Month: August 2010

Developing an Exit Strategy Plan for Business Owners

It is important to for small business owners to develop an Exit Strategy early on. A three-year plan is optimal; a three-week plan is distressing!

The following is a list of important items to include in your strategy. Identify and gather all appropriate documents:

  • Tax returns for the last three years
  • P & L and Balance Sheets for the last three years, plus the most current on you have available.
  • Develop a year-end projection for the current year of sales and expenses. An explanation of any additional capital purchases needed, or recruitment of additional personnel required.
  • A list of your top 10 accounts and the annual sales generated by each for the most recent year (if applicable).
  • A list of assets that are owned by the company. The year purchased, make and model, and fair market value. Items like office furniture can be grouped together and listed as a group.
  • A list of your key employees, their compensation and benefits, and how long they have worked for you.
  • A description of your office space owned or leased, the terms if leased and options that are currently in place.
  • A brief description of how you market your business and what areas generate the majority of your sales. Give percentages and breakdown of sales by specific sectors. Please also provide copies of any printed marketing materials you may have.
  • Are there any pending law suit, employee or supplier issues a buyer should be aware of?

 

Upon your decision to exit, a business broker or intermediary, can help you value, market and sell your business, developing a current value for your business using the market approach, the income approach or the asset approach.

Buy A Franchise – Dryer Vent Cleaning and Service

Imagine a scene in a household when a dryer stops working. A consumer's first inclination is to believe that the dryer is broken. In many situations a repair person is called only to find out that it is not a malfunctioning dryer, but the dryer vent needs cleaning. Dryer vent lint build-up causes dryers to work inefficiently or not at all. Because repair center personnel do no clean, repair or replace dryer vents, they refer customers to the Yellow Pages.

Here's the market niche…there has been no organized company providing this service in the Yellow Pages. When the home is in disarray because there are no dry clothes, the search to find someone to help is an urgent call! This is where we come in. Through networking with local repair centers and property managers, our franchisees receives referrals that put them in touch with consumers who need our service and need it now!

A competitive advantage: An important aspect of our service is safety. Dryer vent lint build-up is the leading cause of fires in homes. Also dryer vents in older homes do not meet current building codes. In addition to the safety hazard and building code problems, a clean dryer vent helps to safeguard homes from the dangers of mold and mildew. With a lifetime warranty, our consumers are assured that we will be out on an annual basis to clean, repair or replace their dryer vent.

A Proven Concept: Our closing ratio is 94%. Our average ticket is $358.00. We have perfected the cleaning, repairing and replacement of dryer vents, so our franchisees don't have to reinvent the wheel.

Key Business Model: This is an Owner Operated OR Executive Model franchise opportunity. With low overhead, few employees and family friendly hours this may be the right opportunity for you!

Hiring A Professional Business Broker to Sell Your Business

There are four different ways that business owners typically use to Exit their businesses:

  • Close the Business
  • Accident, Illness, or Death
  • Succession
  • Sale of the Business

 

The obvious choice for many is Sale of the Business. Statistics show that approximately one out of every five businesses in the U.S. change ownership every year. Selling a business requires dedicated professional attention. Marketing and facilitating a business transfer is a full-time job. The goal of the seller is to maximize the after-tax profit on the sale of the business while maintaining strict confidentiality. The following steps must be taken in order to achieve the seller’s goals:

PRICING AND VALUATION. Sellers want the best possible price for their business. To determine the best price, a professional broker will use the industry-tested valuation techniques, including ratios based on sales of similar businesses and historical data of the types of business for sales. A critical factor in pricing a business is the terms offered, and the type of deal structure. The broker will work with the seller’s financial advisors to achieve the highest amount of “net proceeds” after the sale. While the selling price is important, the amount that the seller “keeps at the end of the day” is what is really important.

PREPARING THE BUSINESS FOR SALE. To make an informed decision, a buyer will require information on the business activity, history, customers, sales and earnings, marketing strategy, employees, assets included, facilities, location and the reason for sale. A complete Offering Memorandum will enable a buyer to make an informed decision and obtain the required financing to proceed with the deal. Generally, buyers are more educated on the process of buying a business than sellers are in the process of selling.

MARKETING AND ADVERTISING. Designing a marketing plan specifically targeted to the types of buyers that would be interested in the business is a key factor. Business brokers use databases of buyer’s prospects, professional associations, and investment groups. Target marketing through trade publications, direct mail and Internet sites specifically for business transactions may be used to reach buyers. Advertising in newspapers both local and national, as well as in industry trade journals will produce qualified buyer prospects.

QUALIFYING BUYERS. The business broker will focus on those prospects who are financially qualified and who are genuinely interested and have the skills needed to run this type of business. Finding a “real, qualified buyer” is a skill that is developed by years of experience in doing business transactions.

PRESENTING THE BUSINESS. The professional business broker is experienced in handling negotiations. The broker also offers the seller convenience of continuing to manage the business while the selling process is under way. Information is disclosed to buyers in stages, as needed, while the deal progresses through the due diligence process.

MAINTAINING PRIVACY AND CONFIDENTIALITY. Business owners are extremely concerned about confidentiality. A professional broker is skilled at protecting the confidentiality from the employees, suppliers, creditors and customers of the business.

NEGOTIATING THE BUSINES SALE TRANSACTION. The business broker will be a vital advisor during the sale transaction. Knowledgeable about negotiating price, terms and other key aspects of the sale, the broker will guide the seller each step of the way. Proper deal structure will greatly affect the net amount that the seller will end up keeping after selling the business. The Broker will help coordinate the Legal, Accounting, and Financial Professionals that are required to complete the transaction.

Buy A Franchise – Sport Nutrition Centers

American's invest $16 billion dollars in sports nutrition & weight loss supplements a year and is growing 6 to 7% annually. Needless to say, health and fitness is now a huge industry and shows every sign of continued growth. A notable segment of the American public now understands the value of staying healthy and living longer and more productively. We stand ready to help Americans achieve their goal!

Who constitutes our customer base? 90% are mostly normal everyday people who desire to get into shape. Women now constitute 42% of that base. The smaller 10% are people looking to build more muscle and do it well. High school athletes needing to increase more muscle and endurance athletes of all ages come to us, looking to increase lean muscle mass and lose the fat. Our products are highly nutritious, easily digestible, easy to take, flavorful and pack the needed punch!

This franchise opportunity is devoted exclusively to that market, through single unit, multi-unit or regional territories. Our franchisees offer clients information, motivation, guidance, knowledge and supplemental products. While this is a retail store operation, our hours are typically 10am to 6pm, low number of employees, wide margins, an upbeat, forward-thinking clientele and a chance to help people improve their own health and fitness. Our stores are low overhead and low maintenance with no food preparation!

Franchisees can own and operate one or more stores and owners can hire managers to create more passive involvement. Larger, regional territories are available for qualified candidates.

Our ideal candidate would be someone with a strong desire and willingness to build a successful retail business and a strong belief in health, fitness and nutrition. Strong people skills are helpful as a willingness to market, network and promote business in the community is key.

Buy A Fitness Franchise Open 24 Hours A Day

Today more than ever, people know it's important to be fit. Their challenge is squeezing exercise into busy lives.

This franchise opportunity provides the solution, bringing fast, convenient and affordable workouts into their neighborhoods – minutes from their doorstep – with your own compact, 24-hour state-of-the-art fitness center.

Fitness is in. The percentage of people belonging to health clubs has doubled over the past 20 years. More growth is expected, fueled by an aging Baby Boomer generation in search of eternal youth and the reality that regular exercise can prevent or control diseases that are driving health care cost relentlessly upward.

Economically, the industry has proven to be recession-proof, averaging an 8% annual growth rate since the early 1990's. The health club industry's fastest-growing segment is the so-called 24-hour express fitness segment – and we are the segment's growth rate leader.

Our concept enables you to offer the same quality equipment and workout experience offered in traditional 'big box' health clubs – but without the crowded parking lots, long waiting lines and inflated monthly dues. Our member-friendly policies lead the industry – we do not require contracts: members pay month-to-month and may freeze their memberships when not using them.

Role of Franchisee:
This business model is developed and designed for the 'hands-off' franchisee. (10-15 hours). 75% of all owners continue jobs or careers they were in before ownership. Most franchisees start with 3 or 6 club developments, with stores run by one full-time manager. Our franchisees are attracted to the freedom and flexibility that the manager run business provides with few employees.

Please go here to find out more information on the purchase of this Fitness, Fitness Gym opportunity!

Ten Steps to the Successful Sale of a Business

1. Make sure you have a valid reason for selling your business. The first thing a prospective buyer will want to know is the reason you are selling. The more valid the reason you offer, the more serious the buyer will be.

2. Don't wait until you have to sell, for either economic or emotional reasons. You don't want anxiety to force you into accepting a deal that's not good for you or for the buyer.

3. Once you have made the decision to sell–and before talking to your business broker–you should gather the information needed to market and subsequently sell your business. Here's the list of key items:

  • Three years profit and loss statements
  • Federal income tax returns for the business
  • List of fixtures and equipment
  • The lease and any lease-related documents
  • Copy of the franchise agreements (if applicable)
  • List of loans against the business with amounts and payment schedule
  • Copies of any equipment leases
  • An approximate amount of the inventory on hand
  • Names of outside advisors

 

4. Remember that you are part of the marketing team. Your business broker can't do it all–and might even ask you to come to an office meeting to tell the rest of the staff about your business. Follow your broker's advice about dealing with prospective buyers–there's a right and a wrong time to meet them.

5. Confidentiality works both ways. The broker will constantly stress confidentiality to the customers to whom he or she shows your business. However, as the seller, you must maintain confidentiality about a pending sale in your day-to-day business activities.

6. You, as the seller, should put yourself in a prospective buyer's position. The next time you go to your place of business, pretend you are a buyer looking at it for the first time. How impressed are you?

7. Just because you are selling, now is not the time to let the business slip. It's important that prospective buyers see your business at its best; bustling, and showing no signs of neglect.

8. Engage an outside professional who understands the sales process. If you are going to use a lawyer, use one who is seasoned in the business sale process.

9. Be flexible! You need to keep the ball rolling once an offer has been presented. Study it closely. Just because you didn't get your asking price, the offer may have other points that will offset it, such as higher payments or interest, a consulting agreement, more cash than you anticipated or a buyer that you are comfortable with.

10. Remember that most successful transactions are successful because they create a win-win situation for everyone involved.

How Do I Sell My Business?

By: Art Lennig, CBI, BCI Murphy Business & Financial Corporation – Georgia, Inc.

Part I: The Advisory Team

How do I sell my business? This is a question that many business owners ask themselves. What do I do? Where do I start? What do I need? What is my business worth? How do I compete against the many businesses for sale? Great questions, but where do I get the answers? I wish I could say there are simple solutions but there are none. Selling a business is an art, not an exact science. It takes time and patience. Pricing is critical – too high and nobody will look at it, too low and everyone will wonder – “What’s wrong?”. The goal is to maximize the value of the business yet sell the business for a fair price that works for both the seller and the buyer.

There are many things that a business owner should be concerned with when they have a business to sell:

  • Confidentiality
  • Tax liability
  • Sharing of information
  • Liabilities
  • and on and on.

 

How do we protect ourselves against these concerns?
Whenever a business owner wants to sell their business, they should assemble an advisory team. This team should consist of: The Owner, The Spouse, Business Broker, CPA, Attorney, Financial Planner. Let’s take and discuss each one and the purpose and experience each needs to bring.

The Owner, Spouse, and other family members – These should be obvious, however many times the owner does not include the spouse and family members in the decision-making process until the end only to find out that not all are agreeable to the sale.

Business Broker – This is the most critical member of the advisory team. The business broker is the quarterback, the general contractor, the facilitator, etc. Their role is multifaceted: Consistently communicate with the owner and spouse as to what is happening with the listing and also what is happening in the market. The Broker should gather all the documents that will be presented to the Buyer. These documents will vary by each business but in most cases will include; Tax Returns, Financial Statements, Lease, List of Assets included in the business sale, List of Assets NOT included in the Business Sale, and more. A professional Broker will want all the information at the beginning of the conversation to make an assessment of your business.

Many Brokers recommend or require a third party business valuation. This is done to determine the fair market value of the business, give you a planning tool to discuss with your CPA and Financial Planner, and also a tool for the Broker to use with those Buyers who want to buy a business during the negotiations. The Broker will (or should) put together a “Package” about the business which at some point will be presented to the Buyer. Professional Brokers prepare these packages and include all the information the Buyer will need to know. Unfortunately the less than professional Brokers do not prepare much more than a cover sheet (with little information) and a tax return. There are two different approaches here: The professional approach is to thoroughly educate the Buyer before bringing the Buyer to the business. The less than Professional Broker uses the “spaghetti theory” – keep parading people through the business in the hope that something will happen. The Professional Broker only brings qualified serious buyers to the business. They do not want to waste the owner’s time with buyers that are not ready to buy. Yes, the better Brokers do require some money before listing the business. This money is usually required to cover the costs of the valuations and other expenses the Broker incurs upfront.

The CPA – This person is critical to the advisory team. This is not always the owner’s CPA as they must be knowledgeable in Business Sales. You want someone that understands the business transfer process, can look at your financial information and provide you with the necessary advice in order to accomplish the sale. Many times the CPA will advise against the sale because it is the “safest” advice he can give. You must use a CPA that has experience in Business Transfers. Once you have the Business Valuation done, you will want to discuss it with the CPA. You want to know where you will be (How much money you will receive) after taxes.

The Attorney – Similar to the CPA, this advisor must have experience in Business Transfers. You do not want the attorney that drew up your will or handled your divorce. An experienced business attorney will protect you through the closing process yet get the deal done.

Financial Planner – This is your Financial Planner. After you have discussed the tax liability with the CPA, you now want to meet with your Financial Planner to discuss the possibility of your being able to live the life style you desire after the business sale. It is most critical that you know this before you ever list your business for sale.

If you would like us to contact you about selling your business, click here: https://murphybusiness.com/georgia/contact-us

Interested in Franchising?

Have you ever wanted to own your own business? Is your company downsizing? Do you dread Monday morning and going to work at a job you are less than happy with?

If you answered yes to any of these questions, it may be time to consider starting your own business. Franchising might be the easiest way for you to do that.

Franchising can offer you training, on-going support and a proven, successful way to manage your business. Those are the top two reasons the lending institutions are more likely to loan you money to start a new franchise business as opposed to buying an existing business. With franchising, you do not need to have a 10 – 15-year background in whatever category you decide to pursue. In fact, most franchisors prefer that you have no background in their industry because you are easier to train “their” way.

If you look around while driving, you will see nearly every strip mall is filled with new franchises. There are plenty of opportunities to get started. As National Director of Franchising for Murphy Business and Financial, we have over 100 preferred franchises, most of which the franchise fee is below $50,000, plus many more opportunities for service-based franchises.

Here are some franchise facts for you to consider. It just might be the right time to change your life and work for yourself Monday morning.

Franchise Facts

  • Franchising is responsible for more than $800 Billion in U.S. sales annually
  • 1 in 12 business establishments is a franchise
  • A new franchise opens every 8 minutes of every business day
  • More than 8 Million people are employed by franchise businesses
  • According to the U.S. Commerce Department, fewer than 5% of Franchises were terminated on an annual basis
  • In a study conducted by Arthur Anderson & Company of 366 franchised companies, nearly 97% were still in business
  • In contrast, a study by the U.S. Small Business Administration revealed that 62.2% of all new businesses failed within their first 6 years of operation

 

Who Buys Franchises?

  • Cash Available: Under $120,000
  • Average Income: $65K – $150K
  • Average Age: 35 – 50 Years Old
  • Gender/Couple: Males, Couples, Females in that order
  • Owned a Business?: No, most have not
  • Work Experience: Corporate

 

If you are interested in doing your own due diligence regarding specific franchise opportunities in franchising, go here. Our national network of brokers can assist you in your investigation.