Andrew Rogerson's Blog, page 51

Where is your business going

For the business owner, the business is at the epicenter of their life. Every decision in the business owner’s life is somehow impacted by the business. The division between the business and the business owner often becomes blurred. There is no finishing work at 5PM every day with the luxury of leaving work issues behind until 8AM the next morning. The business owner’s business life impacts every area of their personal life to include their family, friends, free time, finances and future.

A good question is “Where is my business heading?” The answers seem readily available by looking at income statements, balance sheets and tax returns, etc., but this is all about what has happened previously.

Is looking in the rearview mirror the best way to turn a corner?Is looking in the rearview mirror going to help you negotiate oncoming traffic?Would you drive across the country without a roadmap?

Since the business impacts every area of a business owner’s life and most often is the center of their family’s financial infrastructure providing the majority, if not all, of the family’s current and future income, why take a chance on losing business value, creating risk exposure or paying unnecessary taxes, when these areas can be managed through proactive oversight and planning?

Read More Here is more information about valuing a business.

Business owners should STOP solely looking in the rearview mirror and begin to prepare for the future by looking out of the front windshield. A business is essentially alive and constantly changing. An owner can manage the impact this ever-changing business will have on them and their family’s life by preparing for what is coming down the road with two separate documents; a Business Valuation and a Tax Structuring Report. These documents are exceptionally useful for the business owner that wants to sell but they are also important when putting together a well thought out plan for the future direction of the business.

A well thought-out plan can increase and preserve the value of the business. This is true whether the business is ultimately transferred to other family members, employees or to an outside acquirer. Additionally, just as a business is dynamically ever changing, a business value is an active planning tool to guide ongoing decision making. That is, this is not something that is simply developed then placed on a shelf for future reference.

Click this link to see a sample Business Valuation.

If you would like to have a Business Valuation prepared for your business or medical practice, it requires the tax returns of your business for the last 3 years, a current profit and loss statement and balance sheet. With these documents, a Business Valuation can be prepared in about two weeks.

A Business Valuation shows the price of a business or medical practice but does not show how much the business seller gets to keep. This is the benefit of a Tax Structuring Report as it allows a seller to negotiate with a buyer from a position of strength and not weakness. That is, the seller can proactively manage reasonable expectations with the buyer as opposed to having a sale of the business or medical practice crash because they were able to agree on the price and terms of the deal but not the tax consequences.

Read More Here is more information about tax and selling a business.

Regardless of the planning direction chosen, effective family business transition planning with a Business Valuation and a Tax Structuring Report helps a business owner gain greater control over the direction of future destiny of one of his most precious assets, the family business.

Click this link to see a sample tax structuring report.

Keep in mind that ALL businesses do experience a change of ownership at some point in the life of the business whether planned or unplanned.

If you would like more information about selling a business, buying a business, buying a franchise or a related service such as valuing a business, please visit my webpage Services and choose from the drop down menu the information you would like.

For more immediate help to know the value of your business with a 19 page report or tax consequences when selling your business, you are welcome to send an email to Andrew Rogerson or give me a call on 916 570-2674.

The article Where is your business going first appeared on Andrew Rogerson and Rogerson Business Services.

Ney Grant Talks Middle Market Brokering

Ney Grant from Woodbridge International was my guest on 105.5FM and Money 2.0 in 2013. Woodbridge International focuses on buying and selling companies that are “middle market”; companies that have a net income of a million dollars or more.

Ney shares how selling a middle market differs from smaller mainstream business brokering. He says the process and the amount of time involved in buying/selling large vs. small companies is about the same for a broker, however the marketing is dissimilar. Ney explains that middle market marketing casts a much broader net, is of a higher quality and more expensive to produce. He says they find potential buyers and financiers globally and describes how advertising is more professionally generated and targeted.

Read More Here is more information about the steps to sell a business.

Ney also discusses the inner workings of maximizing price on middle market sales. He says at Woodbridge they drive the process. He says the transaction is built around competition and competitive bidding to move things along and motivate buyers.

Ney notes that one of the ways he helps move along the process on smaller market transactions is requiring potential buyers to pre-approve for an SBA loan, which assists in weeding out those buyers who are not serious and capable. Ney also talks about how they use Mezzanine finance to bridge the sale of a business and once again appears to be quite a different process compared to the smaller market process.

Ney also said they conduct a very thorough analysis of the business and their financial statements prior to taking on a new business to sell.

If you would like to hear my conversation with Ney Grant, please click here.

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 article Ney Grant Talks Middle Market Brokering first appeared on Andrew Rogerson and Rogerson Business Services.

What is next after selling your business

One of the first things I find my business owners do after listing their business for sale with me is cut back their efforts to grow and maintain their business. Why keep trying to make your business better if you will not experience any of the rewards and the benefit will all go to the buyer?

The reason to keep working the business as you would normally is that it usually takes a long time to sell a business. Prior to the Great Financial Crisis (GFC) starting in 2008 it was thought it took about 6 ½ months to sell a business if it sold. During the GFC it grew to taking about 8 months before a business was sold but that was only if it sold. It’s reckoned only about 25% of businesses ever sell; so the success rate of selling a business is not that high.

Next steps after successfully selling your business

If you successfully sell your business, there is as much energy and effort required with your next steps as running your business and then navigating through the process to get it sold. And yes, selling a business is a demanding and emotional process. What most business owners do not do is put together a solid plan for their future and decide their next steps. Sure you can worry about this after you have sold. Here are 8 suggestions so you can do some planning and do things, as I like to say, from a position of strength.

Once you close escrow and the sae is therefore final, it’s time to “smell the roses” again. I just spoke with the owner of a medical practice I’d sold for him and he said it took about 4 months to let everything go and feel ready to look for and embrace new opportunities. Bottom line: Be patient with yourself while you adjust to your new reality.

Relax; it’s now literally in the bank. Prior to closing the sale of your business you had a net worth. After the closing of the sale of your business your net worth hasn’t changed. Simply put, your net worth is now much more secure because it is in a liquid form sitting in your bank account rather than tied up in that asset you had called your business.

Put a financial summary together. To be successful running your business you had to be organized. Now your primary asset, that is, the money from the sale of your business is now liquid, take the time to organize a summary of your assets and liabilities on a personal balance sheet so you have a starting point.

Read More Here is more information about the steps to sell a business.

Putting a financial summary together will extend to your estate plan. It’s probably been years since you took the time to review and update your estate plan as you kept telling yourself; I don’t have the time. Guess what, you now have that time so dig in and learn more about estate plans and how they are such an important vehicle of good financial planning. Visiting your estate plan will trigger other items to address including life insurance, charitable contributions and your other personal assets and priorities.

Put your money to work on your new balance sheet. When you owned your business you were not afraid to talk to business coaches, sales and marketing experts, bankers, attorneys and CPAs to name a few. Look for the help of a wealth management professional to manage your new found liquid asset. Yes; you can manage this asset yourself. Why not look for professional advice and take your time doing it. You now want to sleep well at night so make sure you get the advice that suits your personality and fits your risk profile. Don’t forget you may need both a personal balance sheet and one for your estate plan if this has been put together. Balance sheets help identify priorities and what needs to be worked on. Hiring the help of a part-time bookkeeper to keep it all straight may also be a good idea especially at tax time when you have to file all those tax returns.

As you have no doubt heard, there are only two certainties in life and they are death and taxes. Now let’s not get morbid and worry about death as that will take care of itself. However, as we said in number four above about putting your money to work, let’s try and keep more of what you make by getting the right advice. This should have been looked at when you were selling your business but now is the time to revisit the amount of tax you have to pay and follow professional advice to get it as low as possible. Your assets look much better on your new balance sheet than liabilities to pay taxes. Plus the tax planning you need to do is not just for the current year; it’s for at least the next 5 years and longer depending on those goals you wish to achieve.

Talk to your family and friends. Now your business is sold, you have that time you never had to talk to your family and friends and really listen to how they are doing. Just as you now are able to listen to what’s happening in their world, tell them about your new reality. It may even mean talking about all those decisions you made during the sale process so you can clean up any misunderstandings that you don’t need to have linger.

Now your business asset is liquid be prepared for requests for help from family and possibly good friends about a loan. Are you willing to lend to family and friends? If so, are their different amounts for children, grandchildren, extended family members and friends? Does your loan come with paying interest? If so, how much, when and how should it be repaid? Is the loan on a written document and if so, who creates that document and who tracks the repayments? Does the loan have to be covered with a security? You have probably already learned that some people when borrowing money think it’s no big deal for the lender to provide them with a loan; or more importantly with the need to repay the loan either on time or if ever at all. There are lots of complicated issues lending money to family and close friends. Have all your answers before you start as you will probably want to be consistent with all loans you make.

Owning and running a privately held business is demanding with all the moving parts. Eventually selling the business is much more demanding and exhausting especially as most business sellers are not as young as they used to be. Once a business is sold its then time to look at their next career with all the challenges and rewards that come from being able to try something new. Unlike your previous careers, this one you get to plan and enjoy and do on your terms which is probably about as an exciting opportunity you have had in a long time.

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 article What is next after selling your business first appeared on Andrew Rogerson and Rogerson Business Services.

Grow your business by franchising

The National Federation of Independent Businesses (NFIB) Small Business Optimism Index jumped in December, 2014 to 110.4 the highest reading since October, 2006. An Associated Press-Times Square Alliance poll said that nearly half of Americans predict that 2015 will be a better year for them than 2014. Since then the cost of gas has continued to plummet putting more disposable money in every consumers wallet and therefore adding to the positive mood rippling through the economy.

If you own a business and are ready to grow, the easiest fast growth solution is to start the process to franchise the business model you have put together.

Franchising a business is definitely not for everyone. If you have an interest, here are some things to consider.

Franchising is not just for a business in the fast food and auto repair industries. The types of businesses that franchise include accounting, advertising, agriculture, child care, cleaning, education toys, travel, upholstery to water and many, many concepts in between. If your business is in an industry that is yet to be franchised, you have that market open entirely to you.Most franchises sell for $25,000 to $35,000 making them an affordable way for new entrepreneurs to get into business.Franchising does take time so you can establish it in all 50 states. However, if you tried to franchise in all states at the same time the growth would be impossible to manage. Start either in the most franchise friendly states or the states closest to home and expand as you build a strong system of franchisees.With the right planning and preparation you could be ready to franchise your concept in as little to 60 to 90 days, in most states.You don’t need to be an expert on franchising. There are businesses that guide and make you “franchise ready.” Part of their process is to analyze the strengths and weaknesses of your business model and your management team, develop solutions and then go to market and be successful. Part of their role is therefore to make you “franchise strong” and build you on your knowledge and skills.Finance is not part of the franchisors responsibility. Franchisees can borrow from their personal network or if the concept meets SBA or Small Business Administration criteria, the franchisee can get a 7A loan.Depending on the strength of your business, you can fund selling franchises from your existing marketing budget. There are experts to help define that for you.Do you like learning? There are new skills and plenty to learn; just like you have done before.There is no need to disclose the current financial statements of your current business in order to enter the franchise industry.More information is available via webinar on what’s involved. Simply give Andrew a call on 916 570-2674.

Read More Search our franchise database to see and see all the different industries.

How do I know if my business is ready for franchising?

There is no one size fits all to be successful at franchising. A good starting point is as follows:

Your business has been operating for at least one year; the longer the better.Your business is growing and handling the growth. (If your business is not handling the growth then trying to franchise will make your business weaker.)Your business is doing well financially with a strong Profit and Loss and Balance Sheet. (If your business is financially successful it demonstrates that if the model is copied correctly its chances of success are high.)Your business is different. Customers like trying and buying something new and different. If your business is doing well, can you identify its differences?Do you have the financial resources to invest in starting and growing a franchise concept?Your business needs to be successful and strong – not perfect. If you wait till your business is perfect you will lose to your competitors.Are you willing to listen and hear what’s good, bad and ugly about your existing business and the changes it needs to be a standout and attract new franchisees?

Just as owning and operating a franchise has never been for everyone, neither is turning a business into a multi-dimensional franchise concept. It starts working with your successful business model and partnering with experts who can help guide you to the next level.

If you would like more information about turning your business into a successful franchise and buying an individual franchise, please visit my webpage Buy a franchise or buy a copy of my book: Successfully buy your franchise.

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

The article Grow your business by franchising first appeared on Andrew Rogerson and Rogerson Business Services.

Corporations vs. LLCs: What’s Right for Your Business?

You have the business idea and the determination to become an entrepreneur. Yet before you even place the open sign on your business doors, you must decide what type of business you want to operate: a corporation or an LLC.

The Basics of Corporations and LLCs

Understanding the basics of each business type allows you to select the right one that will fit into your business management and tax strategies. As a small business grows, it can often change business types to suit different management and financial situations. Be aware that you do not have to be locked into one type throughout the life of your business, according to FindLaw.

Corporations

Corporations are legal entities of their own. Through a corporation, you are able to sell stock offerings to people who will become shareholders and have ownership. From selling the stock, you can gain investment capital that can assist with operating and expanding your business, according to the Small Business Administration.

Corporations take on all liabilities related to the business, whether it is business debt or actions the business commits. These liabilities will not affect your personal assets.

When you incorporate, you will be double taxed. First, the IRS taxes profits to the corporation. Then the IRS taxes dividends that the shareholders receive from the corporation. Corporations have very complex tax regulations and record-keeping operations, so take this into consideration to prevent committing tax fraud.

Benefits: Business liability protection, raise investment capital from selling stock

Drawbacks: Double taxes, extensive record-keeping costs

LLCs

Limited Liability Companies, known as LLCs, are a type of hybrid business structure that combine all the benefits of a corporation with the benefits of a partnership. When you own an LLC, you become a member. You can have as many members as you wish, as these members may be corporations, individuals, or other entities. Some states require the LLC to dissolve if a member leaves the business.

Read More Here is more information about which legal entity is right for your business.

There are no stocks to sell with an LLC, so you may raise money in different ways such as requiring new members to invest a set amount into the LLC, or seeking debt financing in the form of bank loans or government loan programs.

LLCs have the same business liabilities as corporations. Your personal assets can’t be touched if someone sues the LLC or if the actions of the LLC cause the business to make reparations. An important advantage of the LLC is that the IRS does not double tax it like a corporation. Instead, you acquire all debts and earnings, which will be placed on your personal income tax returns. All members of the LLC have to file under self-employment status, as all net income becomes taxed.

Benefits: Business liability protection, profit and cost sharing to members

Drawbacks: Self-employment taxes, business may have to close if a member leaves

Questions to Ask When Deciding Between the Two

When debating about being an LLC or a corporation for your small business, ask these important questions:

What costs more to establish and operate? Typically an LLC is easier to start and operate. Corporations cost more to start and have stringent record-keeping requirements.How do you want to handle your tax obligations? While a corporation has certain tax benefits, the double taxation can be seen as a major detriment.Where do you want to gain financing? Corporations allow you to raise money by selling stock options. You cannot do this for an LLC, although there are other financing options available.What do you expect to happen to the business in the future? An LLC can have a limited lifespan if a member leaves. A corporation can last a lifetime.

If you would like more information about selling a business, buying a business, buying a franchise or a related service such as valuing a business, please visit my webpage 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 article Corporations vs. LLCs: What’s Right for Your Business? first appeared on Andrew Rogerson and Rogerson Business Services.

What is your business innovation

I love this story. If you watch Congress the number one hottest issue of contention is Obamacare. If you ask the business community their number one scourge right now I think 8 out of 10 business owners would say Obamacare. If you ask the public their greatest frustration it would be the cost of medical insurance and medical care. The healthcare industry, due to its high costs and confusion are making a lot of people unhappy and sick to their stomach.

When we are sick, how many of us like going to the doctors to wait in a room or emergency hospital room for a doctor? Sick people are all around us and who knows what else we’ll breathe or touch that can infect us with a new disease let alone make our current malady even worse.

When there is a problem, the capitalist system takes over and creates a solution. How’s this for a solution?

The solution is creative, relatively simple and oh so cost effective. Here’s the background. Vinny Catalano is an insurance agent and he’s also a sick health insurance agent who works at Arthur J Gallagher & Cos and wants to get well quickly and cheaply (don’t we all.) Click this link to read Vinny’s story.

I’m glad Vinny is now well but here’s what caught my attention from Vinny’s article and that was how comprehensive his employer was able to use a little technology and come up with a new, innovative and I am sure, exceptionally cost effective solution to a problem.

If you own a business, what new and innovative ideas are you testing and deploying in your business? If you don’t yet own and operate your own business but are ready to jump in, do you have a new or better innovation that would make you a market leader with your business in your industry?

Thinking about selling your business and would like to understand the tax consequences?

Where do you go to find these innovative ideas?

Ask your customers? Ask them what problem you are solving but could help them save time or lower costs to make your product or service just that much better? You may have an idea but don’t want to try it as it will cost you more money to implement. But ask your customers if they would be willing to pay more. Studies have proven that people buy differences and they are willing to pay for differences.

Innovative ideas will also come from your employees? They are busy solving problems for you each day and so it’s little to no stretch for them to have an idea of how to do something better. The biggest mistake employers make is not having a culture of excellence or a culture that welcomes and rewards innovative ideas. It is not complicated. It is a matter of the business owner leading and encouraging new ideas and change, putting in processes and procedures to measure and manage that change and providing rewards when good things inevitably happen.

If you haven‘t yet, have a read of Vinny Catalano’s article. Again, here’s the link to Vinny’s story.

By the way, the article provides the way to see a doctor online for free when you use the code. Here’s the code: “LHOINTRODUCTION” but you will have to read the article to find out how to register and see a doctor for free and immediately. Then give Vinny a call on 916 431-2525 and see if he can make you an offer you can’t refuse. And tell Vinny I sent you.

If you would like more information about buying a business, buying a franchise, starting a business or selling a business, please visit my website Business Advice Books.

The article What is your business innovation first appeared on Andrew Rogerson and Rogerson Business Services.

Franchise a business

Ready to franchise your business?

Mark Siebert is the CEO & Sr. Franchise Consultant at the iFranchise Group. Mark was my guest on Money 2.0 and shared great ideas with me for those business owners who own a business and are ready for the next step by making it into a franchise.

Mark Siebert says 15 years ago iFranchise was put together to be a resource for companies looking at getting into franchising and for established franchisors who were encountering problems. Mark says iFranchise has now helped businesses in 54 different markets around the world and says they are the largest consulting firm in the niche market that is the franchise consulting industry.

How do I turn a business into a franchise?

Marks goes onto talk about the initial steps they take in determining if a business is has  “franchisability ”. He says that process involves their analysts and senior staff investigating the business and establishing 3 specific things.

Will the business be able to sell franchises? (i.e. Is it unique, credible, established, making money, etc.)Does the business have the ability to be duplicated across multiple markets?What will the forecasted return on investment be? (i.e. With the average expectation at least 15-20% by 2-3 years of operation.)

Mark says all three criteria must be satisfied for them to move ahead. He says iFranchise averages around 400 company submission queries a month and only end up moving ahead with 3 or 4.

Mark says that iFranchise is “industry agnostic”, meaning they truly are experts on how to franchise regardless of the industry. He notes that Franchise Times Magazine puts out a list of the top 200 franchises in the US and their consultants at the iFranchise Group have worked with 98 of those top 200.

Mark says over the last 6-7 years they have helped well established companies such as McDonalds, Subway, and Denny’s on various franchise projects. They have also worked with many start up projects,  such as Massage Envy.

Read More Here is more information about buying a franchise.

Mark goes on to discuss how they assist new franchisors, particularly when they are attempting to grow in a market that is already heavy with competition. He says they help companies understand what makes their company unique in that space so the business can carve out a niche and reposition themselves in the market.

Mark says the top reasons for a franchisor to get into franchising include the ability to grow faster and capitalize on money provided by the franchisee, as well as obtaining a highly motivated owner/operator.

Please listen to my conversation by clicking this link to hear Mark Siebert. Mark was my second guest in this episode. The conversation begins at 27.30 minutes into the recording.

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.

The article Franchise a business first appeared on Andrew Rogerson and Rogerson Business Services.

Price-Match Guarantees: Lessons to Learn

From online retailers to all sizes of brick and mortar stores, price-match guarantees seem to be everywhere. Customer loyalty programs and benefits like price matching can help retailers increase the amount of repeat customers they receive. According to a report by BIA Kelsey, a repeat consumer spends 67 percent more time on a purchase compared to a new customer. So, by providing unparalleled customer service and perks like price matching, retailers can reward customers for coming back and motivate consumers to recommend their brand. For retailers wanting to get in on the craze, they can learn from these other businesses.

Home Depot

Home Depot has been price-matching for years. To make price matching successful, the retailer trains its employees and then gives them freedom to make the sale. For example, Home Depot only discounts exact-match items, not similar items, which allows them to beat competitor prices by 10 percent without discounting too many products. When doing a price match, Home Depot employees must call the store with the same item to verify the lower price before marking it down.

In addition to competitors’ prices, the store also matches its own website. This is important because people do not want to pay more in-store than online. This level of customer service keeps customers coming back because they know they always are getting the best price. And, in this case, Home Depot can control its guarantee and increase its revenue.

Read More Here is more information about how to value a business.

Vision Direct

Online price matching is important because it gives consumers an incentive to buy a product they cannot see, touch or try on. For example, Vision Direct is an online retailer that matches its competitor’s prices. They also go a step further buy beating any lower prices by 5 percent and accepting coupons from other retailers. All customers have to do is email their customer service department with their order number and the website offering the lower price or coupon. Then, a customer service representative verifies the discount and beats it by 5 percent.

Toys “R” Us

Toys “R” Us is another major retailer that has a price match guarantee. Similar to Home Depot and Vision Direct, they match the prices of identical items that are advertised at a lower price. However, Toys “R” Us does not beat competitor prices and has many more caveats than the other two. The offer is only valid for in-store purchases and they will only match up to two items in one purchase. They also have stricter rules for online discounts. For example, they only match prices from certain online competitor websites, like Walmart, Target and Best Buy, and take shipping charges into account when marking down products. They also do not match online marketplace pricing, which means that third party sellers like Amazon do not qualify.

Furthermore, Toys “R” Us goes into detail about special event pricing and storewide discounts. This means they do not price match Black Friday or Cyber Monday sales or full store sales when everything is 50 percent off or buy one get one free.

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 article Price-Match Guarantees: Lessons to Learn first appeared on Andrew Rogerson and Rogerson Business Services.

Sale of businesses increase in 2014

Each quarter, BizBuySell puts together their Insight Report to show what’s happening with the selling of a business and the buying of a business. The annual report and the fourth quarter reports for 2014 are now available and it continues to show that sales of small businesses nationwide are continuing to increase and in fact, at the highest level since they started tracking this data in 2007.

What happened in 2014?

The Insight Report comes from a survey sent to business brokers. Here are some of the highlights from their report looking at the data for all of 2014.

A total of 7,494 closed transactions were reported in 2014. This is an increase of over six percent from the 7,056 transactions in 2013.The top reason for the increase in sales includes an increase in the number of qualified buyers in the market. The second most common response was the general improvement of the small business environment.The top reason for a business being sold is that a Baby Boomer now wishes to retire, that is, more than 78 percent of business brokers attributed at least a quarter of their closed transactions to Baby Boomer sellers.If you are thinking of selling your business, the Insight Report shows that small businesses are performing at a higher level where the median revenue of small businesses sold grew from $405,905 to $417,562 in 2014, and the median cash flow rose from $97,000 to $100,000.Higher performing businesses flowed into a slight uptick in median sales price. In 2013 the median sales price was $180,000 while in 2014 it went up to $185,000.Similarly, financial multiples that grew modestly as the average revenue multiple rose from 0.59 to 0.61 and the average cash flow multiple moved from 2.21 to 2.24. This indicates that while sellers are getting slightly higher returns out of their businesses, buyers continue to receive good value on their purchases.

Read More Here is more information about how to value a business.

What happened in the fourth quarter of 2014?

In addition to the annual data, BizBuySell’s Insight Report also revealed a strong fourth quarter to end 2014. That is, the growth trend for the sale of businesses was up and so was the financial performance of the businesses.

Some data highlights from the businesses that sold in the fourth quarter of 2014 includes:

There were 1,848 closed transactions which represents a 12 percent increase from the same period in 2013.The fourth quarter of 2014 also marked the third consecutive quarter of increased median revenue, topping out at $445,146. Additionally, the median cash flow rose to $103,829 with both indicators at their highest point since BizBuySell started tracking the data in 2007.The impact of the increase in median revenue and median cash flow meant sellers were able to ask for and receive more money for their businesses. That is, the median asking price for a small business during 2013 and the first quarter of 2014 was sitting around $200,000. However, in the fourth quarter of 2014 the amount sellers received had grown to $224,900.What’s happening in 2015?

With good sales of businesses in both 2013 and 2014, there still appears to be strong supply and demand in the pipeline for 2015. As the economy continues to strengthen, small business financials are likely to keep improving, and sellers will be more confident that they can successfully sell their businesses.

From the business broker’s perspective, 82 percent expect sales transaction activity to increase in 2015 and more than 45 percent believe final sales prices will rise in 2015 compared to just 12 percent who believe they will decrease.

While Baby Boomers were active in selling their business in 2014, business brokers are confident they will remain a driver of supply. Seventy-eight percent of brokers said they expect a larger number of Baby Boomers to exit their businesses in 2015 than did in 2014.

If you would like more information about selling a business, selling a medical practice, valuing a business, buying a business, buying a franchise or starting a business, please visit my website Rogerson Business Services or if you would like more information visit Business Advice Books.

The article Sale of businesses increase in 2014 first appeared on Andrew Rogerson and Rogerson Business Services.

Buying a business is only for the motivated

According to Wikipedia, an IRS Revenue Ruling includes how a law is to be interpreted and then applied to factual situations. That is, to keep the law consistent for all taxpayers, so taxpayers know or most likely will know how the IRS laws would be applied to their specific situation, these public administrative or revenue rulings are put into the public domain.

IRS Revenue Ruling 59/60 concerns how a business should be valued when a set of facts are to be presented before the IRS and part of this ruling states that the value of a business must be considered when there is a motivated buyer and a motivated seller that wish to do a deal for the sale of a business.

The word ‘motivated’ is such a critical word as it applies equally to a seller and a buyer. If the seller is motivated and the buyer is not, the deal will not get done. Equally, if the buyer is motivated and the seller is not, the deal will not get done.

With the ready availability of websites and social media it is much easier to market a business for sale. This ease of marketing, you would think, would make it easier for more buyers and sellers to connect and do more deals. Based on my experience this is not the case. Because of this ease of marketing, buyers are able to see a range of businesses for sale. They see so many and think they have plenty of choices however, once they start getting into the steps of buying a business, they realize it is much more complicated than they thought and give up or what I see really happening, is that they find the right business but do not know how to present themselves correctly to the seller and close the deal.

For the last 6 months I have been working with a buyer to buy a business I have for sale. He had been looking to buy a business for 18 months and then came across my listing. After asking lots of good questions, signing a Non Disclosure Agreement and providing a Personal Financial Statement he was qualified to get a loan of just over $1.4 million. This took him about 5 months to get done as he was cautious with each step he took plus a family emergency came up which took about a month to resolve.

Six months after his first inquiry about buying the business a written offer was presented to the sellers for a very low price as he wanted to see how much the sellers would reduce their price. Unfortunately for him, the sellers a week earlier had received another offer from a qualified buyer and chose to work with that buyer rather than even respond to his offer.

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Buying a business not only requires being organized by having good credit score, a good credit report, a strong resume that shows your management experience and a strong personal financial statement that shows you know how to handle money, but most important of all, the motivation to work through the purchase of a business when you find the one that matches most of your criteria. There is no such thing as the perfect business and so if that’s your standard, be prepared to be disappointed.

When you are ready with the above, then it’s time to find a business that meets your needs.

Many times the ideal business is not on the market.

If you have seriously been looking for the right business to buy but have come up short, you’ll agree that not only can it be frustrating and time consuming but it can also be expensive. Getting an accountant or attorney to give you advice on what you should or should not do can add up. Perhaps you are reluctant to get that professional help and so this is another deterrent to find a business that works for you.

Some of the best businesses sold are not listed for sale. This is because the owner of a business may not have seriously considered selling until I contact them. It just happens that I speak to the owner at the right time and knowing I represent a motivated buyer and have experience in closing the sale of a business, provides a level of comfort to the owner of a business to sell and move to the next phase of their life. As a business owner, they will have heard from other business owners their challenges of selling their business and my approach could save them time, money and much emotional stress.

Steps to find the right business for you.The first step is for us to meet and make sure we feel comfortable working together. During this first meeting I will get to know you and what is important to you including the industry, sector, size, and location etc of the business you would like to buy. I would also like your work experience and education. However, most important is for me to understand your financial situation so I target the size of business including your downpayment and your comfort servicing debt if you need to get an SBA loan.Most business buyers need a loan to buy a business. This is the purpose of the SBA loans. If you don’t know any SBA lenders, I can introduce you to them so you can determine your borrowing ability and understand your loan repayment terms and conditions.The next step is for me to do a search of businesses that fit your criteria so we can narrow these down to the right list of potentials businesses and then put in motion a direct mail and telemarketing plan to uncover serious sellers.For a seller to be serious they must be willing to provide the financial statements of their business so a business valuation can be done.If the valuation works for you and the seller, the next step is to visit the business, meet the owner and go over key questions.If everything is still working for you and the seller, I write up an offer which you sign and present to the owner for negotiation.With negotiations complete, the next steps are due diligence, getting formal finance approval and working through the escrow process and closing the sale.

The right buyer I can help is qualified, knows what they want, ready to act when I show them the business that fits their needs and you guessed it, motivated.

How do you pay for this service? We charge a small retainer and success fee.

If you would like more information about buying a business please visit my webpage 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 on 916 570-2674.

The article Buying a business is only for the motivated first appeared on Andrew Rogerson and Rogerson Business Services.