Business Broker » Business Owners

Small Business Challenges – 3 Strategies to Kicking Your Business Up a Notch

admin — Tue, 23 Mar 2010 04:11:53 +0000

Recent studies and surveys have indicated some of the top challenges that small businesses or solo entrepreneurs are facing today.

More than half of the respondents in research conducted by Industry Canada believe that growth is the most important issue they face. Growth categories include attracting new customers, recruiting qualified staff and having the time to manage growth. Competition came in as the next highest concern.

1.Growth New businesses start out focusing on making a profit in order to establish and sustain themselves through the first few years. One way of increasing the bottom line is many business owners will try to do everything themselves within the company to save money. While this may work for a while, it will ultimately impede growth. Time and energy of key staff is better spent on finding ways to attract new customers and increase sales. Everything that isn’t growth related should be delegated. If you are not sure what this entails, you may want to hire a business coach to develop a growth and marketing strategy.

2. Employees Another important challenge is labour shortage; finding, recruiting qualified staff and retaining them. Employees will remain with an employer who shares decision making as a group, communicates openly, praises publicly and criticizes privately, gives them the necessary tools they need to perform and then empowers them with responsibility to get the job done. Listen and address staff concerns. Foster an environment of team spirit and accountability and you will see happy, engaged staff who go the extra mile in performance and customer relations.

3.Competition Every business has competition. It’s what drives the economy. In order to develop your marketing edge, it becomes critical that a business knows their competition. There are a number of factors to think about when examining your marketing approach.

Consumers are more knowledgeable and selective than they have ever been. They demand more. With the internet at their disposable, a quick search is all it takes to educate themselves and do a price comparison.

Most businesses have a web site. Is your web site attractive, friendly, and informative? Does it entertain your customer and give them a reason to return and visit again?

Do you have an internet marketing specialist taking care of the complexities of web site positioning for maximum exposure and traffic? To change the momentum of your business, you need to pause and take time to prepare a plan. Identify goals and objectives with measurable time lines. What are your Key Performance Indicators that will help you evaluate results? Get external advice and a fresh perspective. Seek professional help where needed. Spend all your time on growth activities, employee relations and marketing opportunities,delegate day-to-day administration, and you will see outstanding results.

By: Erika Martlew

12 Profit Boosting Business Tips

admin — Sat, 13 Mar 2010 21:30:31 +0000

In the face of falling demand and intense competition every order has to be fought for. Getting it right isn’t an option; it is a survival strategy. Business owners often become complacent leading to a haemorrhage of lost orders that can cripple a firm. Most failings are avoidable. Here are twelve tips to help you survive the crisis.

Take the advice of your media advertising representative. They want you to succeed. A small advert placed frequently works better than the occasional larger one. Always use USP (unique selling points). Special offers for example. If you live in a bi-lingual area it doesn’t cost much to make your website bi-lingual. You wouldn’t put a notice on your door: ‘English Speakers Only’ would you? If the wording of your website or brochure is amateurish you will invite ridicule, not orders. Make better use of e-mails. They are real sales boosters when you know how. They have at least ten advantages over the telephone. I will list these shortly or e-mail me if you miss them. Poor signage is a no-no. How often I have heard it said: ‘But our customers know where we are.” Hello! The new ones do not. An attractive high visibility sign will be seen by hundreds, perhaps thousands a day. First impressions count. Sales are lost when potential clients telephone an answering machine. A telephone answering machine cannot answer questions, which is why most people call in the first place. Be polite; listen and respond transparently. If you are in business then being a sales person comes with the territory. Improve your people skills; be pleasant, informative, highlight the advantages of your service, and ask politely for the order. Never ignore a spouse or partner. If you don’t get the close right you won’t close. Be a pully-pully salesperson: Ask the customer; ‘Which would you prefer?’ or ‘Would Tuesday be alright or might Wednesday be better for you?’ Clients are offended and inconvenienced by poor timekeeping. If you are unavoidably delayed call them; explain; invite their understanding or suggest an alternative in order to avoid inconveniencing them. Customers are not stupid; do not treat them as though they are. Explain what has gone wrong, what is necessary to put it right and why. It is infuriating to be given a bill without a break down. If you do so you invite the allegation that you are cheating or over-pricing. Again, transparency keeps customers happy. Happy customers are your best sales staff. A man bought a business. The first thing he did was ask for a list of dormant clients. He discovered most had left due to poor service. By informing them of the change of ownership and addressing their concerns he learned lessons. Best of all he enticed most back. Always leave two or three business cards in your customer’s home or premises; where they can be seen. Respectfully ask your customer to recommend you and ask if they have friends or family who may be interested in your service. The most important rule of all: Always thank your client for their custom.

By following these basic rules you can double, even treble your turnover without it adversely affecting your outgoings.

Business Capital Sources For Free

admin — Tue, 09 Mar 2010 19:42:36 +0000

The main goal of any business venture is to survive. Technically speaking, money is the backbone of a successful business establishment. A business can not run without fuel from capitalization. Every business owners are so aware of the fact that starting up or expanding a business must have a solid foundation which is financing. Funding a business is one of the greatest problems for those who desire to be business owners. Adding up to the difficulty is the present economic turmoil hitting the world today. Some business owners are choosing to close down rather than to pursue on operation. However, for the more aggressive and positive entrepreneurs, closing down a business is not helpful at all. Instead, looking for capital sources is the most appropriate thing to do. There is actually free business money for business capitalization and expansion.

Free business money is in form of government grants. The government is offering and entitling every qualified taxpayer and business owner to eligibly accept free business money. Government grants are for real. Some people might be reluctant about such programs offered by the government since there are no public disclosures or even advertisements for their availability. This could be the reason why most people are not aware of government grants for financing a business venture. Also, one reason is that the budget does not allow a specific and exact date of release. The distribution of free business money is only for qualified applicants. Nevertheless, if your application hasn’t been successfully approved, there are still many programs which can consider your application.

Government grants are programs which serve as a homage for loyal taxpayers. The government is constantly allotting budgeted amounts for potential applicants. Whether you are just a novice businessman or even if you’re already a business tycoon, government grants are always reachable. The application process is quite easy to undertake provided with a good sense of compliance and direction as well. You must also forward the correct requirements to avoid delays and hassles. In time, you will be able to be granted with enormous amounts for the capitalization of your business if you are a determined applicant.

It is also important to equip yourself with the proper knowledge on the application process, its terms and conditions, requirements and the category you should fall into. There are many categories of free business money and one must be suitable for you. There are also websites that guide you through the application process and the people to consult. Know whether the sites you are visiting are really revealing the most proper stand during the process.

Your embarkation to the most profitable business starts with planning and budgeting. Government grants are always open to help you out with financial constraints and unavailability. Should there be any hesitations regarding these programs, you can always get in touch with your local administrator or seek for legal advice from a tax lawyer. These people should be able to help you out in facing your business dilemmas. The source of fund must be well prioritized in order to get your business going.

By: Christina Gruble

Ground Rules for Successfully Selling Your Business

admin — Thu, 04 Mar 2010 18:28:29 +0000

Sooner or later you are going to exit your business. The question isn’t whether or not you will be ready. The sixty four thousand dollar question is whether or not your business will be ready.

It is estimated that seven out of ten privately held businesses have no succession plan to transfer the business to the next generation of owners. What does that mean to you? It means that if you do not currently have a plan in place to transfer your business to family members, existing partners, management or employees, someday you will think about selling your business.

That day might come sooner than you anticipate. Don’t make the mistake of thinking that just because you are not currently ready to retire that you have plenty of time to prepare your business for sale.

As a business broker, I have been involved in a number of transactions (and potential transactions) where the business owner wanted to sell, or in some instances, was forced to exit the business earlier than expected. In fact, retirement is NOT the number one reason why businesses sell.

Here is a list of the most common reasons why owners sell (or otherwise discontinue) their businesses:

Burn-out (the number one reason for selling)

Health issues

Personal diversification

Retirement/semi-retirement

Death

Divorce/partner disputes

Business growing too fast

Second generation not up to the task

Loss of market share

TAKE GOOD CARE

The sad truth is that many business owners do not take good care of their most valuable asset: the business. They don’t groom someone to continue the business in their absence, and do not keep the business in salable shape during the time they operate the business.

Business owners tend to get too bogged down in the day to day business operations to worry about–or plan for an event that they perceive won’t occur until sometime in the distant future; selling the business.

Unfortunately, fate sometimes dictates circumstances beyond your control, and tough decisions must be made. If your business isn’t ready to sell when the time comes, what are your alternatives?

1. Liquidation of business assets—may be a solution, but one that usually returns very little money to the business owner. If the business had been an operating business, the underlying assets (except for real estate) may be outdated and of little use to anyone. At auction, the assets will bring only what the attending bidders are willing to pay. In some instances, underlying assets are sold to liquidators (or scrap) for only pennies on the dollar. Liquidation of a going business often occurs where the owners have become ill or disabled, or need to retire and have not planned adequately for their exit from the business.

2. Closing the business—is even less attractive than liquidation. That is because many who find themselves in this situation have a tendency to “put off” liquidating the underlying assets in hope that maybe someone will come along to buy this business. This almost never happens.

BUILD WEALTH NOW BY PLANNING FOR THE SALE OF YOUR BUSINESS

Okay, so you think you have enough to do without throwing more onto the pile. Am I right? That is why I have written this article for you. It provides a “down and dirty” overview of things that you ought to begin thinking about and planning for right now. Doing so will provide you with an additional safety net that will help safeguard your valuable business asset.

Here are just a few of the benefits of planning now:

A planned sale allows for your goals and objectives on your timetable

You may begin to identify potential buyers

You may be able to create an attractive acquisition candidate

You can begin to understand why a buyer may want to buy

You might learn why buyers would not want to buy—and be able to fix the problems

You may begin to realize the worth of your business now, and learn how to increase the value as part of your retirement planning

BUSINESS VALUE HOUSEKEEPING CHECKLIST

Record All Sales

Business owners often invent remarkable ways to beat the tax collector. But the taxman can be a business owner’s best friend when it comes to selling one’s business. Income taxes are a great investment in the years immediately preceding an anticipated sale of the business.

Paying income tax proves to the buyer AND the banker that your business operations have been profitable.
Nobody wants to pay more income tax. But consider this example: Ronald Bunk systematically underreported business income by an average of $20,000 per year. Assuming a combined tax rate of 40%, Mr. Bunk saved $8,000 in taxes per year. But, the underreported income also reduced the company’s earnings base by $20,000 per year. If, for example, the business could be sold for a multiple of 5x the company’s reported earning base—the company would sell for $100,000 less ($20,000 average earning base not reported times the price multiple of 5) than it is really worth!

Without considering the time value of money, it would take in excess of twelve years of (illegal) tax savings to make up for the loss of $100,000 in business value. The lesson: In trying to screw the government, business owners often find themselves on the short end of the stick; often in more ways than one.

Eliminate co-mingling of business and non business assets

A common practice among closely held companies is to co-mingle non business assets and expenses with business assets and expenses. I have seen businesses owning motor coaches, boats and airplanes; all reported as business assets. The costs of maintaining and operating the assets were expensed as regular business operating expenses.

It is true that those businesses (not audited by the IRS) are saving a certain amount of income tax, and providing an extra “fringe” benefit for the owners of the company.

Wise business owners should endeavor to separate non business assets from the business in the three to five years before a planned sale of the company. Doing so will make it much easier to accurately measure and reflect the true earning power of the business, as it will be unfettered by the capital investment in non business assets and the associated costs.

Buyers of your business are generally purchasing future income and benefit streams that will be produced by your business. The leaner and more productive your business is—the more it is worth. It is never too early to begin segregating non business assets from your business, as it may take some planning and time.

Do your own due diligence

Some executives of both public and private firms get a physical check-up once a year. Many of these same executives think nothing of having their personal investments reviewed at least once a year, if not more often. Yet, these same prudent executives never consider giving their company an annual physical, unless they are required to by company rules, regulations or some other necessary reason.

Anyone interested in purchasing your business will perform “due diligence” procedures on your business before closing on the purchase. All too often, sellers are surprised at the skeletons purchasers can find in the closet. These skeletons can reduce the value of your company, and in some cases, kill any chance at closing a sale. What skeletons are your company’s closets?

Why not give your business a periodic physical? In essence, I am suggesting you would do well to treat your business as if someone else owned it—and you were the potential purchaser. What problems would you discover that could cause you and your advisors to reduce or withdraw your offer?

Spending the time and money to discover and fix your company’s problems now will pay huge dividends in the form of increased company value—which is exactly what you want when it’s time to sell.

Compliance with taxing and regulatory authorities

Mountains of regulation often seem to impede a company’s growth and profitability. Some regulations might seem rather easy to “slight” or ignore.

Take for example one of my recent sellers who swore to me that the business had no regulatory violations of any type. I reminded the seller that anything “hidden in the closet” would most likely be discovered in a buyer’s due diligence (investigatory) process. “Nope—no problems of any kind” I was assured.

Well, guess what the buyer’s due diligence turned up? Seems the seller had a couple of shipping/storage containers sitting behind the building—which the sellers KNEW were in violation of local zoning ordinances. How did they know? They had received four previous “reminders” from the trustees about the containers, and the need to remove them.

“Why didn’t you mention that to me, or disclose that fact on your disclosure statement?” I asked. “Gee, nothing ever happened and the township never did anything—so we just figured it was no big deal.” Was the seller’s reasoning.

No big deal, except when the purchaser turned up the non compliance issue, it threw a few extra wrinkles into the mix. In that case, the issue was easily resolved (yet, much to the additional cost and chagrin of the sellers). But, sometimes known violations are not so easily remedied. In those instances, a seller runs the risk of blowing a good deal.

What’s the bottom line?

Clean up any tax, industry, OSHA, EPA or zoning issues with which your company does not comply.

Organize and keep records available. One never knows when opportunity might knock. If and when it does knock, will you be ready to strike while the iron is hot? How many times have you heard someone say something like, “I’d sell anything, including my business for the right price?”

Maybe you have even said it yourself. But would you know what paperwork and documents a serious buyer will immediately need in order to pursue the purchase? When a qualified buyer is ready to begin serious due diligence, they will need a variety of company documents.

Following is a partial list of things a buyer will ask for:

• Three to five years income tax returns

• Copies of one to three years quarterly payroll reports

• Three to five years CPA prepared financial statements

• Current year to date financial statements

• Detailed depreciation schedules listing each fixed asset owned by your company

• Corporate Minute Book with updated minutes

• Recent aged accounts receivable trial balance

• Recent aged accounts payable trial balance

• Company organization chart

• Copy of the Summary of Insurance Coverage (provided by your carrier)

• Information about Employee Benefits provided by the company

• Information about Employee Retirement Plans

• Copies of labor contracts

• Copies of other contracts to which the company is a party

• Copies of licenses, registrations for patents, copyrights, trademarks, etc.

The foregoing list is an example of the types of records your company should have up to date and on hand at all times. These records are extremely important to speed the sales process along. Though this advice sounds basic, I often encounter companies whose records are not complete and up to date. This situation can dramatically affect a potential sale.

I suggest using a three ring binder to keep the basic updated records available at all times. This also makes other business needs for the documents much more manageable.

CONCLUSION

You can increase your wealth by knowing a few simple ground rules for successfully selling your business. Just like other owners of closely-held businesses, you know how to operate your business on a day to day, month to month and year to year basis. But your experience in running the business has not prepared you to know how to sell your business.

While the information I provided in this article is not all inclusive, it should help you get started in preparing your business for a successful sale—no mater when the business might be sold.

By: Grover Rutter

The Difference Between Insurance Agents and Brokers

admin — Thu, 04 Mar 2010 08:39:13 +0000

For a business owner seeking general insurance, the difference between a business insurance agent and broker is not just a matter of semantics. There are sufficient distinctions between the two that can influence whom you should insure your business with.

Both business insurance agents and brokers are insurance intermediaries who assist business owners with insurance decisions. Typically insurance agents deal with a particular insurer (captive agents). Also, agents do not procure insurance contracts, but merely recommend them. Even independent agents deal primarily with one insurer- the difference being that they are allowed to recommend any product from any company to a client. Brokers procure insurance contracts on behalf of their clients.

A broker should not be automatically superior to an agent and vice versa. However, there are certain distinctions that should indicate whether you should consult an agent/broker or both in seeking certain types of business insurance.

The key differences between insurance agents and brokers can be categorised as follows:

1) Duty to clients

2) Qualification and experience

3) Fees and premiums

4) Special deals and policy arrangements

5) Options for clients

Duty to clients

A business insurance agent has an administrative liability to clients. Brokers have that liability and a legal obligation to their clients as well. Agents are merely facilitators- representatives of a particular insurer (or insurers in the case of independent agents). Agents have a responsibility to both the insurer and the client and ensure that the client provides all necessary material for an application to be underwritten. Brokers have a legal duty to their clients and can even be held liable for not fully fulfilling the request of a client. Brokers therefore have a higher duty towards their clients.

Qualification and experience

Both agents and brokers require licenses to operate. However, brokers require a special license or, in some cases, a higher mark in the same licensing exam. Brokers generally have higher qualifications and experience than agents. This does not suggest that some business insurance agents are not as qualified or have more experience than brokers do. However, brokers tend to handle a larger portfolio and normally have a wider range of experience with business insurance than the average agent.

Fees and premiums

The level of service and higher duty is not a free bonus with brokers. Brokers may charge a fee for their service or offer higher premium than the base premium. Agents are not allowed to do the same, since they do not have a similar level of accountability to clients and are usually captive agents.

Special deals and arrangements

As a result of their networks and experience, brokers can arrange special deals or contract arrangements for clients. A broker has the power of negotiation with insurers, whereas an agent typically has to present the insurer’s package to a client and is unable to effectively negotiate terms and conditions of the business insurance contract. As a result, it is easier to get what you want or need from a broker.

Options for clients

Business insurance brokers and independent agents are free to deal with any insurer that they choose. Captive agents usually offer fewer options to clients and may not always be in a position to recommend alternatives. Brokers and independent agents differ because independents agents tend to have one or two companies that they work with on a regular basis. As a result of their higher duty to their clients, brokers must attempt to find the best arrangement for their clients. That fact and the brokers’ negotiating power enable the broker to provide better options for a client.

One of the critical insurance decisions that a business owner may have to make is which insurance intermediary to choose. In some cases, it may actually be appropriate to choose an agent if the insurance needs are straightforward and the business owner requires the best deal with basic criteria. However, for larger and more intricate contracts, a broker has the position and experience to procure what is required. Clearly, the choice between a broker and agent is not just a matter of preference. It can significantly influence how well your business is protected.

By: Darrell Victor