Andrew Rogerson's Blog, page 40

Factors to Watch Selling Your Business

When determining an asking price for your Sacramento business, an estimation of the Fair Market Value and other research can be a starting point, but there are some other important components that can impact the price premium or discount to be applied in a negotiation.

These factors are discussed below.

1. Type of Buyer

Each buyer has a different acquisition goal, along with varying internal and external forces that bring them to the negotiating table. The type of buyer affects the price he or she is willing to pay:

Bargain hunters want the lowest possible price—below market rates.
Financial buyers are looking for a return on their investment, which limits what they’ll pay.
Corporate buyers have a strategic objective like expanding sales into a new market or product line. These buyers typically will pay a premium over market value.
Strategic or synergistic buyers think that the “synergies” of the deal will allow for an even higher premium that’s justified by the benefit of those synergies. Things like revenue enhancement, cost savings, and process improvements are what they look to gain in the acquisition.

2. General Attractiveness of Your Business

Of course, a sales price below market valuations will make your company in Sac more attractive to prospective buyers. An asking price that’s in line with the company’s fair market valuation is also attractive. Factors that make a company attractive include its quality of earnings, strong growth rate higher than industry norms, a strong balance sheet, and a capacity to support additional debt. Being a market leader with strong management also help the cause.

The chance of a higher premium are greater here if the overall economics of the business make it attractive, it’s future earnings can support it; and an attractive acquisition target is going to attract a larger group of interested buyers. More prospective buyers means more competition; the pressure increases for a higher premium.

3. Financial Parameters

As the seller, these are pretty basic: realize the most after-tax dollars. The financial parameters of the buyer determine the price for the company, and include the following:

Internal cash available for acquisitions;
The amount the buyers are willing to invest in one deal;
Cost of capital;
The percentage required over and above the cost of capital;
Availability of capital and the its terms; and
Reaction of capital markets to a proposed acquisition.

4. Negotiation Skill and Bargaining Leverage

The premium the buyer will need to pay will be influenced by your business broker’s negotiating skills, bargaining leverage, and time constraints. The seller may have time and demand on his side. A negotiator’s leverage comes from his perceived ability to fulfill needs: the buyer offers the seller liquidity, freedom, and the opportunity to further develop the company. The seller offers the economic advantages of owning the company.

5. A Buyer’s Experience with other Acquisitions

Prior experience can be a big factor when considering the premium that a buyer is willing to pay. If the buyer’s last purchase didn’t work out, they will really struggle over offering what they see as a large premium. However, the reverse can also be the case where a buyer has proven experience in the industry and may opt to pay a higher premium because they are confident that they can make the deal pay off.

A buyer’s prior experience may help with an understanding of the relative value of companies in the industry and value drivers; a better understanding of the strengths and weaknesses of the company and how it compares to others; and a better understanding of the risks experienced by similar companies and the industry.

6. Inherent Risk Factors and the Buyer’s Tolerance

Risk is the possibility of a bad outcome or the uncertainty of a desired outcome. Tolerance of risk is the willingness to accept and manage the risks. As to the risk of acquisition pricing, there are two key thoughts: (i) the lower the inherent risks of owning the company, the higher the premium a buyer will be willing to pay; and (ii) the higher the premium paid, the more the risk. When the buyer identifies the risks, they need to determine if can if they can tolerate it. If the pay-offs look promising, and a there’s a strong belief in a favorable outcome, they may think it’s worth the risk.

7. Market and Economic Conditions

Economic and market conditions can greatly influence buying decisions, and the impact on the bottom line can be significant.

There are many factors to successfully sell a business. Andrew Rogerson is a Certified Business Broker and knows the business environment in Sacramento, CA having spent over 10 years negotiating transactions for his clients.

Successfully Sell Your Business

Andrew Rogerson specializes in helping business owners sell their business including its many steps. This includes a business valuation, creating a marketing strategy to find qualified buyers, and handling all phases of the transaction including third-party finance for the buyer, due diligence and escrow. He is the author of “Successfully Sell Your Business” which is available for immediate download.

For more immediate help you are welcome to send an email to Andrew Rogerson or give me a call on 916 570-2674.

The post Factors to Watch Selling Your Business appeared first on Rogerson Business Services by Andrew Rogerson.

Handshake Deals May Work at State Capitol

Sacramento is the center of California’s state government. This means that most of the meetings, negotiations, and deals are struck right here.

While a handshake to close a deal between two members of the Assembly may work at the State capitol of California, a handshake is not the way to close the sale of your business.

As a business owner, you might be inclined shake on a deal for new TV advertising or buying office supplies from a new vendor (although you should get it in writing). These “handshake deals” personalize the relationship and help grow the business. Likewise, some business owners will trust the other party and sign documents they don’t bother to read or don’t understand (and afraid to admit it).

When selling a business, an entrepreneur who uses the handshake and the blind signing techniques may find themselves with serious issues.

If you’re thinking about selling your business, you need to be certain that all of the “t’s” are crossed, and the “i’s” are dotted. Of course, we know this saying means that we should pay close attention to what we are doing, particularly when it’s the review of a document. This means a careful review by not only you—but also by an experienced business broker in Sacramento, CA who can spend the time needed to see that everything is accurate, and you will be satisfied with the transaction.

Sales Agreement

If you are ready to sell your business, you’ll need to create a sales agreement or Purchase Agreement, which is the most important document in selling the business assets or the stock of a corporation.

Have you done this before?

What it easy and fun?

Ok, even if it was enjoyable, you have better things to do than to fret over every single detail of this deal. Sure, you want it done right, but let your business broker handle all of the hard and tedious work and manage every detail.

As your Sacramento business broker, Andrew will be certain that the agreement is accurate and contains all the terms of the purchase. The sale agreement will define everything that you intend to sell to the buyer of the business. This can include assets, customer lists, intellectual property, and goodwill. Andrew will work with you to ensure that you sell what you want to sell and that there is no question or issue with the agreement. He will prepare the sale agreement so that it’s ready for you to review and sign and has legal attorneys available to help address a complicated legal issue if that becomes necessary.

Before you shake hands or sign a contract without reading it to sell your business, talk to a seasoned business broker who knows the economic (and political!) environment in the Sacramento area. Andrew Rogerson is a Certified Business Broker and specializes in lower middle market and private equity transactions and will be an invaluable resource during the sale of your company. Andrew will help minimize the risks throughout the sales process and provide you with insights from his years of business dealings in the Capital City of California.

Many Steps to Sell a Business

There are many steps to successfully sell a business with completing due diligence just one of those steps. Click this link if you would like a one page summary of the Many Steps to Sell a Business.

Are you thinking about selling your business? Would you like to know the value of your business? If you would like more information please visit my website Business valuation.

For more immediate help you are welcome to send an email to Andrew Rogerson or give me a call on 916 570-2674.

The post Handshake Deals May Work at State Capitol appeared first on Rogerson Business Services by Andrew Rogerson.

Mompreneurs: Tips for Professional & Personal Success

If you’re a mom and a business owner, you know first hand how hard it can be to juggle your professional and personal lives. Your kid’s school is calling you because your daughter forgot her homework, and you’re trying to meet your clients’ needs too. It’s a lot for anyone. First off, you should know that you’re not alone. The Department of Labor estimates that 57 percent of women work outside of the home. Second, you should know that there are plenty of resources out there that can help you. By following these tips and tricks, you’ll be able to achieve a better work and life balance.

Find Quality Child Care

If you have it in the budget, you’ll want to try to find either a great babysitter or a day care center for your child. That way, you’ll have a few uninterrupted hours where you can focus on completing as much work as possible. By researching a high-quality child-care provider, you can rest assured that your child is in good hands while you’re running your business. In an individual babysitter, you’ll want to look for someone who has good references and plenty of experience. Parents.com suggests even scheduling a paid play date so you can see how your child and the babysitter get along. In a day care facility, you’ll want to search for a place that has flexible hours, a low student to teacher ratio, employees who have had their background checks and up-to-date licenses. Be sure to ask your friends for personal recommendations, too.

Take Time for Yourself

Many working moms are often so busy fulfilling work and familial duties that they often forget to take care of themselves. If this sounds like you, pencil some “me” time into your schedule. Have lunch with a friend sans kids. Book a spa treatment. Take a bubble bath. Even if it’s just for an hour once a week, taking care of yourself is paramount. The only way you’ll be able to take care of all your other responsibilities is if you’re taking good care of yourself.

Work Smarter, Not Harder

If you can swing it, try to only work eight hours every day. Keeping your work and home life separate is key to maintaining balance. The following tips can help increase your productivity. Make a to-do list and work on checking all the tasks off before the end of the day. Try not to check email past 5 p.m. Turn down assignments if you won’t have time to complete them. Put your phone on silent starting around 6 p.m. and only answer non-work calls.

Give Yourself a Break

Most importantly, you’ll want to let go of perfection. Things will never be perfect. It’s OK if the house isn’t tidy. Your kids don’t need to eat a home-cooked meal each and every night. Likewise, it’s also perfectly fine to let them watch TV in the afternoons. The laundry doesn’t have to be done a certain way each and every single day. Plenty of moms feel guilty when they don’t have time to take care of everything around the house. But you’re working hard, and it’s difficult to do both. You can let a few things go every once in a while.

If you’re searching for a way an easy way to give your kids a fun activity that’s still educational, try creating a free double puzzle. Kids will love how engaging this puzzle is. First, they unscramble clue words and then use letters to figure out the final word. It will teach them all about spelling, and it’s a breeze to create. You’ll love how it keeps your kids occupied, and your kids’ teachers will appreciate your child’s growing vocabulary.

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Why It’s Vital To Have a Mobile Friendly Website

As the internet continues to build in popularity, more companies are realizing the value of maintaining a strong web presence complete with consistent content and captivating graphics. However, smartphones and smart devices continue to dominate the market and show no signs of slowing down. Because of this fact, thousands of companies are channeling their efforts into upgrading and streamlining their websites to become mobile friendly. There are a few reasons to consider this move. For companies that are looking to stay on top of the trends and maintain relevancy in the marketplace, there are five main reasons why it is imperative to develop and maintain a strong mobile friendly website.

1. It helps build search engine rankings.

While keywords and content are really important for search engine optimization, it is also helpful to maintain a mobile friendly website. The more visits a website gets from a mobile device, the easier it is for Google to recognize the site as a relevant authority. When Google recognizes a site as a relevant authority, it usually lands on the first page. This also depends on the keyword. Some keywords are more competitive than others. However, the best way to beat out the competition is to have customers searching for and visiting the company website from their mobile devices.

2. It helps a company stand out from its competition.

There are lots of companies that are still in the stone-age when it relates to the internet and supporting a strong web presence. At the bottom of the totem pole, there are companies with information that hasn’t been updated in years and slow servers. This is very frustrating for people who want correct information on their mobile devices. It also makes the company seem irrelevant and out-of-touch.

3. More people use their phones instead of laptops.

Ofcom’s 2015 Communications Data Report showed that smartphone use was up 23% from the year prior. The study also shared that across the board, two-thirds of adults own a smartphone. Furthermore, these same adults are most likely to use their smartphones for at least two hours every single day. This was also at the expense of laptops. Many people are more likely to walk with their cell phones at all times. Because of how advanced cell phones have become over the past few years, it isn’t uncommon to find people who own the latest smartphone and use it for everything. Laptops are still convenient and helpful to own. However, most people aren’t glued to their laptops, but many people sleep with their phones at night. The accessibility with a cell phone is much easier.

4. The demand for instant gratification is on the rise.

It’s hard to fathom what life was like before the microwave when people had to wait for the stove to heat up food. The same can be said for smartphones. Even though smartphones have only been on the scene for a little over ten years now, life before cell phones doesn’t seem unfathomable anymore. People like to get their information in a matter of seconds. With a smartphone, people can reach anyone and any information within seconds. The instant gratification factor is important because companies now must keep up with the pace of technology and the quick turnover demand.

5. People are more likely to respond positively to a company.

Studies show that consumers respond well to mobile marketing. According to a study done by Thrive Analytics, out of all the users who clicked on a mobile marketing campaign, 55% actually made a purchase. This rate is higher than many people experience with their ROI with email lists. When people open up their smart devices to get specific information, they usually want it quickly so they can make a decision. Yes, there are internet options that allow browsing. However, most people browse their apps with the intention to get information and make a decision on it immediately.

There are plenty of ways to develop a company and gain customers. However, in the 21st century, it is clear to see that without a strong mobile presence, people view many companies as irrelevant and out of touch. Strengthen the mobile presence and this will strengthen a company’s chance at experiencing longevity.

This article is written by a guest author, Jessica Kane.  Jessica is a professional blogger who writes for Faxage, a leading company that provide internet fax services for individuals and businesses.

The post Why It’s Vital To Have a Mobile Friendly Website appeared first on Rogerson Business Services by Andrew Rogerson.

Transitioning a business from the seller to the buyer

Without exception the sale of a business from the current owner or seller to the new owner or buyer is exceptionally difficult.

In simple terms, the difficulties for each party touch the ‘head’ and the ‘heart.’

For the seller, normally their greatest challenge is their ‘heart.’ They have been thinking and talking to their loved ones to decide if the time is right to sell their business. To help make this decision they look at their personal finances, the headaches they deal with each day, the new and upcoming headaches they see and if they wish to deal with them. If the answer is no and they decide its best to sell the business, they have to start a process that may or may not having an ending that will work for them. Once they start that process, it’s very hard to deviate from it as there are many things in play.

For the buyer, they have many challenges and most of them reach a final decision in the ‘head’ with the ultimate decision in the ‘heart.’ The buyer ‘head’ decisions are looking at financial statements, meeting and talking with important players that affect the business or guide the buyer’s decision making process such as landlords, lenders, attorneys, accountants and more.

After the buyer has made all the ‘head’ analysis they think they can do they are left with one final decision; is this what they really want to do. That decision comes from the ‘heart.’

The transition is the key factor in the future success of the business

The key factor to the continuing and future success of the business is the transition.

The new owner needs to understand how and why the previous owner operated the business the way they did and the reason behind their decisions. That’s not to say the new owner needs to make the same decisions, but if they can understand the reason behind previous decisions and make any changes carefully and with consideration, it will increase their chances of success.

Plus, an important piece that is over looked, if the previous owner and the new owner can work together with their decision making process, it means the best decision is made and that’s the best anyone can do.

What’s the role of the seller after the sale closes?

The buyer has so many items to address to close the sale of the business, often any clear role for the seller is not planned or made.

However, there are some things to consider.

Does the seller have a strong, autonomous decision making management team? Does the seller just make the “important” decisions and then delegate? Does the seller centralize any and all decision-making and then micro-manage to ensure the end result meets their needs?

The more the business relies on the seller centralizing any and all decision-making and then micro-managing to ensure the end result meets their needs the longer the buyer will need them to stay on.

Critical piece of a successful transition

A critical piece in the transition is the seller’s customer relationships. If the seller has many client contacts, the success of the transition will be positively having the seller ease out of the relationship and moving it to a new person be it the buyer or a key employee.

The best decision can take many twists and turns and depend on many items. How many client contacts does the seller manage? Are they day to day contacts or are they ad hoc or seasonal? In relation to gross sales, what is the value each contact brings and over what period of time? (The greater the value the more effort to make to preserve that client.) Is there an opportunity to re-contact with old clients to restore lost business patronage?

The worst thing to do is simply call each customer or send them a letter and announce there is a change of ownership unless the seller has run down the business and there is a need to start to build goodwill all over again.

In line with the last suggestion, putting a sign or banner out the front of the business to state there is a change of ownership is equally foolish. The buyer has just paid a percentage of the purchase price of the business for goodwill. A sign or banner announcing a change of ownership is notification to the world the seller has now “left the building” and so old clients could come in and meet the new owner or look for somewhere else to buy that product or service.

Buyer management style

An equally important part of the above is a critical question and that is, what is the management style of the buyer and will it complement the sellers?

We each bring our unique personality to own and operate a business. There is no better example than Steve Jobs. Steve Jobs started Apple with Steve Wozniak and was fired only to be asked years later to come back and run the company. That is, personality matters and so does their management style.

Best transition model

There are different transition models.

Here is a simple but effective model.

Phase one.  The seller commits to work full-time as if there has been no change of ownership. During this time they transition to the buyer or the seller’s replacement their management knowledge of how the business operates.

Phase two.  The seller continues to work in the business but now let’s the person they trained make their own decisions.

Phase three.  The seller moves to a part-time role.

Phase four.  The seller no longer comes to work in the business but is available for phone calls or one off in person visits to discuss a specific problem and/or review how the business is operating.

Communication and Trust

At the end of the day, a successful transition is about open communication and trust. The open communication allows issues to be addressed and resolved to the benefit of all parties. However, its only by trust that there is a willingness by all parties to do what they said or agreed they would do that means the outcome agreed during the open communication gets done.

A good legal contract states the intentions of all parties however the successful transition of the business comes down to the buyer and seller working together in good faith; not what is written in a legal contract.

Are you thinking about selling your business? Would you like to know the value of your business? If you would like more information please visit my website Business valuation.

For more immediate help you are welcome to send an email to Andrew Rogerson or give me a call on 916 570-2674.

The post Transitioning a business from the seller to the buyer appeared first on Rogerson Business Services by Andrew Rogerson.

Opportunities for Entrepreneurs

The overnight success of companies like Facebook and Uber have changed the way people think about entrepreneurship. It’s no longer a profession for those who simply want to own a business. To be an entrepreneur in the digital age means having the desire to build a brand around an essentially simple idea. It’s as much about selling a product as it is about selling the idea of that product, and a large part of achieving that goal is finding individuals who share in your entrepreneurial spirit and putting them to work.

In this new startup culture, an enthusiastic, independent-minded professional is just as valuable as a highly trained technician or computer programmer. It should be no surprise that job listings now reflect this new reality. Here are just a few industries that are hungry for employees who think like entrepreneurs.

Automotive

The automotive industry is changing. As environmental standards change and people look for alternative means of transportation, the role of the car salesman has shifted significantly. The amount of information and reviews on the Internet means that consumers often arrive at the car lot informed about their options. In fact, many people avoid the lot altogether, relying instead on services like DriveTime, which offers a database of tens of thousands of used cars across the country.

The days of haggling at the dealership are over, but buying a car is still a big investment and most people prefer some human interaction when it’s time to make the final decision. Enter the DriveTime sales adviser, a highly motivated and highly knowledgeable professional who works with customers to find the best car they can afford. It’s a low stress approach to car sales that puts the emphasis on customer service, not on filling a quota.

Personal Finance

Most people don’t enjoy talking about finances, even when they are personally invested. Financial advisers were once thought of as a luxury reserved for those with diversified portfolios and large bank accounts, but that has changed. Today, many people seek advice for ways to get the most out of every dollar.

A good financial adviser has two skills that are often thought to be mutually exclusive. They have to understand highly technical financial systems and they need to be able to communicate that complexity in layman’s terms. They also need to be able to explain to an impatient customer the value of an investment that may not pay off for 10, 20 or even 50 years.

Public Relations

Every business has a message that they want to convey, and every potential customer has a message that they think they want to hear. The public relations specialist exists somewhere in the middle, trying to find common ground where both parties can be happy.

Public relations requires quick-thinking individuals with a gift for language. They feed off of social settings and are highly attuned to how a large group will perceive them and, in turn, the company or organization they represent. Public relations specialists spend a good deal of time fielding questions, and truly good ones have done their homework and know the answer well in advance.

Perhaps owning and operating your own franchise is right for you? If you would like more information about buying a franchise please visit my webpage Buy a franchise or buy a copy of my book – Successfully buy your franchise.

For more immediate help with buying a franchise, send an email to Andrew Rogerson or give me a call on 916 570-2674.

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Importance of Accurate Bookkeeping

Accounting and bookkeeping are critical components to managing your business properly, along with keeping these records for tax purposes. Maintaining accurate and up-to-date financial records for your operations will tip you off to cash flow and tax issues.

With these reasons in mind, here are a few basic definitions that should be a part of your company’s standard accounting practices.

Revenue and Expenses: Each transaction must be recorded, as it’s critical to the business to know what funds are coming in and what’s going out, and from where it’s coming and going.

Cash: Record the amounts of cash your business spends annual to determine accurate expenses. You can examine the reimbursable checks written and keep a detailed petty cash record to accurately document cash expenditures.

Inventory: Inventory records are critical. Many businesses let this slide—when they do, they lose track of one source of revenue. Without this tally, the record-keeping for each month and year will be off. You may be making decisions on inaccurate data!

These records will also help with your forecasts for the coming year by tracking trends, prevent stealing, and misplacing merchandise, which can help keep inventory holdings to a minimum. Track the dates when inventory was purchased, stock numbers, purchase prices, dates when it was sold, and sale prices.

Accounts Receivable and Payable: Show me the money! You must know what your customers owe you and the amount of debt you owe to others. All of the data you have is important to record: invoice dates, invoice numbers, sale amounts, contract terms, dates and amounts paid or due, account balances, and updated client information.

Employees: If you have even one individual on your staff, you have a responsibility to file and pay forms and payroll taxes to your state and the federal government.  Employers are responsible for maintaining employee forms such as the W-4 and the I-9. You must keep records on withholding, employer matching, unemployment, and worker’s compensation.

If you are going to tackle your own bookkeeping, you should consult with an expert, particularly at the start to make certain that you are doing things correctly. As the business expands, you decide to hire a bookkeeper and perhaps use more sophisticated accounting software programs.

If you’d like to talk about bookkeeping, especially if you are considering selling or buying a business, buying a franchise or a related service such as valuing a business, please visit our website Services and choose from the drop down menu the information you would like.

For more immediate help, you are welcome to send an email to Andrew Rogerson or give me a call on 916 570-2674.

The post Importance of Accurate Bookkeeping appeared first on Rogerson Business Services by Andrew Rogerson.

Minimize the Risks

Make sure that you’ve thoroughly prepared your due diligence for a structured, competitive transaction process and to ensure that the window of vulnerability is as short as possible.

Window of Vulnerability

Throughout your interaction with a potential bidder right up until the sale is closed, there’s what is called a window of vulnerability where you and your business are exposed to inevitable risks. Because of this, you want to shorten this window as much as you can. To do so, consider these strategies to mitigate these risks and execute a sales process that exposes your business for the shortest amount of time possible.

Be Ready For Due Diligence

Regardless of whether your business has just one bidder or many, it’s crucial to prepare comprehensive due diligence information. It’s best to provide this information in a format that can be easily reviewed by your bidders’ due diligence staff. Failure to make ready complete documentation will raise numerous questions by the prospective purchasers. Information that is incomplete, incoherent, or internally inconsistent will mean additional information requests to provide clarifications—and to do so ASAP!

If this is the case, your due diligence preparation can become disorganized and reactive, which may not show your business in the most positive light. No one can totally predict everything that a bidder may request, but a carefully and thoroughly prepared compilation of your data will be worth the time invested beforehand. This is where a knowledgeable and experienced business broker can help you organize and collect data, as well as to ensure secure and efficient dissemination of your business information to bidders. This will speed up the process due diligence and minimize the risks during your window of vulnerability.

Competitive Tension

Competitive tension among multiple bidders is a good thing. This gives you some leverage in considering a strategic choice, while also diversifying any buyer-specific completion risk.

There often are some in a competitive process who see more value in your business than others. With a controlled, competitive process between the best potential purchasers, a sense of urgency for them to move quickly may develop and to outbid the competition. In this way you can realize a greater value for your business and also have the benefit of an accelerated transaction process that’s powered by competitive pressure of the bidders.

Give Your Bidders Clear Deadlines and Instructions

Don’t give your bidders an exact timeline that details the sales process from start to close, as you want to have the leverage to adjust their expectations and to dictate the terms of the negotiation as much as possible. But if you give your bidders clear expectations as to deadlines and any specific instructions, you will be able to maintain the pace of the process and minimize extraneous miscommunications and efforts.

Make these clear next steps for bidders several weeks out, including realistic deadlines. Make sure you hold them to these dates. Make certain that all process requirements are defined, particularly those that deal with communications. Give each bidder a memo that memorializes the comprehensive process and clearly states the requirements for a bid to be considered. These requirements can modulate the flow of information, so that only the most serious parties receive your most sensitive information. This type of culling process also helps your team’s efficiency with some of the more labor-intensive aspects of the due diligence process.

Work with a Professional who does this for a Living

Just like you should never swim alone, moving through this process without a qualified agent can make this exercise stressful and drudgery, and you may start to sink. You need someone to help you.

Engaging a business broker who is experienced in the sale process will be a lifesaver. A broker who focuses on private equity transactions will prove invaluable and can help you minimize transaction risk throughout the sales process. A business broker will give you important insights about how to reach the right set of potential buyers and, at the same time, minimize execution risks and potential information leaks. They’ll be able to facilitate an efficient transaction process by pointing out and helping you address potential problems with a deal beforehand.

If you would like more information about buying a business, please visit our website Buy a business or buy a copy of my book Successfully buy your business.

For more immediate help with buying a business you are welcome to send an email to Andrew Rogerson or give me a call at (916) 570-2674.

The post Minimize the Risks appeared first on Rogerson Business Services by Andrew Rogerson.

Buy a franchise

Congratulations, you’ve decided to buy a franchise.

Now you need to put your nose to the grindstone and do some homework in order to choose the right one. More time in preparation can avert any number of franchise disasters. Here are some tips on what to do before you sign anything.

Franchise Disclosure Document

Your starting point in this process, particularly if you’re new to this game, is to contact an experienced business broker. He or she can advise on how to analyze potential opportunities and help you make your decision. The franchise’s information is contained in its offering circulars. These documents, called Franchise Disclosure Document or FDD and used to be called the Uniform Franchise Offering Circulars (UFOCs), can be hundreds of pages and filled with legalese. The offering circular contains the company’s history and its management team, financial statements, its processes for settling disputes, and the risks associated with the franchise. They also include a great deal of helpful data, such as annual revenues per location, growth projections, and the expectations of franchisees. The FDD’s also provide the names of former franchise owners.

Make sure that you carefully examine the three-year percentage figures on franchise turnover. If this figure is in double-digits, it’s a red flag. In addition, look at the litigation section—if its voluminous that’s another sign of a troubled franchise system.

Compare Prices

Now that you’ve passed those hurdles, take a look at the prices. In addition to the initial entry fee and royalties (the portion to be paid to the franchiser), see what you’ll contribute to shared services, like advertising, software rental, equipment and maintenance, and other services. You also will want to find out what’s required for initial inventory and store-construction expenses, as well as the amount of a cash reserves needed. You need to think about all of those costs when you weigh your decision.

Franchise Characteristics

One important factor is the size of the franchise system. If a systems has less than 50 units, this may indicate some issues with their business model, which could require more business and operational skills from franchisees than would be required in a larger franchise system.

Also study the territory and customer base being offered and determine whether the franchise offers area exclusivity. If it doesn’t, see how many how many identical outlets are already in the area. You should also see the business in operation by visiting several sites. Try to get a feel for what goes on, customers, staff, the size of transactions, and other business processes.

Make Use of a Franchise Expert

Again, if you don’t have a firm grasp and experience with the franchising process, seek the advice of a knowledgeable business broker. A broker will be able to instruct, for example on negotiating with a young franchise, where you may be able to seek more favorable terms. A broker will have many more thoughts and strategies to help you secure the franchise you want.

If you would like more information about buying a franchise, please visit our webpage Buy a franchise or buy a copy of my book – Successfully buy your franchise.

For immediate assistance with buying a franchise or with your franchise questions, email Andrew Rogerson or call us at (916) 570-2674.

The post Buy a franchise appeared first on Rogerson Business Services by Andrew Rogerson.

Address All of the Issues

Selling a medical practice involves a myriad of complex issues, ranging from legalities of employment, taxes, business organization, to accounting and leasing. These types of issues permeate the entire sales process, from preparing for the sale and throughout this business transaction.

Failing to prepare is preparing to fail, the old adage warns.

A physician who doesn’t adequately prepare his or her practice for sale risks a result of receiving less than the maximum valuation of the practice.

Many physicians have opted to sell their practices to a larger medical group or hospital and sign an employment agreement with the buyer. Some see this as a way to better achieve a life balance or to do away with the added stress of running a business to devote more time on treating their patients. Finally, some physicians will sell their practices when they are ready to retire. Regardless of the reason, there are important questions to be addressed with the help of an experienced business broker specializing in health care concerns that will ensure that the sale realizes its maximum value and adequately protects the patients.

Here are a few reminders that are a good place to start:

Make sure your books are in order

This should be a given at any point in time for a successful business, but if a physician is planning to sell his or her business within 18 months, remove expenses from the books such as cellphones and cars to show little or no expenses on the books that impact the net revenue and that may be hard to explain. Another scenario is to create a separate professional association for those expenses. Physicians should discuss strategies with an experienced business broker to make certain their balance sheets show as positively as possible how their practice is performing.

Show your billing and collection data

Just like other business owners, a physicians should show potential buyers what the practice bills out and the amount of money it collects during the most recent 12-month period—this can help maximize the value of the medical practice. If your records indicate that the practice collects on average 75% of all billing, this will command a better price than a practice that’s less successful and collects on only half of its bills.

Make Sure Your Practice is Right-sized

As another measure of the performance of the practice, a physician should make certain that he or she is employing the right number of employees for their workload, and to show that all of the support staff are being fully utilized. Physicians should review job descriptions, responsibilities, and tasks, as well as the benefits for each of their employees. While this may not result in downsizing, it should help to more fully describe how the practice’s employees are utilized.

Do Your Homework

These are just a few on the issues physicians need to address when preparing to sell their medical practice. There are plenty more, and preparation is critical to realizing the best return on investment.

Speaking of investment, an investment of time is truly needed for physicians to have a sense of the market, the value of their business, and to map out a solid strategy for selling. So with all of this studying, why not get a tutor?

Andrew Rogerson has years of experience working with healthcare professionals throughout the sales process. If you are thinking about selling your medical practice and looking forward to the next phase in your life, contact him today. Andrew can consult with you on the valuation of your practice and how to position it to receive the best price.

If you would like more information please visit our website Sell a Medical Practice, or contact us directly via email or call (916) 570-2674.

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