Here is some great advice I heard from a friend:
“Sometimes we fail to realize it takes valleys to make mountains,” he said. “It takes rain to make rainbows. It takes losing to truly appreciate winning. It takes being sick to truly appreciate good health.
“But through it all, our climb back to the top of the mountain after being knocked down is what makes us strong”
Posted by Don Holt, Crown Business Group LLC
Structuring your business is often the key to maximizing after-tax cash flow. Business owners should think both current and future cash flow when setting up a business structure. Always consider the “Exit Strategy”. What does a buyer want to buy? Typically, buyers look to purchase assets because of beneficial tax benefits of depreciation and amortization of assets. Sellers typically look to sell stock because of the capital gains rates applicable to stock sales and a single level of taxation. Typically pass-through entities such as “S” corporations, partnerships or LLCs have met the needs of both buyers and sellers. With tax rates projected to go up due to federal deficit spending, a pass-through entity could actually decrease current cash flow to business owners for future years. Are we headed for a paradigm shift? Too early to tell really. However, 2010 may be the best year ever to sell your business if tax rates rise! Let us help you with a complimentary consultation. Contact one of our professionals today!
By W.A. Robinson III - CPA
Business Intermediary
The Crown Business Group LLC
A few years ago I joined the Rotary Club in the town where I live. At each weekly meeting, members recite the Four Way Test” as a promise to follow these principles in their business and professional lives. The Four-Way Test was created by Rotarian Herbert J. Taylor in 1932. It has since been translated into more than 100 languages and is used by organizations and individuals throughout the world.
Of the things we say and do…
1. Is it the TRUTH?
2. Is it FAIR to all concerned?
3. Will it build GOODWILL and BETTER FRIENDSHIPS?
4. Will it be BENEFICIAL to all concerned?
What better New Year’s Resolution could you have than this commitment in all of our activities?
Don Holt
Co-Owner
The Crown Business Group LLC
Buyers Want Cash Flow
The astute small business buyer is looking for cash flow. So, is cash flow the same thing as profit? Not usually. A buyer will look at your profit and loss statement or your tax return, and especially at the owners or family compensation. Other large one-time expenses like a new computer system, building remodeling, etc. are expenses which the new owner would not have next year, and can be adjusted for cash flow. Depreciation and amortization are non-cash expenses which would also be adjusted to arrive at the true cash flow. Further, the current owner may expense some items which the new owner may not choose to include in their operation of the business, so these would also be adjusted to show the true cash flow.
What is good advice for business owners who are considering selling their business next year? Work with your accountant to insure you have clean financial records. A new owner will want to understand your records to get a clear picture of what they are buying. These are essential to get the maximum price for your business.
A professional business broker is experienced in advising a selling client on a suggested business selling price. The business broker will also develop a confidential marketing plan to expose their client’s company to the buyers.
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