Buying Or Selling A Business? -- Is It SBA Financeable?

There is a general misconception in the small-business acquisition marketplace that a person could easily purchase any type of business through the SBA with a low down payment and get a loan for the rest. Most people also believe that SBA loans are a major source of small business financing. But data shows that SBA-guaranteed loans make up a small portion of the value of the overall small business lending market.

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14 Karats of Knowledge for Preparing Your Business for Sale

Selling your business is no stroll in the park. You’ll need the right motivation, a ready mindset, and something attractive to sell. So, a key factor to a successful sale is preparation. The more effort you spend preparing your company for an eventual sale, and understanding the factors that make a business sellable, the more attractive your business will be to prospective buyers. Keep in mind that just because your business is making a profit, doesn't necessarily mean it's attractive.


Ready up with these 14 karats of knowledge to help you get a golden deal:

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Deal Momentum: A Key Factor When Selling Your Company

When selling a business, time is not your friend. Time is the enemy of all deals. In fact, "Time kills all deals" is an expression that can be associated with a number of different industries but is especially relevant to business acquisitions. So, the key to a successful deal is to prepare well, come out strong, and maintain momentum throughout the business sale process. The deal clock is set in motion as soon as your company hits the business-for-sale market, not later in the process when a buyer presents the first offer.

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Why Not Sell The Business On Your Own?

There are very logical reasons why you don't see public "Business For Sale" signs posted on reputable, profitable companies. Why? Because that sign would soon be replaced with "Going Out Of Business Sale." Consider the following points. First, even if the you don't actually hang a "For Sale" sign outside the window, trying to sell it on your own through classified ads, or, heaven forbid, by word of mouth, for instance, threatens the business' reputation and future.

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10 Tips - Negotiating a Business Purchase from a Buyer's Point of View

Having a formula and understanding the fundamentals of successful negotiation can help you make the best deal possible and avoid lost opportunities.

Negotiation may seem a daunting task, but when handled in a balanced manner, negotiation can be a positive experience rather than a negative one. The negotiation strategy should be one that results in a winning deal for both parties. It's not about who strong-arms the other. Nor is it a game with a winner and loser. It’s a complex process for sure.

A good deal is never one-sided. Negotiation isn't about capitulation, it's about finding a mutually acceptable solution. If the parties can determine the factors that are most important to each, the price and the terms of the deal can be structured to meet those needs.

The following are some key negotiating tips. While they can't guarantee that you will always get what you want in a negotiation situation, they will certainly enhance your chances for success.

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Buying an Existing Small Business Beats Starting a New Franchise

Last Friday afternoon I was a guest on KSEV Radio AM 700 with host Aubrey Thoede and had the opportunity to discuss a subject that many call-in listeners wanted to learn more about....starting their own franchise. But buying a new franchise is not the best way to go about achieving the "American Dream."

Once you've hit five years, your odds of survival go way up," Birch said. "Only two to three percent of businesses older than five shut down each year."

Everyone reads or hears about big corporate mergers and large company acquisitions. However, big corporations aren't the only companies being bought and sold. Profitable, privately-held small businesses are changing hands everyday. These transactions are done behind the scenes and are not reported along with the daily stock market news. These business exchanges fly under the radar of the public at large -- which may be part of the reason that it is not commonly understood that buying an existing small business is the most viable path to being a successful business owner.

If you are considering your options for going into business for yourself, buying an already established profitable business should be the first option on your list and starting a new franchise the last. Here are six slam-dunk reasons why:

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Selling a Business: The Problem of Overvaluation

Last week I met with a business owner after an introduction by his accountant. He was thinking of selling his profitable waste recycling business, a business he had been running for nearly 30 years. The business had a reliable management team, an enviable customer base and a strong balance sheet. Unfortunately, the owner had a vastly inflated idea of the value of his business.

His thought process went something like this:  “I’ve built this business over 30 years so it must be worth a lot of money.  A couple of years ago we built a nice place to retire to and need to clear the mortgage. We also need a couple of million to create a pension pot that will maintain our lifestyle. The business has provided us a very nice lifestyle and will do the same for the new owners – it has to be worth about $3 million.”

It’s difficult to be objective about something you’ve built from the ground up; a business that has shaped your life and underpins your standing in the community. Coincidentally, $3 million happened to be about the figure he needed to meet his retirement aspirations.

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When Is The Best Time To Sell A Business?

Internal and external factors are important considerations when selling a business. Here are issues you should think about when trying to time your exit. There are many factors that determine best timing for selling a small business -- the financial condition of the company, valuation, growth cycle, profit history, and the current market. Usually the best time to obtain the highest price occurs when sales and earnings are good and trending upward. A solid earnings trend will enable a buyer to pay a higher price and still meet his return of investment criteria. A history of good performance also gives the buyer confidence in projected future earnings.

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11 Things You Should Know Before Selling Your Business

Know why you want to sell your businesss.
Having a solid reason and a committed resolve to a sale is essential in achieving a successful transaction. In addition, one of the first questions buyers ask is, "Why is the owner selling?" They want to know that it is for a good reason and not because there's something wrong with the business that might be hiding in the shadows.

Know what you will do after your business is sold.
If you don't have a plan in mind, you might find yourself getting cold feet or feeling a little off balance when that first offer to buy the business comes along.

Know the value of your business.
Get a business valuation by a reputable firm to understand what you could expect in the current marketplace. This is an initial step in determining if the sale would meet your objectives.

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You Can Purchase a Business Using Retirement Funds

Don't let your retirement dollars idle away! Put your money to work! Invest it in your own business and let your money work for you!

You can use cash from your 401(k) or IRA account to purchase a business without incurring early distribution penalties, with no taxes, no loan repayment, and no hassle.

For example, a Texas resident using $100,000 from a qualified retirement fund can keep the extra 31% that would have been paid in taxes, leaving an additional $31,000 to fund the new business by adopting a transfer trust plan versus withdrawing the funds outright.

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