Category Archives: Main

7 Ways to Improve Your Business that Cost No Money

By | | , , , , , , ,
Leave a comment

It is the norm for Small businesses, startup, new ventures to struggle due to limited financial resources.  There are so many efforts that can improve your business and produce results that are little or no cost.  We all want results, but at what cost ?  Did that $1000 investment or expense produce $10 results?

Part of my profession as a business broker involves consulting with both buyers and seller of business.  I also provide consulting services to businesses outside my role as a business broker in Florida.  Rarely do I experience a discussion based upon “I have too much cash flow to deal with”.  Small business owner  and entrepreneurs are constantly seeking ways to improve thier businesses with limited resources.  Below are a list of several tactics and efforts a small business owner may take that cost little or no money and therefore the Return on Investment ( ROI)  is extremely high.  There are many other practices and efforts that can be utilized outside of the below short list, hopefully this list can change the line of thinking of a business owner from “I wish I could do something but I don’t have the money” to:

What Can I Do To Improve My Business With Limited Or No Money

1.Look at your company from the perspective of a customer.   Can you do that?, can you pretend you are a customer trying to do business with your company.  You send an inquiry via email, you place a call into your company- what happens?.  We all have dealt with companies that customer service seems more like “How to effectively get a customer off the phone”  instead of ” I wont let you hang up the phone until I know I have completely helped you to fulfillment”  IS it a pleasant experience to do business with your business?

2. Attempt to surround yourself with more beneficial  synergistic strategic partners-

As a business broker I have various strategic partners that allow me to best assist my clients.  These professionals include, Attorneys, Accountants, bankers and Financial people.  Not so long ago I relocated to a city 5 hours away.  Among other things, I needed to develop a new “team” that I could rely on that help me help my clients.  I researched banks that do a lot of SBA loans to small business, migrated thru the company website, found a point of contact that I had an interest in meeting with, sent an email, and got an email back saying “going on vacation back in 2 weeks, call me then”.  I proceeded to pursue a relationship with someone that would call me back., passed over this prospective strategic partner and found someone that I feel may develop into a mutually beneficial business relationship. My clients will benefit from my valued strategic partners.

3. Use the Internet more

Improve Your Business

Photo (c) highachievingwomen.biz

  • post a blog- how much does that cost?
  • post a tweet about  a sale, a special or event- We’ve all heard/read that this can be a good idea- just do it.
  • check out a site such as Fiverr.com and see if someone can do something for you for $5.  Are there other sites that facilitate low cost solutions? Can you afford to make a $5 error?
  • Try something you haven’t tried- a video, guest blogging, join more related forums or user groups, start a group.

4. Educate yourself– take some time out of your day to read other related blogs info on your industry or specific area of focus. Commit yourself to learn your own financials better than you presently do.  Again the ROI on your time invested in this can be quite high.

5. Go to a network meeting– there are several available in most communities that are either free or cost a couple bucks.  How much could you benefit from making that “right contact”.

6. Consider a Freelancer–  Are there some functions/task that you currently are having performed that may be done more cost effectively thru an outside source such as a free lancer.  Open your mind to it.

7. Treat all customers, prospects, employees, vendors with respect and integrity– The ROI on this no cost effort is immense

Dont ever stop trying something different.  I have utilized the above items in my various business ventures throughout the years and still utilize them on a regular basis.  If you are running a business, buying a business, or growing a business these low and no cost business practices will result in very good return on investment and usually all it takes to get these returns is to consider them and just do them.

Most Important Step to Starting,Running, Buying, or Selling a Business

By | | , , , , , , ,
1 Comment

You are looking to Start a Business.  You are Running a Business.  You are Buying a Business.  You are Selling a Business.  What is the most important step in any one of these ventures, And no the answer is not having unlimited deep pockets. To start, run, sell,or buy a business you need to understand that business.  You need to understand not only the operational side of your business, you need to understand the financial side of your business.

I am a business broker in Florida and I help people buy and sell businesses. (and current and former business owner)   This last week I completed a very busy week of helping an out of town business buyer visit several different businesses.  Our intent of visiting these multiple businesses was an effort to understand the businesses. To buy a business you have to understand the business.  A small business owner truly needs to understand the financial health of their business.

Running Your Business Successfully

Many, Many Many small business owners DO NOT understand the financial side of their business.  Do you feel as an entrepreneur you need to understand the difference between a debit and credit or if you buy something if it should be a capital purchase or an operating expense.  So many small business owners and entrepreneurs run their business using their gut as their guide, they can feel if their business is going good or bad.

Other small business owners look at their checkbook- if there is money in that things are ok. On the other side you may have a very successful business, you buy several new truck and new equipment with cash every year, you have very little money in the checkbook and “feel” you have an unsuccessful business. You could be very wrong.   And yes it is also very easy to hire a CPA and or accountant and send all the monthly records to them, count on them to sort thru them and have them generate a report for you to maybe glance at and file away.

Hire An Accountant

Photo (c) freelancefolder.com

Your CPA or accountant is a great place to start the learning process. The more you know, the more effective they can be to you.   Your  Balance sheet and your Income statement tell your companies story.  You may feel your company is healthy, or improving, or getting better, or getting worse- your balances sheet or Income statement (Profit/Loss Statement) will tell you in a factual manner.

You need money for your business- you go to a banker or financial institution to get money, do you think they will listen to you tell them about your business and loan you money based on that.  they will use your company financials to make that business decision.  A few years ago banks I had worked with strongly considered your balances sheet to make loan decision.  Now-a- days both Balance Sheets and income Statement both are a strong part of that evaluation.  Why is that?.  Understanding the “whys” about your business is important to your business.

In the preceding scenario a business may have a strong balance sheet due to significant assets like real estate owned or equipment owned by the company.  But in current economic conditions the companies Income statement show  that the business sales are down 25% and and shows losses for the last year- lending may not occur.  The banks may not be all that excited about the fact that you own real estate thru your company.

The business buyer I was working with flew in town for 3 days for him and I to visit businesses.  Most of the small business owners we visited had good businesses.  Without divulging any confidential information, they all showed cash flow in excess of $200,000 per year.  They (the respective business owners)  all said they didn’t really understand the financial side of the business, but “here our our records for your review”. (after confidentiality agreements were signed) They could speak for hours about their customers, employees, procedures and ideas.  Questions regarding financial information were usually answered with  1 or 2  brief sentences.

Buying A Business – The Right Way

The buyer I was working with was a very educated buyer, a President of a publicly held $40 Million company , and 30+ years of experience.  He had looked thru maybe 30 businesses to narrow down visits to less than a handful.  He and I both knew that to buy a business, he had to understand the business. We spent hours discussing the financials of the businesses.  

You as an entrepreneur that is starting a business or running a business may someday want to sell your business.  Understanding the true financial condition of your business is the 1st step to improving the financial condition of your business.

Buying a business is a very effective way to expand your customer base and Revenues. knowing how to read and understand the financial statements of others could be the difference of a business acquisition that is a success or a failure.

And when an educated buyer approaches you about buying your business, you provide the business buyer your Balance Sheet, your Income Statement, and your explanation and understanding of the true financial condition of your business may be the difference in someone buying your business at a good price or passing your business over to pursue other businesses to buy.

Negotiating from a Business Owner Business Broker Perspective

By | | , , , , , , , ,
3 Comments

As a Small business owner or Entrepreneur, we find ourselves always negotiating.  We negotiate with our vendors for better prices/terms.  We negotiate with our spouses to spend just a few more hours at the office before we come home for dinner.   I believe everyone’s views and methods of  negotiation are as different as our taste in music.

Negotiating When Buying Or Selling A Business

My profession as a business broker certainly involves negotiations at most every step of the long process of buying and or selling a business.   Someone “needs” to sell their business, he “needs to sell at this price”,  according to all the other Business For Sale , his price is 3 x what other like businesses are asking, I find myself “negotiating or discussing” the merits of his target price.  My previous position as an owner of a small business with 25 employees and handling manufacturing, transportation, multiple office locations, and distribution required constant negotiation. I used to formally review my employees on an annual basis.

They generally expected a raise.  Before the meeting, I would calculate what the company could afford, set a range and meet with the employee.  I never viewed this process as a meeting that allowed negotiation on wages.  I viewed it as a means to allow di-directional feedback, but the wage increase was not an arbitrary number.  Very often employees would ask for more, I think just because they thought that is what they were supposed to do- which is fine with me.  They viewed this as a negotiation, I viewed it as something else.- This was just part of my personality or philosophy on negotiation.  I had fantastic long term employees and we would later negotiate days off, holiday pay and other items, but raises were not a point of negotiation.   Again, I think we all have our own unique views and ideas on negotiation.

Very often how ones negotiates may be a matter of his or hers personality.  Other time “someone told me or taught me” how to negotiate and that becomes the norm.  Currently as a business broker I do have to negotiate terms and conditions of me helping a business owner sell a business.  The line between negotiation and discussion does become blurred and for me I think it is fine to have business negotiations and business discussion become one and the same thing.

My Negotiation Tips For You

1.  I find I don`t get so caught up on the concept of negotiation and semantics.  I find that we have a business decision to resolve, we have 2 parties seeking to resolve it, and the 2 parties work together to seek resolution. Put yourself in the position of having options and the process has the potential for the best results.

2.  Its not always about price.  I have been through the process of negotiating  leases on a facilities, annual purchase orders with major suppliers, and larger purchases of capital equipment and many other “negotiable situation.  Very often the person that I am trying to reach agreement with is very strong and firm upon the price they believe is needed.  And in many situations I have been willing to accept the price desired by the other party, BUT I make absolute sure the other party hold true to every other term and condition within the agreement.

So my position is ok let us go with the price you desire, but it is mandated that delivery date, guarantees, support, followup and every other item involve with this matter is followed completely.  At times I feel that such value can be added thru the other terms that the actual price is really a value to both parties.  Or as it relates to my current profession as a business owner selling a business, I will give you a $50,000  price reduction, but I want a personal guarantee on the buyer, I want 8% interest instead of the 7% interest the buyer is offering for me to finance my business, and I want the owner to stay on as a free consultant for an extra 3 months.  SO the person buying the business gets the reduced price, and the seller gets some real added value.

Negotiation And Business Price

Photo (c) thesologuide.com

3.  One more point about price.  How many times have we been working thru a deal and felt the need to drive the price down to a level that the seller is willing to accept but not really happy with.  Then a week later when we want this little extra help or assistance or concession and we hear “We’re already losing money on this deal and we really cant help you with that”.

4.  Really a good deal is a deal that is good for both parties.  Sometimes one party can leave the “negotiating table ”  knowing that it is a great deal for him/her, and knowing that the other party is “taking a hit”.  How does that help sustain an ongoing relationship.  There are businesses that are ok with the “one and done” concept and have little regard to the effect on the other party.  I think our globe is fairly small, and getting smaller and I aspire, plan and count on all business relationship being perpetual.  Again the example about buying or selling a business.

If you are selling a business and you want a price that is higher than the actual business can justify, and if you provide some seller financing to the buyers, what is going to be the result of you getting this inflated price.  Very likely it results in the buyers of the business, not being able to make payments to you, going into default, and you having to deal again with the business that you originally sold because you had not longer wished to be dealing with it.

5.  Dont mistake negotiating with wishing or hoping.  If you know the terms that you need to attain to make the deal make sense to you,  be prepared to walk away from the deal. Are you making an offer and hoping /wishing the other party takes it because you know you want or “need” this product or service?  Be prepared to walk away form the deal, again try to put yourself in the position of having options.  If someone is wanting to buy a Towing Business and makes a bottom line offer to someone selling,  it helps the potential buyer knows that there are 3 other similar towing businesses for sale in the area and is fully prepared to pursue these other options.

Steps Involved with Buying Selling a Business

By | | , , , , , , , ,
1 Comment

Buying or Selling a Business is a process.   The below provides a framework to define the process and steps needed to buy or sell a business.  The size and type of business that one may be buying or selling will influences the complexity of each of these steps.

1)  INITIAL INFORMATION REVIEW–  Confidentiality and Non-Disclosure Agreements are signed to assure confidentiality related to this  private matter.  Irreparable harm can occur if the confidential content of discussions and negotiations are improperly disclosed. Seller reserves right to approve potential buyers and may require that additional buyer information/capability be submitted before confidential information is released to the  buyer of the business.

2)  THE INITIAL MEETING: At the first meeting, the potential   buyer of the business  will want to know the seller’s motives for selling the company as well as more detailed information about the business and the seller will want to know how if  the buyer is the type of person to whom he wants to sell the company. If the results of the initial meeting warrant further consideration of the deal, the buyer will next begin to evaluate the company and develop a financial structure for the proposed business purchase.

3)  THE LETTER OF INTENT/PURCHASE CONTRACT: Either a contract with

contingencies or a letter of intent will be presented. A letter of intent may have an ” escape clause”  in it to allow one or both parties the opportunity to withdraw from the deal if certain conditions are not met.  The letter of intent will address :

  • The purchase price/ consideration – Selling price of cash, notes, equity, or some combination of these.
  • What is being purchased — Assets, liabilities, and operations that are being transferred to the buyer and those being retained by the seller should be identified.
    Buying Or Selling A Business

    Photo (c) webuybusinesses.com.au

  • Structure — The parties need to agree about whether the sale will be a sale of assets, a sale of stock, a merger, or some other structure. Whether the SBA, bank, or owner takes back a note, the company cash flows must be able to support that loan.
  • The definitive purchase agreement — As the buyer begins its detailed evaluation of the company, the attorneys will be preparing the purchase agreements. The Sales Purchase contract is usually drafted by the buyer’s attorney.
  • Due diligence — The seller will need to have ready his financial records, all corporate records,pertinent  contracts and all pertinent other  documents  that the buyer of the business will be requesting for review once the letter of intent or contract is signed. This will allow the buyer of the business to analyze the company in greater depth to determine whether everything has been represented properly, whether he wants to buy the company, and, if so, the appropriate price to pay. A purchase price is usually negotiated based in part on historical financial information. and future potential earnings.
  • Escrow — The buyer will establish an escrow account  into which his initial  Good Faith deposit of monies shall be deposited and handled by a 3rd party escrow agent .
  • Other significant items-  non- compete terms,  and employment contracts.   leases and long-term purchase contracts, and any other pertinent business agreements shall be addressed.
  • Professional fees – Usually the buyer and seller will bear their own costs for attorneys and accountants.
  • Conditions and Timing for closing. Usually the closing is within two weeks after all contingencies have been completed, and like most steps in the buying or selling of a business this time is negotiable.

4)  CLOSING– Once all issues have been resolved, the documents are signed, and the consideration exchanges hands, the deal is in condition to close. The actual closing marks the conclusion of the process.

Again buying or selling a business is a process and depending upon the size of the business and type of business this process from start to end can take several months or even longer.  Due diligence when buying or selling a business is a very important part of this process. Negotiations are made at most every step of the process as new information becomes available and additional analyses are performed.

In a successful negotiation, both the buyer and the seller need to be flexible and to understand which points are important  and which ones may be “deal breakers”.  Most people may buy or sell a business maybe once in his or hers life.  Following  the advise of a trusted advisor such as a business broker can help increase the likelihood of a successful business sale or business acquisition.

I’m Looking to Buy a Business

By | | , , , , , , , , ,
2 Comments

“I’m Looking to Buy a Business“.  As a business broker based here in Florida  this is a statement that I hear often.  Within  the industry various statistics are stated regarding business buyers.  I have heard that 9 out of 10 of those that say they want to buy a business actually don’t buy a business.  Based on my experiences that statistic may hold true.  There are so many currently employed that during their 40- hour work week aspire to “be their own boss” by starting their own business or buying their own business.

Live Your Dream – Buy A Business

There are many unemployed out there that also think they may want to buy or start a business.  So while there are probably as many as millions of those both currently employed or unemployed that aspire to buy a business or start  a business, there is a much much smaller subset of those that even attempt to act on those aspirations.  Of that small percent that actually act on their dreams and or  goals a small percent may contact a business broker such as myself, and a small percentage of that group may find themselves at a closing table signing documents and actually buying a business.

Many business acquisitions are done with out the assistance of a business broker.  The numbers of how many entrepreneur types set off to buy a business and successful find a business without the professional assistance of a business broker are unknown to me.  I personally  had bought several businesses on my own without the assistance of a business broker.

These were strategic acquisitions within a certain industry.  I personally feel these types of acquisitions have a higher success rate.  Existing relationships, industry knowledge, focus,  and synergies provide for a higher success rate.   My views on this are based upon a fair amount of first hand experiences of myself and peers. This discussion is based primarily on non- strategic type acquisitions as referred to above.

Buy A Business

Photo (c) richardparker.com

Just one of the many steps in the process of buying a business that I assist in is how to apply some focus and some parameters to the basic statement of “I want to buy a Business”.  Being my company website is Sell a Business Florida I assume the person contacting me thru my website is looking to buy a business in Florida, but very often many of the other parameters have not been carefully considered.

When one is looking to buy a business criteria can range from looking at a certain specific company, to a certain “type” of business, to “I want to buy A business in the state of Florida”.  If you (or someone that you know) are currently employed and want to act on aspirations to buy their own business and gain the feeling of control of ones destiny, or are currently unemployed and view buying a business  to be the best means to a gainful career please consider the following.

Things To Consider Before Buying A Business

Below are a few parameters to consider when searching to buy a business.  The list can be long and extensive but the below is a starting point that allows the search to buy a business to maintain some focus.

  • Location-  For business purposes and family purposes does the business need to be in a certain State, County, City, or a certain side of town?  Or are you looking to buy a home based business that you can operate from most anywhere in the world?
  • Type of Business-  Are you looking to buy a certain type of business  like a Landscape Company For Sale or Towing Business For Sale , or are you looking to buy a business that has maintained certain performance levels such as “I want to buy a business that has at least 3 consecutive  years of  Net Income of $100,000+”.
  • Are you looking to buy a Hands on or Hands off business.
  • How much Available Capital to do you have? – This will set a range of businesses that you may consider.  Keep in mind that both Available capital for buying a business and Working Capital for running the business should both be considered.
  • Are you looking for a business that includes real estate
  • Are you looking for a business that provides Seller Financing?

Prospective Business Buyer– ” Hi Scott I am looking to Buy a Business in Florida” Scott– ” Great,  What type of business are you looking to buy” Prospective Business Buyer – “I really don’t know”