Getting Employees Willing Cooperation

Being successful in business depends a great deal on our employees. You can be very capable when it comes to technical knowledge, equipped with an MBA, plus have good sales and marketing skills. You can be a visionary, with ideas that will revolutionize the company. However, if you can’t mobilize your employees, turning ideas and goals into reality will be more difficult, it not impossible.

Too many times, I have seen owners, executives, and managers fail, not because they were not smart, but because their employees were not motivated to excel. When you hire a new employee, their first day on the job can be the best day they are working for you. On their first day, they are excited by the new challenge, motivated to do a good job, with hopes of future advancement. On their first day, they are not thinking about how little they can do, or that management isn’t listening, or that management is indifferent to my ideas. These attitudes come later, after we’ve shown them that that we really aren’t listening to them

If you feel you aren’t reaching your employees, I will be glad to discuss it with you. You can email sam@thecrownbusinessgroup.com. More to follow

“Seller Financing – Is it for me?”

Buyers will sometimes ask -”Will the Seller consider financing part or all of the purchase price?” The Crown Business Group, LLC advises seller’s to consider several factors before considering an answer. What the buyer is really asking is, “does the seller want to become the bank?”. That is the proper context for the question to be considered no matter how attractive seller financing appears..

When I was with Price Waterhouse, I consulted with many banking clients, both large and small. Regarding loans, the bank’s perspective was not how much money they would make in fees and interest, but whether the borrower would pay the principle back in its entirety. That should govern the seller’s perspective as well.

  • Is the buyer able to pay back the principle?
  • Where will the money to pay back seller financing come from?
  • Will it come from the operation of the business?
  • What are the risk of holding the note? For example, if the buyer defaults, what are the sellers remedies.

If the seller simply finances an office building that housed the business offices of the business, then maybe a default is not a terrible ordeal since an office building may lend itself to other tenants. However, consider financing a fast food restaurant, land and building. Fast food buildings are very specific in use and sometimes very specific to franchise specifications. Therefore, financing a fast food location is higher risk because the location may lend itself only to the operation of a fast food concept. Additionally, the operations originate from the location itself which means that the seller may have to also step back into running the business.

Other issues that may give a seller pause:

  • Does the property house or use any chemicals or hazardous materials in the business?
  • Could the property be subject to condemnation or a re-zoning?
  • Does the buyer depend solely on the operations of the business to pay back the sellers note?
  • Does the noter reflect an interest rate that rewards the seller for risk assumed?
  • What term of financing is the buyer requesting?

Bottom line, seller financing can be an attractive option to both seller and buyer, however, the seller is taking on risk and risk should be carefully weighed and rewarded?

William A. Robinson III, CPA

Member – The Crown Business Group LLC

Run Your Business As If It Was For Sale

Too often our office is contacted by a small business owner that wants to sell their business due to some unexpected perosnal crisis. They have a health problem, or are getting a divorce, or made a capital investment and now running out of cash. It could be anything, but it was unplanned and unpleasant. Now they are forced to sell.

Most of us know of improvements that could be made in our operation that would enhance our operating results, but we get busy with the daily routine and get side tracked. We miss out on opportunities that are there for the taking. And most would have been so easily implemented.

But, when personal crisis hits, we have to unexpectedly find a buyer. We don’t want to, but we’re forced to. The price we would like to get for the business is going to be lower than expected because we’ve gotten bogged down in non-productive activity, like spending too much time in the office and not visiting customers or interacting with employees. We recommend that by staying focused and making improvements as the opportunity arises, you will be ready to sell if you need to.

Every business has things that can be done to improve profits…and little improvements can add up to better results. Better results means higher selling price, whether planned or unplanned.

Should I Buy A Business That Is Only Breaking Even?

There are some very good opportunities for business buyers if they have the vision and energy to buy a business that is only at break even. Obviously, the business needs to be in a catagory that has upside potential or fills a niche market. Many businesses on the market were started from scratch a few years ago and as the economy slowed, owners worked hard to build it to a break even status. Now, the owner is wanting to sell, but the business is not profitable.

The economy of the past few years has drained some new startups of their financial resources. Owners have built up a customer base and have really done all of the hard work of getting the business to break even.Unfortunately, they can’t hold on long enough to reap the reward. Many of these businesses can be bought for a very attractive price.

This is where a new buying opportunity is attractive and new ownership can take a business to the next level. We all know that it takes working capital to start a business. Why not take advantage of the effort and resources someone else has invested and take advantage of a business opportunity that is on the edge of being profitable.

Why Should I Use You To Sell My Business?

Earlier this week, I received a call from a business owner who wanted to sell her small business. She had gotten my name from her accountant. After a brief tour of her store, we sat down in the office to get better aquainted. It was then that I found out how candid and direct the conversation was going to be. This owner had tried to sell another business about five years ago and had a bad experience with her business broker. Her opinion of business brokers was that they “over promised” and “under delivered”.

I knew I had my work cut out for me. I explained that unlike many of our competitors, The Crown Business Group LLC did not charge any upfront lising fees and I was not going to get paid until her business sold. Crown was going to find a qualified buyer while at the same time, keeping the sale of her business confidental in the community.

One thing that I know is that our reputation is ‘the most important thing” we have. Word can get around too fast on the internet and in the community if we don’t service our clients well.

As a member of the International Business Brokers Association, I know that many of our competitors also do a good job. The Crown Business Group wants the sellers who engage our services to have a positive experience when it comes time for them to exit their business.

Owning a Business Is a Good Investment

Last week I received a call from a prospective buyer asking for more information on a business we are marketing. I asked him if he was going to work in the business, or use a manager to run it for him. He said he was going to use a manager and that his goal was to buy several businesses. He wants to learn each business but act as a general manager.

I asked him how he intended on financing these acquisitions. He stated he was going to use his personal savings that was earmarked for retirement. His retirement account had lost value and his strategy was to buy several profitable businesses that would yield a greater return than the investment market he was using.

I told the prospect that he was not the only person I had talked with that wanted to use this strategy. It makes sense to me that a business that yields even a 5% return is more than I am currently enjoying while invested in the market. And, these businesses have good potential for growth. Then, when retirement time comes, the owner can sell his businesses and enjoy the additional cash from the sale.

 

More on Foreign Buyers

We at The Crown Business Group LLC are endeavoring to find buyers from other countries that want to buy existing businesses here in the U.S. All of the businesses we have for sale are listed on a website in China. To help us with the language barrier, we have partnered with Ms. D.D. Lee, who speaks Mandarin, to help communicate with these prospects.

We are also in the process of launching an new effort to reach buyer prospects in other parts of the world who want to immigrate to the U.S. These buyers are qualified and have cash for the  purchase. As you know from watching the news, many countries are not business friendly. Individuals who have been successful overseas face the risk of losing their wealth due to corruption and government intervention. These entrepreneurs want to come to the U.S. but need to be a business owner to do so.

If you are in the position that you would like to sell your business and pursue something different, we may be able to help. Call us for a free consultation. We can give you an idea of what you can expect when selling, regardless of where the buyers originates.

Too Many Qualified Buyers

It is hard to believe that we have more buyer prospects than we do seller’s. When you talk with commercial or residential real estate agents, it’s just the opposite. They are looking for qualified buyers for their inventory.

Not so in the area of business brokerage. We are contacted weekly by private equity groups looking for businesses that have gross sales of over $5 million. We also have foreign buyer prospects looking to invest in a U.S. business with sales as small as $500,000. Many of these foreign investors want to immigrate to the U.S. and one of the prerequisites is that they buy or start a business. It’s a great opportunity for an owner considering selling.

If you would like to talk with us and get more information on how best to market your business, click here to contact us.

Exisiting Business or New Startup

The question I left you with last week was, “Why are so many people attracted to start a new business from zero”? It looks challenging and exciting, and many times, depending on the nature of the business, it is. But, consider all of your options. Look also at buying an existing business.

At my Rotary Club lunch yesterday, one of our members was making a presentation on some of the common mistakes business owners make. One of his points was “not enough working capital”.

When you start a business, whether it is a franchise or not, it takes a lot of cash to stay afloat until the business grows to where it can support itself. Last week I mentioned some of the expenses you incur before you have your first customer. Some are labor cost, buildout, equipment purchases, rent, advertising, etc. If these cost go on too long to the point you are strapped for cash, it can lead to an eventual business failure and the loss of your cash investment. I have met a fair number of business owners that are in this situation.

If you are thinking about going into business for yourself, get some good advice from your accountant or someone who has been through what you are planning to do. Consider the cash you are going to need before the business has a positive cash flow. If it looks risky, then you can change your plans from a new startup and start looking for an existing business to purchase.

Buying a Business vs. Starting a Business

If you are ever talking with someone who is debating over whether they should start a new business or buy an existing business, tell them to call us before making that decision. We can help you think it through.

Starting a business from scratch is not easy. It requires a lot of cash to be able to survive. Your start-up expenses are high before you ever make the first sale. There is rent to pay, build-out of the interior, signage, equipment to buy, employees to hire and train, and advertising before you have the first customer.

When you purchase an existing business, customers are already patronizing you. They know where your location is, there is name recognition, and you have cash being generated to pay the bills.

Most start-up businesses fail, not because of a lack of effort or enthusiasm, or because they don’t have a good product, or a good idea. It’s because they run out of cash. Cash to pay expenses…….cash to pay for inventory, supplies, rent, salaries and wages, advertising, and everything else to pay for when you are in a start-up. 

So, why are so many people attracted to start from zero? We’ll discuss that next week.