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Buying A Business – What To Look For

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Posted on 27-01-2011 | By: Blackdog

Category : General Thoughts, Small Businesses

In a tough economy, buying a business can be a short-cut out of unemployment. When jobs are scarce and sources of new business are hard to find, buying a business that someone else has established can be a good approach. However it is also an expensive business – people do not give away their hard work and bargains are rare. If someone has the commercial ability to get a good business undereway they are not likely to be silly enough to undervalue it. Any one considering this step should also do a lot of research to make sure that they are getting what they expect. When you buy a house you hire a slew of professionals to check that everything is in order. The money involved in buying a business can be at similar levels and so you should be as cautious. The formal name for this type of work is called due dilligence. Due dilligence work should be carried out on at least three aspects of the sale.

– the commercial strength of the business
– the financial strenght of the business, and
– the legal agreement that is being proposed

Here are some suggestions that we found , from Rudy LeCorps which gives a good general series of steps that you should take when evaluating a business for purchase.

» Introduction
It is possible for anyone to create current and future passive income by buying existing businesses from owners who are changing career or retiring.

» Step 1
Decide What Type of Business You Want to Buy. Examine your professional experience to see what kind of business would make the best use use of your existing skills. Buying a business in which you have no experience is not recommended, unless you can hire an experienced manager to run it for you. An easy way to do that is to review a list of industries to determine which one fits your skills or gets you excited. Running a business is a lot of work and the more you know about that business and the more passionate you are about what you will be doing, the better off you will be.

» Step 2
Your Next Step is to Find a Business to Buy in Your Industry of Choice. Finding the right business to buy will take time and patience. But in a nutshell, you can find businesses for sale ads by a) browsing the opportunity section of the newspapers, b) working with a business broker, c) by browsing the Internet, and d) by approaching business owners directly.

» Step 3
You Next Step is to Conduct Due Diligence. Due diligence should be conducted carefully. By following a systematic due diligence approach, you will be able to intelligently conclude whether the business represents a good investment opportunity. Otherwise you could spend money buying a business and loose all your investment. A complete due diligence system is discussed in my free eBook which can be downloaded at http://whiteoakpartnersinc.com.

» Step 4
Next, Determine the Price to Pay for the Business. Business valuation is your next task. To value the business, you can apply one of several strategies, including a) a multiple of net income, b) a multiple of sales, c) a comparable-based valuation and d) a discounted cashflow strategy. A complete valuation strategy is presented in my free ebook which you can download at http://whiteoakpartnersinc.com.

» Step 5
Your Final Step is the secure financing for your purchase and make an offer. Financing can be in the form of personal savings, bank loans, or capital from investors.

p>Rudy LeCorps is Managing Director of Whiteoak Partners, a small business advisory and investment firm in Jersey City (http://whiteoakpartnersinc.com). Rudy LeCorps is also co-founder of Spiffy Car Rentals, Inc. and has been President of the company for the past 10 years. Spiffy Car Rentals is an operator of car rental locations in Northern New Jersey . Rudy LeCorps also worked for Morgan Stanley and JPMorgan Chase where he was Vice President of Investments from April 2008 to October 7th, 2010.

At the end of the day, buying a business is a commercial decision. If the deal is to succeed, you will need to be able to make a profit and to service the financing that you will undertake to make the purchase. Events recently have shown that what seems like sensible borrowing now can look like a poor decision in a higher interest rate environment or when sentiment moves away from high financial leverage.

Aside from these considerations, you need to make sure that what you are being sold is what you will end up running and that is where due dilligence plays a role in buying a business.

Business Support For Small Businesses And Where To Find It

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Posted on 26-01-2011 | By: markie

Category : General Thoughts, Small Businesses

Running a small business is tough and owners need all the support that they can get. Even when a business is prospering and has lots of cash, it can still benefit a lot from support in the form of advice, especially in specialist areas. Finance is one area where businesses need help, but marketing and stock control are topics that are regularly in demand. There are planty of sources of advice, but not all of them are suitable for smaller businesses and many fo them are not so easy to access. Here is some information from Holy Earp and she wrote the following in support of a single support organisation. We think it could be a useful resource for small business owners.

If you’re a small business trying to get off the ground, then it’s valuable to make use of all available resources. Providing essential small business support, one experienced business group is able to offer a comprehensive service, to provide you with all the help, guidance and advice you’ll need.

This group’s services are focused on you and your business. They value their members and want to make sure that you receive the most beneficial and exceptional service possible. Through their extensive experience within the business sector and from listening to what small businesses like yours need, this group of professionals have developed a series of practical business solutions to ensure that you are fully prepared and organised across all areas of your company.

Other sources of information may provide the knowledge you require to implement successful processes in your businesses, but they don’t provide the support, drive and motivation which this group can offer.
Their business solution-based packages are just the beginning.

Through joining the group, you’ll not just receive a service, but you’ll also become a member of a thriving small business community. Building on your strengths and helping you to improve on your weaknesses, they’ll help you to develop and progress.

If you’re unsure of how a business group can help, why not try out an introductory membership package? These specialists offer this completely free of charge, to allow you a valuable insight into the benefits which full membership holds. As an introductory member, you’ll receive a quarterly online magazine and newsletter, as well as weekly tips, news and advice. Plus, you’ll also have access to exclusive articles and videos which can help to improve your business.

You can upgrade your membership at any time to take full advantage of the tailored business solutions which are on offer, as well as essential training, expert advice, HR, finance and health and safety templates, plus much more.

Their packages offer a highly cost-effective option to improving your business, saving you the cost of hiring various specialist advisers. For an excellent price, they can offer full business support over all aspects of your company, eliminating the need to employ several experts to oversee the running of your business.

For small business support which truly offers the level of guidance and knowledge that is so important when running your own firm, join this business group today and watch your company begin to grow.
Written by Holly Earp on behalf of the Forum of Private Business, providers of small business support.

There are other organisations that offer similar support. In the UK BusinessLink is the one that is most often quoted. However, now that the Government in cutting back on business support and has announced that regional development structures are being dismantled, it is not clear what BusinessLink will look like in the future. As soon as the new small business support options become clear we will feature them on our blog.

Three Men Were In A Bar……(fiction)

Posted on 03-11-2010 | By: markie

Category : Business In General, General Thoughts, Small Businesses

Martin took a moment to look closely at his two friends and he began to wonder how things had ever got this bad. Anyone looking at the three o them would assume that they were three wealthy businessmen enjoying the end of a day’s golf. Certainly they all looked the part, but things are not always as they seem and Martin was worried.

In the ten years since they had been playing together, he had always enjoyed getting out of the office with Simon and Luke. Recently, however, he had begun to feel some resentment towards them. On the surface things continued as normal, free spending, joking and teasing. Martin’s father had reminded him that it was important never to look too hungry or too desperate when you are trying to close a deal. The recession had been tough on everyone. Luke was in the transport business and was pretty open about the price pressure that he was under, but he still seemed to be surviving. Martin was certain that Simon had done better in the downturn and he knew that he was still expanding and hiring people.

Martin ran an engineering business and things were bad. Sales were down 30% on last year and he had let several people go in the last few months. It had not been easy telling people the bad news, but now he was thinking that he should have acted sooner. When he first noticed things getting tighter he had taken the view that things would not be too bad for him. Natural optimism had been a strength and a weakness for him. “Hope is not a strategy” said his bank manager – prat. Cash was running out and he was spending more time on the phone talking to suppliers than he was looking for business. Soon he would have to back in front of the prat looking for a larger overdraft. And the banks were the ones who caused all the problems in the first place.

His accountant said that he should have a plan. Every time he phoned he kept asking about budgets and forecasts, but Martin had no time for that. This was a battle for survival. He had reached the stage now where he avoided the accountant altogether and now left the monthly figures to Ann in the office.

Simon had just done a review of his digital marketing and was about to invest £20,000 in a new website and internet marketing campaign. He raved about the marketing company who had done the strategy review and about the results that they were getting. He offered Martin their phone number, but he had not called them. Engineering is a very traditional sector and that internet stuff wouldn’t be well received by his customers. Anyway if he had £20,000 to spare he would pay some of his suppliers.

Still things would probably get better. You had to believe in a better tomorrow.

“Another drink chaps?”

5 Myths About Leadership

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Posted on 08-09-2010 | By: markie

Category : Business In General, General Thoughts, Small Businesses

leadership1

    The William Wallace Myth

Behind much of the discussions about leadership is an assumption that it is based on one of the fables that we learnt as children. Deep down we assume that a leader should be a hero figure, capable of riding out in fornt of his men and rousing their passions through stirring words and deeds of great bravery. This braveheart concept is almost never mentioned, but it does lie behind many of the ideas and debates on the topic. In truth, while people would like to be inspired by the people that they meet in work, too much passion is not considered to be a good thing in the modern workplace. While we would like the inspiration, we would have a low tolerance for the intensity that would go with it and most would not relish the expectations that such a passionate leader would have.

We do admire leaders that are physically larger, are physically attractive and are fluent speakers, but this is a dangerously exclusive model of leadership. It leaves no room for the average person and confuses attraction and admiration with ability to steer a good path for an organisation.

    Leaders Are Born Not Made

For most of modern history it has been assumed that there is a cadre of leaders who are more qualified to lead than others because of their genetic inheritance. This group have been born to families of people who were successful in the past and therefore their offspring have been seen as well qualified to lead in any number of circumstances.
As social mobility has increased this myth has been debunked. People from a range of social and family backgrounds have been successful leaders. We also know of many circumstances in which the lord of the manor has proven to be a business disaster.

There are certain qualities that leaders must have, but they are not exclusively available to a narrow group of families. In addition, a leader will be influenced by a range of people as he grows up and these will play a significant part in the person that he or she becomes.

    Leadership is about Getting Things Done

Managers run bureaucratic organisations by setting goals, allocating resources and by controlling the actions of people. This is how things get done in these organisations and the quality of these management controls determines how much gets done. Leadership overlaps with management regarding the control of people. The process of setting objectives and monitoring their delivery is management, but the communication of the direction of the organisation and making sure that people both share in the vision and want to contribute to its deliver is a part of leadership. At this level leadership and management are linked, but they are not the same things.

    Good leaders Produce Superior Profits

For many organisations that yearn to produce great leaders, profits are the main goals. Yet it is not true that leaders always produce superior profits. At their best, leaders have a long term vision for their businesses, and they are generous in sharing the spoils of success with their colleagues. Their goal is to maximise long-term profits and they will do so at the expense of short term results. They will invest heavily in training and staff involvement. They will spend lavishly on long term incentive programs. A short term focus would produce better immediate results and is somewhat less risky. This is because the future is hard to foresee and visions have to change. In purely financial terms there is an argument for taking the money today and meeting the challenges of tomorrow as they arise.

People who are well lead are more satisfied in their work, but research does not indicate that that makes them more productive.

    A Good Leader In Any Circumstance

It does not take much thought to realise that someone who is an effective military leader may not be a good leader of an animal care charity or lead a team in running the merger of two businesses. However, even in the narrower world of business leadership one man is not right in all circumstances. Compare Terry Leahy from Tesco and Tony Hayward from BP. Terry announced his retirement recently to broad acclaim in how he had led the company. On the other hand, Tony recently departed BP amid criticism of his handling of PR surrounding the gulf oil leak. Terry Leahy appears to be a modest man who knows his trade of retailing well and has used this knowledge to steer the business on a successful path for an extended period and his success is undeniable. It is doubtful if he were in the position that Tony Hayward was in earlier this year that he would have been able to cope with the glare of American publicity that he would have been under and that he would have been any more surefooted in his dealing with the press and the US congress. He was an excellent leader in one set of circumstance, but may not have coped well in another. This is not to take away any of the recognition he deserves for this achievements. Rather I am just pointing out how different people are required to lead in different circumstances.

Business Growth – Mindset or Mind Power?

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Posted on 27-08-2010 | By: markie

Category : Business In General, General Thoughts, Marketing Advice

If you take the time to look through the blog posts and other internet material on business growth, you will see that most of them fall into two categories. The first claims that business growth is all about having the right attitude, while the second claims that it is all about thinking clearly about your business.

The central idea within the first set if that you would have more business growth ” if only you were more XXX….”. For XXX substitute organised, goal orientated, can do, etc., depending on the context of the piece. They are usually written by business coaches.

On the other hand, the second category stems from the thinking that business people are too busy working in their businesses to be wokring on them. In other words, the daily grind takes over and there is no time for thinking and planning. These writers propose that if you make that time available then you will be able to solve your business problems and you will get growth.

The problem with both approaches is that while neither of them is wrong, neither of them is particularly helpful. For example, a person who is working on a business idea with very limited potential will not succeed even if they have a fantastic attitude to their work. Similarly, someone thinks about their business but is out of touch with their customers will probably not achieve business growth.

An interesting departure from the usual thinking comes from Jim Symcox in his blog. He states:

“it’s amazing what happens to a business that takes the time to really look at their business from a strategic viewpoint. Provided they use a good facilitator and coach to get to the real question.

So rather than asking the tactical question “how to we get more sales?” the strategic question could be “how do we get more sales from the following sectors: x, y, z, whilst positioning ourselves as experts, as friends of the community and supporters of business enterprise in the UK and Singapore and building close relationships with our prospects and clients?”

The focus on how to think about business growth is of considerably more practical value to business people than a strict adherence to a coaching or a consulting model or ideal.

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