com — Tue, 26 Sep 2023 01:27:01 GMT

Acquisition Entrepreneurship offers immediate cash flow with less risk

Should You Buy a Business or Start a Business?

When most people think about starting a business, many people go the traditional route of beginning from scratch. While there's success to be had in building a company from the ground up, there are some distinct disadvantages to doing so.

If you want to own a business but don't want to deal with the uphill march of starting from the ground up, buying an existing business may be a better fit. In fact, one study found that entrepreneurs who acquire a business are as twice as likely to experience growth above their industry average.

Here are some things to consider when deciding your path forward to business ownership.

Factors driving business acquisition

Business decisions should never be made with tunnel vision. It’s crucial to consider the economic landscape when deciding your next move. In the age of a global pandemic, labor shortages and inflation, acquisitions are on the rise.

Here are some of the top factors driving the increase in business acquisitions.

The pandemic

The COVID-19 pandemic has changed the way we do business, including how one ventures into the world of entrepreneurship. Two of the biggest motivators for business acquisitions are acquiring new talent and technology. By taking over an existing business, you’re able to do more with less.

While the pandemic is slowly but surely coming to an end, we can expect its effects to last for years to come.

Labor shortage

The persistent labor shortage is also a driving factor behind business acquisitions. With competition at an all-time high, it’s harder than ever for businesses, especially new businesses, to build and maintain a workforce.

Inheriting employees who are familiar with all aspects of the business is a huge perk of acquisition.

It’s less arduous

Purchasing a business that's already in operation means that you're taking over a company that's already generating cash flow and profit. Even better is the fact that you'll inherit an established reputation and customer base.

Buying a business may also open the doors to all sorts of valuable legal rights, including copyrights and patents, which can prove to be quite profitable.

Be aware of the expenses

On the flipside, buying a business typically has higher upfront costs. But many find that it's much easier to get financing to acquire an existing business than starting one from scratch. Lenders and investors feel more comfortable dealing with an existing business with a proven track record.

How to buy the perfect business

As with anything in the business world, nothing is certain. Buying an existing business doesn't guarantee short and long-term success. If you're not careful in your decision making, you may be stuck dealing with uncooperative employees, obsolete inventory, and outdated distribution strategies.

With business acquisitions more popular than ever before, entrepreneurs around the globe are seeking the perfect business. But, the right business for you isn’t going to be the same as someone else.

So how do you find the perfect business? Here are some tips and tricks to guide you.

Choose an industry you understand

As an entrepreneur, chances are that you have some experience in business already. Make use of your experience and buy a business in an industry that you understand and are familiar with.

Take some time to think about the type of business that you’re interested in acquiring. Consider your skills and experience so that you don’t invest your money into a company that is completely foreign to you.

It’s also important to consider the size of the business in regard to sales, number of locations, and workforce size.

Geography matters

Just as you pay attention to geography when buying a home, the same stands true when buying a business. Figure out the general area in which you want to own a business. Then assess the cost of doing business in the area, such as wages and taxes. It’s also important to do some research into the labor pool.

Once you’ve selected an industry and region to focus on, research the businesses that are on the market. You can find business acquisition opportunities by looking online at sites such as www.bizbuysell.com

Be aware that not all business owners list their business for sale. Spend some time talking to business owners in the industry and region of your choice. While an owner may not have their business on the market, some may consider selling with the right offer.

Business acquisition is a great time to put your business contacts and networking abilities to work.

Create an acquisition team

The more people you have in your corner, the better. Your acquisition team should consist of an accountant, banker, and attorney to guide you through the process. Each of these advisors are essential for reviewing and verifying all of the pertinent information about the business you’re thinking about buying.

Before acquiring a business, there are some basic questions you’ll want answers to, including:

Why is the business for sale?
What’s the business’ outlook?
Does the business have enough market share to remain profitable?
Is there an abundant supply of necessary labor, technology, products, etc?

It’s also crucial to assess the company’s reputation and business relationships. Talk to existing suppliers, vendors, and most importantly, customers. Ask them about their relationships and experiences with the business.

You’ll also want to gather information from licensing and credit-reporting agencies, industry associations, and the Better Business Bureau.

Final thoughts

Building a brand from scratch is daunting. Buying an existing business is a way to avoid all of the learning curves and pain points that startup entrepreneurs experience. Acquiring a business that has developed a customer base, vendor relationships, operational procedures, and trained employees is a huge perk.

Existing business also has brand recognition, a track record, and most importantly, stability. With half of all businesses failing in their first five years , making the decision to acquire a business is a safer, faster, and easier way to turn your entrepreneurial dreams into reality.

Why HVAC, Landscaping And Other Residential And Commercial Service Businesses Are In Demand By Business Buyers

duda@fcbb.com — Tue, 26 Sep 2023 01:06:47 GMT

Now is a great time for businesses to invest in these booming industries

Did you know, the residential and commercial service industry has been booming in recent years? And the global commercial services market is estimated to be worth around USD 4 Trillion in 2021.

The home services industry includes businesses working in residential and commercial services. The commercial services include:

HVAC
Landscaping
Plumbing
Flooring
Concrete
Storage and moving services, and more

The industry's stability and its players have made it a safe investment and a source of growth in business sales.

The outbreak of Coronavirus heavily impacted the global supply chain and logistics. Due to lockdown, many people spent their time at home. And as a result, people started to invest more in remodeling, plumbing, HAVC, and Landscaping. According to experts, this trend is expected to grow even as people return to their offices and reach a “new normal”.

Let's explore the global markets of many residential and commercial services, which are rising exponentially,

The global Heating, Ventilation, and Air Conditioning (HVAC) service market is projected to reach USD 367.5 billion valuations by the year 2030 from USD 57.8 billion in 2020. This estimation is based on a compound annual growth rate (CAGR) of 3.9 percent of the forecast period (2020-2030). According to a more recent forecast , it is estimated that the global HVAC market volume will reach 151.1 million units by the year 2024.
The landscaping industry is estimated to grow 2.1% from 2025 from 2020. This brings the landscape industry revenues to USD 84.9 billion. According to other statistics , the American landscaping market will grow at a compound annual growth rate (CAGR) of no less than 4.5 percent from 2020 through 2025.
The global flooring market is projected to grow at a compound annual growth rate (CAGR) of nearly 6.2 percent from 2021 to 2028. The flooring market value was forecast to reach USD 434.2 billion in 2021 and is estimated to reach over 620 billion in 2028.

The attractiveness of Residential and Commercial Service businesses

With restrictions easing and workers beginning to return to their workplace, an increase in demand for commercial services is being seen. The main drivers which have led to this increase in demand are the attractive features of residential and commercial service businesses, which include,

The spread of the market
The businesses' stable revenues and small size
The companies' services are essential
And the revenues are recurring and predictable

Another major factor for the surge in business interest and investment in commercial service is the fractured nature of the market. Around 94 percent of companies across the U.S and Canada are small-to-midsize businesses with 50 or fewer employees.

Eyeing this opportunity, businesses and investments firms are injecting capital into residential and commercial service companies. Due to the large and fragmented market, the investment will receive higher returns and enjoy a steady upward progression.

There are numerous other reasons, too, as to why the demand by businesses for commercial services has increased. Let's take a deeper look at the HVAC and landscape market for reasons of increased demand.

The Heating, Ventilation, and Air Conditioning (HVAC) service market

The increasing end-user markets, such as the data center market and developing construction businesses in emerging countries, are some major factors driving the growth of The Heating, Ventilation, and Air Conditioning (HVAC) service market over the estimated period.

There are many benefits a consumer gets from HVAC systems which include,

Energy-efficient
Improved temperature variability
Filtered Air
And improved lifespan

The HVAC service market and HVAC equipment market directly correlate with each other. Increase in demand for HVAC equipment will have a positive impact on the HVAC service market. The reason being, increased demand for new equipment leads to more installation services. Factors which have led to a rise in demand for HVAC equipment are:

Climate changes and unpredictable weather conditions exhibited by the recent heat wave in the Pacific Northwest
Technological developments and innovations
The growth in the construction industry

The increasing disposable income in developing countries has also surged the demand for HVAC equipment.

Other reasons as to why there's a high demand by businesses for The Heating, Ventilation, and Air Conditioning (HVAC) service market are,

Increase in demand in the residential sector due to the growing population in Asia-Pacific
Increase in demand for maintenance and replacement services in Europe and North America
Increase use of air conditioners in offices and homes around the U.S.

The improving living standards and rising global temperatures create a substantial market for A/C systems, which is projected to grow in developing nations.

Landscape

The increase in younger households, who favor gardening and lawn care activities, has led to increased demand for landscape services.

Other major factors include:

Increase in outdoor living trend – due to the pandemic, outdoor living was adopted by many homeowners. Consumers are purchasing and fixing various landscaping products, including open-air kitchens, decorative features, living spaces, and lighting elements to spotlight the natural beauty of outdoor living spaces.

Environmental concerns – consumers demand landscape products that use

o Solar power

o Conserve water

o And reduce energy consumption levels

Many businesses use recycled content to develop new landscape products as recycling plays a major role in Landscaping.

Owning or investing in a landscaping business has many other benefits, including,

Opportunity for seasonal revenue
The demand is increasing steadily over the years
The landscape business model is straightforward and simple
Landscape business is easy to start. Only some quality equipment labor costs, and transportation are required.
There are opportunities for expansion, such as:

o Expanding the service area

o Hosting landscaping seminars

o And providing off-season services like snow plowing, pest control, and others

Conclusion

As the coronavirus pandemic further recedes, future growth is expected in the residential and commercial service industry. HVAC, Landscaping, plumbing and other commercial service businesses are a great investment opportunity.

Now is a great time for businesses to invest in these booming industries.

The Best Way To Form Your Business In Nevada

duda@fcbb.com — Tue, 26 Sep 2023 00:59:01 GMT

Learning the different business structures will help ensure your success

The Best Way to Form Your Business in Nevada

Nevada, also known as the Silver State, is home to almost 3 million small businesses, and this number is sure to increase in the coming years. However, only half of the new business startups successfully hit their fifth-anniversary mark, as most of them shut down much sooner due to a lack of resources.

Thorough research should be conducted before launching your first business startup. Because your business foundation is one of the vital parts of future success, learning the different business structures will help you make a wise decision.

Types of Business Structures

The future of your startup is tied to how you’ve structured your business and its processes today. It should be planned and regulated according to your goals while keeping in line with prevailing laws. So, it is better to research first than regret later. The most standard business structures in Nevada are:

Sole Proprietorship

The simplest business structure is the sole proprietorship. There is only one business owner in this business structure, and they are responsible for all business decisions, profits, losses, and debts. Being a sole proprietor means you are your own boss, but it also means great responsibility, such as expense evaluation, banking fees, office equipment, and tax payment.

Although you will encounter particular challenges as a sole proprietor, it does have its advantages. One of the best things about the sole proprietorship is that it is very easy to set up. As this type of business structure has an uncomplicated legal system, it is no wonder anyone can quickly start it. Also, because you are the only owner, completing and approving paperwork is easy.

Moreover, obtaining a sole proprietor license is quite affordable. If the need arises, you can easily dissolve the company without extensive paperwork and legal complications if your business fails.

Partnership

The partnership business structure consists of two or more owners. However, there are two types of partnerships:

1. General partnership

2. Limited partnership

In a general partnership, the shares of a business are divided equally between all partners. As a result, everyone gets the same share of profits and losses.

In contrast, only one owner has total business control of a limited partnership, while others have small contributions and profits.

Starting a business partnership can be expensive as you must hire a corporate lawyer to draw and review contracts. But it is almost as easy as creating a sole proprietorship.

The plus point of a partnership business structure is the higher chance of success. The reason behind this is that banks are more likely to fund partnerships than sole proprietorships. Additionally, having more than one person’s efforts can give you new and exciting business ideas, combine multiple skills and thus a better chance of thriving.

Limited Liability Company (LLC)

A limited liability company or LLC is a hybrid business structure, allowing owners to limit their personal liabilities while taking advantage of the legal flexibility of the partnership structure. A properly formed LLC protects its owners from personal debt, liability, or repayment responsibility. LLC members can benefit from company-generated income without paying direct taxes.

S Corporation

S corporation is a business structure for small startups as it saves them from double taxation. However, S corporations must meet specific Internal Revenue Code (IRS) requirements. If IRS requirements are met, the company has the right to pass income directly to shareholders without paying federal corporate taxes. Therefore, a Properly Formed S corporation is best for obtaining regular incorporation benefits while having the tax-exempt privileges of a partnership.

C Corporation

C corporation is a double tax business structure having multiple owners and a set of directors. C corporation owners pay taxes on personal and corporation levels, so the business owners or shareholders must pay taxes separate from the company. Additionally, C corporation allows unlimited investors.

Although C corporation demands double taxation, shareholders have the advantage of reinvesting profits in the corporate company at meager tax rates.

How to Choose a Business Structure?

Your startup can easily fall into any of these business structure categories. So, how do you determine which one is the right option? It depends on your financial needs, industry risk, and growth opportunities. Factors you should evaluate before making the decision:

Funding

If you need outside funding from an investor or bank, it is better to start as a corporation because otherwise, you will have trouble obtaining outside funding. Beginning as a sole proprietor is pretty simple and comes with very few legalities, but it is challenging to procure financing. Therefore, you must keep in mind which business structure is best for your financial needs.

Future Growth

Another factor that must contribute to your decision is your business’s future growth. It would help if you ensured that the business structure you are selecting allows the future growth envisioned for your company. Write down your objectives and see which type of business structure they align with.

Liability

Your business structure must carry the least amount of personal liability. This means that the law declares your company as its own entity. So, creditors can only sue the corporation and not take legal actions against your personal assets. In this situation, a properly formed LLC is the best option as it provides tax benefits of sole proprietorship while protecting your personal assets. However, if you are in a partnership, your liability is shared between you and your partners.

Taxes

As a small business owner, you can’t afford double taxation in the early business stages, so the C corporation is out of the equation. Moreover, as small business owners claim profits as their income, you need a structure that taxes your company only and not your personal assets. In this case, a properly formed LLC is often the best path to choose.

License

After registering your business, you must qualify and obtain a license and permits to work in the industry. Unfortunately, specific business structures can make it difficult for you to get a license and permit.

Control

If you want to be the primary authority of the business, choose between LLC or sole proprietorship. You can also create a partnership and negotiate to have the most control in the agreement. However, you can’t claim the most authority in any corporation business structure as it is based on shareholders and a board of directors who vote for decisions.

Wrapping It Up

A comprehensive business startup plan is necessary to succeed in the business market. However, selecting a business structure is complex due to certain legalities. Therefore, it is best to consult with business planning professionals to guide you on the right path.

Step By Step Guide To Forming A Business In Nevada

duda@fcbb.com — Tue, 26 Sep 2023 00:56:40 GMT

Starting a business in Nevada isn't hard once you know what forms you need and how to fill them out

Starting a business in Nevada isn't hard once you know what forms you need and how to fill them out.

If you're like most, the thought of starting your own business can be overwhelming. It's not just about having an idea; it's also about researching the legal requirements for setting up your company.

With the help of this guide, you'll learn everything from choosing a name to registering with government agencies. With this information, there won't be anything standing between you and success!

Step One: Create a Business Plan

Before you start with the business registration process, you should create a business plan. Having a business plan can assist you in preparing to get a license and avoid expensive refiling fees.

If you need help with this step, SCORE, a Small Business Administration resource partner, provides free business plan templates for both new and established businesses.

Your business plan can help you set your vision, mission, and goals for the business. Lenders often require one when applying for a business loan, too, so you'll be one step ahead in that process if you should need financing.

Step Two: Prepare Business Documents

The next thing you'll want to do is prepare the required legal documents needed for your LLC, partnership, or sole proprietorship.

Here is a list of common business documents needed:

Articles of Organization
Operating Agreement
Statement of Information
Minutes

Step Three: Choose Your Business Name/DBA

If you're going to use a name other than your legal name, you must file a Fictitious Firm Name Form (Doing Business As - DBA) with the County Clerk's office to identify the owner(s).

You'll want to file the DBA in the county that your business will operate in. If you plan to operate in more than one county, you may need to file a license in each. Check with each county to find out their licensing requirements.

You'll need an established legal business name to fill out your application for a business license.

Step Four: Pick a Business Structure

There are five main types of businesses you can form in Nevada, and each will have slightly different legal and tax implications. Let's go over each so that you can decide what's best for your business.

Corporation

A corporation is a separate legal entity from its owners. This means that if you have a corporation, it's not you who owns the business directly - your corporation is the owner on record for tax purposes and liability protection.

Incorporation involves several steps, including:

Filing articles of incorporation
Paying specific fees/taxes
Appointing a registered agent
Maintaining corporate records
Complying with annual report requirements

Limited Liability Company

An LLC is a limited liability company that protects its members from being personally responsible for business debts on their credit reports.

The LLC is a popular type of business entity with many kinds of companies, including both small and large businesses. It's also popular because LLCs provide protection from liability and tax concerns.

Forming an LLC for your business is the easiest way to get started in Nevada. It provides the same protection as a corporation, but it's easier to set up, making it more cost-effective for smaller companies.

General Partnership

A general partnership is a form of an LLC that has two or more partners.

Typically, all partners share the responsibilities and liabilities of the business (unless otherwise expressly stated in the partnership agreement). One downside to this structure is that if one partner leaves, it can create an imbalance in the company.

Sole Proprietorship

A sole proprietorship is one of the more straightforward business types to set up with any state or local government. It typically doesn't require any paperwork filed with the Internal Revenue Service, though you may still need to file taxes for income earned.

The LLC offers limited liability protection for its members, but the sole proprietorship does not. Even if your business is sued or incurs debts, you can be held personally responsible - even with a DBA.

Also, since this option provides little to no protection against personal liabilities incurred by your business, it may be less attractive for some small businesses.

Nonprofit

A nonprofit business is a business that doesn't make a profit. Nonprofit organizations also often have tax advantages because of the specific work they do.

Nonprofits often rely on donations, grants, and other funding sources to operate. Nonprofits do not pay taxes. However, they may still need to file taxes for income earned.

Once you choose a business entity type, it's time to start the licensing process.

Note: After reading through the business types, if you're still unsure which is best for your situation, we suggest you seek legal advice .

Step Five: Register Your Business Online

Looking for an expert company to prepare your registration with a focus on Asset Protection, Tax Savings, Privacy, Estate Planning, and Wealth Preservation? Visit Executive Asset Solutions at http://myeasg.com/ .

Ready to register your business online on your own? Here are the steps to follow when registering your business at the official Nevada business registration portal

Choose your business entity type.
Choose an industry for your business to determine the state, regulatory, and local government requirements.
Enter your business location.
List your employees, if any.
Take care of tax requirements.

Everything is done online in the same portal, convenient!

Want to fill out the Nevada Business Registration offline? You can find the form here .

If you need to contact the Nevada Commercial Recordings Division, their information is listed below:

202 North Carson Street

Carson City, NV 89701-4201

(775) 684-5708

Step Six: Get Your EIN Number (Optional)

An Employer Identification Number (EIN) is a tax identification number used by U.S. citizens, residents, and certain domestic entities for federal tax matters.

If you are a sole proprietor, LLC member, or partner without employees, skip this step. However, if you have employees in Nevada or plan on hiring soon, you'll need an Employer Identification Number (EIN).

You can also use this number to open bank accounts and apply for business loans. To get started on the process of getting an EIN in Nevada, head over to the IRS website . It's quick, easy, and free!

Step Seven: Get a Retail Sales Permit (Optional)

You may need a resale permit, an exemption certificate, or could be subject to use tax. Check with the Nevada State Department of Taxation in Las Vegas to find out.

You can schedule an appointment or find all the forms you'll need on their website .

Step Eight: Get Other Special Permits (If required)

Some businesses, such as cosmetology and contractors , will need additional permits from city or county offices such as:

Check with the appropriate licensing agency to find out.

Have more questions? Check out the Nevada Secretary of State's Business License FAQ .

Don't Be Fooled By A Business Seller's Claims, Due Diligence Is Critical

duda@fcbb.com — Tue, 26 Sep 2023 00:50:59 GMT

Are you contemplating buying a small business to become a small business owner? Or are you looking to add another company to the one you already have? If so, you’ll need to understand what due diligence is and how it affects your decision to buy.

Don't Be Fooled by a Business Seller's Claims, Due Diligence is Critical

Are you contemplating buying a small business to become a small business owner? Or are you looking to add another company to the one you already have? If so, you’ll need to understand what due diligence is and how it affects your decision to buy.

The Meaning of Due Diligence

Due diligence is where you investigate a business that you’re interested in purchasing. You should conduct due diligence before going through the final stage of the transaction to know if purchasing the business will be worth it.

You should look at the important components of a business when performing due diligence. Some of these issues include the financial risks taken by the business, profits, legal problems and other things that will cause you not to buy such as will you enjoy owning this business? You must examine the business’ past financial records and future projections.

How Due Diligence is Done

Doing due diligence for a small business takes time to complete. This is so because the process involves going through the company’s financial records, cross-referencing and ensuring that everything is as stated.

However, as a business buyer, you should not conduct due diligence by yourself. You should hire professionals such as an accountant and lawyer with experience in the field. You should also be a part of the team by looking over the documents, but allow the experts to do their jobs before you make a purchase. Consider doing this because, as experts, they will find important information that you would’ve missed.

You should have a commitment with the seller in the form of a Purchase Agreement or Letter of Intent to start the due diligence process.

The next step is to go through your findings with your team to ensure all critical parts are covered. Your teams will have a checklist of their own, but it doesn’t hurt to set up your own list.

A Checklist for Due Diligence

When you’re conducting due diligence, there are several aspects about the prospective company that you should take a look at. Below, you will find issues that you should be on the lookout for when conducting due diligence.

• Financial Due Diligence

Financial due diligence, also known as due diligence for accounting places the focus on the economic portion of the prospective business. The emphasis is placed on assets, accounts, liabilities, tax, historical trends, amongst other things.

You should look at the business’ past financial data such as balance sheet, income statements and cash flow statements. You should also pay close attention to the accounts receivables, gross profit, rate of return on the products offered and get an understanding of the company’s inventory history.

• Legal Aspects of Due Diligence

Legal due diligence shows the legal aspects of a business, such as legal contracts and any other document that can have hidden risks for a lawsuit. Some contracts that you should pay close attention to are leases, distribution and purchase agreements, business sales contracts, articles of incorporation, business registration, copyrights, trademarks and employee’s agreements.

• Due Diligence for Operations

Operational due diligence comes in when you want to do a full investigation of the business to actually see how it operates. Some operations include the business market, the model and its competitors.

You should be able to identify the customer patterns, learn how marketing for the business is done, run a market analysis, get feedback from people, do research to find trends in the market and study the competitors.

Repercussions of not Conducting Due Diligence

You may end up making a mistake with purchasing a business without doing your due diligence. The business owner may try to fudge the numbers to try to get you to buy. If you don’t do your due diligence, you may end up buying a business that isn’t in good financial standings.

Purchasing a terrible business will cost you money because that business or product may cause you to spend a lot of money to overhaul it. You may also inherit bad debts and lawsuits.

Conclusion

Due diligence is important when you plan on purchasing a business or product. It can keep you from spending your money on something that will eventually leave you at a loss.

No Se Deje Engañar Por Las Afirmaciones De Un Vendedor Comercial, La Diligencia Debida Es Fundamental

duda@fcbb.com — Tue, 26 Sep 2023 00:50:50 GMT

¿Está considerando comprar una pequeña empresa para convertirse en propietario de una pequeña empresa? ¿O estás buscando agregar otra empresa a la que ya tienes? Si es así, deberá comprender qué es la diligencia debida y cómo afecta su decisión de compra.

No se deje engañar por las afirmaciones de un vendedor comercial, la diligencia debida es fundamental

¿Está considerando comprar una pequeña empresa para convertirse en propietario de una pequeña empresa? ¿O estás buscando agregar otra empresa a la que ya tienes? Si es así, deberá comprender qué es la diligencia debida y cómo afecta su decisión de compra.

El significado de la diligencia debida

La diligencia debida es donde investiga un negocio que le interesa comprar. Debe realizar la debida diligencia antes de pasar por la etapa final de la transacción para saber si la compra del negocio valdrá la pena.

Debe observar los componentes importantes de un negocio al realizar la debida diligencia. Algunos de estos problemas incluyen los riesgos financieros asumidos por el negocio, las ganancias, los problemas legales y otras cosas que harán que no compre, como ¿disfrutará de ser dueño de este negocio? Debe examinar los registros financieros pasados de la empresa y las proyecciones futuras.

Cómo se realiza la diligencia debida

Debe tener un compromiso con el vendedor en forma de un Acuerdo de compra o carta de intención para iniciar el proceso de diligencia debida.

Una lista de verificación para la diligencia debida

• Due Diligence Financiera

• Aspectos legales de la debida diligencia

• Due Diligence para Operaciones

Repercusiones de no llevar a cabo la debida diligencia

Comprar un negocio terrible le costará dinero porque ese negocio o producto puede hacer que gaste mucho dinero para revisarlo. También puede heredar deudas incobrables y demandas.

Conclusión

La diligencia debida es importante cuando planea comprar un negocio o producto. Puede evitar que gaste su dinero en algo que eventualmente lo dejará en una pérdida.

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