From the monthly archives: May 2010

We are pleased to present below all posts archived in 'May 2010'. If you still can't find what you are looking for, try using the search box.

Self-Assessment is Important Before Searching for a Business to Buy

Why is self-assessment important? Not only is the acquisition of a business one of the most important financial decisions you will ever make, but it is also quite often a major lifestyle change. While there is certainly no requirement that your personal interests conform to your business purchase, a thorough and realistic assessment of your personal interests may help to minimize the risk of acquiring a business that may quickly become monotonous or uninteresting to you. For those individuals who do not have firm ideas of what type of business they might be interested in or would be suited for, a list for personal consideration shown below may help bring your thoughts into focus. It would be unlikely to find all of your ideal options and conditions embodied in one, single business. For practical purposes, however, you may choose to trade off the negative aspects of a low status business for the benefits of high income potential or trade off your reluctance to work on weekends for the opportunity to t ...

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Cash Flow is King When Selling Your Business

Think of the bottom line cash flow of your business as the first introduction to a prospective buyer. If that bottom line is not attractive, buyers will look elsewhere. The right strategy towards achieving a successful sale is to pin your bets on improving cash flow to stand out in the marketplace when it comes time to sell. Working IN the business vs Working ON the Business Most small business owners spend their time trying to beat their competition by building the latest and greatest gadgets or providing the best customer service. They can become so focused in the daily details of working in the business that they lose sight of the end game. The most important thing an owner can build is value so they can one day sell the business. The more value created the more money a buyer will pay. So, how do you create that value? Value is determined by available cash flow and the risks associated with obtaining it. Yes, the other aspects of the business that drive value, such as product, service, market, and ...

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Houston: Model City -- Forbes Article by Joel Kotkin

Do cities have a future? Pessimists point to industrial-era holdovers like Detroit and Cleveland. Urban boosters point to dense, expensive cities like New York, Boston and San Francisco. Yet if you want to see successful 21st-century urbanism, hop on down to Houston and the Lone Star State. You won't be alone: Last year Houston added 141,000 residents, more than any region in the U.S. save the city's similarly sprawling rival, Dallas-Fort Worth. Over the past decade Houston's population has grown by 24%--five times the rate of San Francisco, Boston and New York. In that time it has attracted 244,000 new residents from other parts of the U.S., while older cities experienced high rates of out-migration. It is even catching up on foreign immigration, enjoying a rate comparable with New York's and roughly 50% higher than that of Boston or Chicago. So what does Houston have that these other cities lack? Opportunity. Between 2000 and 2009 Houston's employment grew by 260,000. Greater New York City--with nearl ...

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Texas No. 1 on 'Best-for-Business' State List for CEOs

Texas ranked as the No. 1 state for business in a recent survey (May 24, 2010) of CEOs published in “Chief Executive” magazine. Closely following in the poll of 651 CEOs were North Carolina, Tennessee, Virginia, and Nevada. Rounding out the top 10 were Florida, Georgia, Colorado, Utah, and South Carolina. As for the bottom of the barrel, California led the way, followed by New York, Michigan, New Jersey, and Massachusetts. "Texas is pro-business with reasonable regulations, while California is anti-business with anti-business regulations," one CEO told the magazine. The CEOs ranked states in three main categories: taxes and regulation, skill of the workforce, and quality of living. Perhaps not coincidentally, nine of the top 10 — Colorado is the exception — are among the 22 right-to-work states in the country, meaning that state law forbids forcing employees to join a union to be able to work. Meanwhile, all five of the states the CEOs ranked on the bottom do not have su ...

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Who Are The Buyers For Privately-Held Companies

When selling a business, it is important to know who the buyers are for privately-held businesses and why they buy.

Most owners of small and medium-sized businesses do not think about exiting their business nor do they plan for that inevitable day. They enjoy their work and their lifestyle. Many of them do not even realize that their business may be an attractive acquisition target.

If you have been thinking about selling, this article will help you see your company as a potential acquirer might see it. Understanding who the buyers are and their respective acquisition criteria equals better preparedness when the time comes to sell. Having realistic expectations and understanding the factors that drive value in the marketplace will further bolster an owner's readiness for a successful sale. Proper valuation and presentation to the most likely buyers is crucial to achieving a sale for the best price in the shortest time frame possible.

There are three main categories of buyers of privately-held small to midsize businesses: 

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Texas #2 State in America for Small Business Development for 2010

The Small Business and Entrepreneurship Council (SBEC) has ranked Texas the second-best state in America for small-business development for 2010. The council released its Business Tax Index: Best to Worst State Tax Systems for Entrepreneurship and Small Business report. The report analyzes and combines 16 different tax measures into one tax score for all 50 states and the District of Columbia, including income, capital gains, property, death/inheritance and unemployment taxes. The report also takes into account various consumption-based taxes such as state gas and diesel levies. "Taxes at the state and local levels matter by diverting resources from and reducing incentives for productive, private-sector risk taking that generates innovation, growth and jobs," says Raymond J. Keating, chief economist for SBEC and author of the report. "Quite simply, economic recovery will be restrained by high or increasing taxes, or boosted by low or falling taxes. Governors and legislators have a choice." The Small ...

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Should the Buyer Take Over the Business Before Closing?

The answer is a resounding NO! Confusion and misunderstandings often occur if the soon-to-be new owner takes over or works in the business before closing. In our experience this has never been a winning scenario. There are times when the buyer and seller think it would be a great idea if the buyer began operation of the business prior to the closing of the sale. Why? Here are some typical reasons: The buyer needs the income. The seller has really "had it." The time it takes to close a deal has been excessively long. The seller is in poor health and can't operate the business (or something similar.) The buyer feels the business is deteriorating and wants to get in before it all goes too far downhill. These sound reasonable because both the seller and the buyer have a shared goal - to maintain the business and transfer ownership successfully. In analyzing the reasons for early possession, does the end justify the means? The answer is a resounding NO. Sellers, who often ...

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What to do in the First Few Weeks After Buying a Business

When you have closed the deal and are now the new owner of the business, there are a few things to take care within the first month to put your new enterprise on the right path. Nothing drasticPut Your Staff at EaseHave a group meeting with the employees. It is likely that they did not know the business was for sale and are now concerned if they still have a job. Let them know you bought the business, that they are part of the deal, and you need their help in growing the business into the future. Meet with each employee individually as well to fully understand their roles, their ideas, and to guage their value. Key employees should be rewarded or encouraged, monetarily perhaps, to be sure they stick around.Transitioning with the Previous OwnerDepending on what the terms were in the purchase agreement you had with the previous owner, there will be a transition period, whereby the previous owner will help you learn the ropes of operating the business to make sure the business changes hands as smoothly as possib ...

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10 Things It Takes To Buy A Business

No ten-point list can ever hope to supply you with every imaginable consideration when it comes to buying a business. The following factors - listed in no particular order - should be a good jumping-off point, but feel free to expand on them and dig even deeper to decide that the business you plan to buy is right for you. 1. Consider the History - Plan For the Future Business price is typically based on historical factors - real estate prices, equipment and inventory value, the net earnings the business brings to the owner. By considering what you can do with the business once you took over should be a factor in determining whether it is a good buy. While future potential earnings is dependent on the efforts of the new owner, it is not usually a factor that is heavily weighted into the asking price of the business but can be the reason it is purchased and brings a price that is towards the higher end of the value range. 2. Look For a Solid Foundation A business that has been shown to flourish despite ...

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Tip #4 - Low Owner Energy, Low Company Performance!

If a company is on a downward trend, many business owners think they can bring their companies back from a valuation that doesn’t meet their expectations. But it takes energy that many business owners no longer have. Very few companies can make that leap back to new heights without a strong drive, vision, and leadership from the owner. Sometimes it’s best to recognize the reality of the situation and sell the business before it's to late for a comeback.

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