As a business owner, you gain freedom and the potential to earn more than you might otherwise earn. If you are ready to tackle the hard work involved in business ownership, you may be prepared to take the next step. Two main advantages to being a business owner include forging ahead with more freedom and also boosting your income. However, you must be prepared to take some risks. Grow Your Income Owning your own business gives you the opportunity to grow your income. While owning a business can dramatically boost your income, this typically comes with both increased risk and more work. Generally, the longer a business owner maintains their business, the greater the potential for profits. Business owners who have operated their businesses for ten years or more generally earn over $100,000 per year. It’s important to remember that it may take years before you achieve the income level you desire. Building a successful business takes time, and increasing the profits of an existing … [Read more...]
Strategic Negotiation: Essential Tactics for Deal Success
Negotiation can evoke a range of feelings: some people thrive on it, others dread it, and many fall somewhere in between. Regardless of your stance, the ultimate goal remains the same: to emerge successfully from the negotiation. Mastering effective negotiation methods and tactics can give you an edge where others might falter. The objective is to close deals effectively. Here are three negotiation strategies that have been proven to close more deals. Leverage the Experts One common belief is that you should never negotiate your own deal. Business owners are often too emotionally invested in their businesses, which can cloud their judgment. Buyers can also become overly emotionally attached. Engaging a professional business broker or M&A advisor can be a strategic move toward achieving a favorable outcome. A professional broker not only knows what constitutes a fair price but also understands the many factors that influence the negotiation. Take it or Leave it Another strategy to … [Read more...]
Why Business Brokerage Professionals Use Term Sheets
Term sheets are invaluable in that they can serve as a point of orientation during negotiations. Thanks to term sheets it is possible to keep everyone involved, focused and on target. What is a Term Sheet? These nonbinding agreements detail the basic terms and conditions of a deal. It is different from a legally binding agreement, so it is often misunderstood by buyers and sellers. However, the term sheet serves the purpose of moving a deal along and helping both parties to get on the same page. A term sheet can be thought of as a preliminary proposal that contains a range of information that is essential to the deal. A well-crafted term sheet includes more than the price, as it also includes key terms and any major considerations, such as employment agreements, consulting and more. In Russ Robb’s book, “Streetwise Selling Your Business,” Robb concluded that a term sheet serves to include the price range along with the basic structure of a deal. Importantly, Robb also notes that a … [Read more...]
Navigating Due Diligence: Essential Steps for Successful Business Transactions
There is no denying the satisfaction that comes with obtaining a signed letter of intent from both the buyer and seller. However, it’s crucial to recognize that due diligence has yet to be completed. No deal is final until the seller undergoes this process and commits to proceeding. In Stanley Foster Reed’s insightful book, The Art of M&A, Reed emphasizes that the goal of due diligence is to “assess the benefits and liabilities of a proposed acquisition by investigating all relevant aspects of the business’s past, present, and foreseeable future.” Reed highlights the importance of thoroughly examining every aspect of a business and its potential trajectory. Due diligence is inherently comprehensive, and it’s no surprise that many deals falter during this critical stage. Therefore, it is prudent for both buyers and sellers to consult with key team members, such as lawyers and accountants, before embarking on due diligence. Reviewing All Aspects of a Business There are numerous … [Read more...]
Why Should You Buy an Established Business?
A pre-existing business is a proven commodity. A new business, regardless of how great your idea may be, will always have a future that is uncertain. You can hire many consultants and plan meticulously. Yet, even with the best ideas and most experienced consultants, your newly minted business could still quickly fail. A business with a long track record of success provides you with a degree of security and certainty. It’s also important to note that an existing business has a myriad of established relationships, which are invaluable. Business is all about cultivating strong relationships and developing a positive reputation. An established business will have those relationships set up and ready to go. This can be tremendously beneficial and save you a lot of time and energy. Whether it is suppliers, customers or key employees and management, this track record can help ensure your success. It will bring with it long-term customers, as well as an established and proven supply chain. … [Read more...]
How Business Owners Can Leverage AI
Artificial Intelligence has certainly received more than a bit of attention in the last two years. It’s no wonder that many business owners wonder how best to use this tool to gain an edge over the competition. Currently, the cost of ChatGPT-4 is only $20 per month, which is a very nominal cost considering its capabilities. For that cost, users gain access to a powerful large language model or LLM. ChatGPT-4 allows users to put in a prompt and quickly receive an answer. Since ChatGPT-4 is a neural network, it is possible for you to customize how data is generated. An AI Virtual Assistant? Almost anyone can appreciate the benefits a virtual assistant can bring. With ChatGPT-4, it is possible to use the technology as a digital VA that can simulate the work you might otherwise need to hire people to do. AI tools have become better and better at providing pinpointed information. More and more, business owners are viewing artificial intelligence as a tool that can serve the function of a … [Read more...]
Discovering How to Leverage SBA Lending Options
For most entrepreneurs, finding the money to launch their first business stands as a tremendous challenge. The good news is that getting a loan through the Small Business Association (SBA) is turning out to be a viable option for many business owners. The SBA doesn’t directly provide loans itself, but instead, works to facilitate lending. SBA assistance can even extend into the realm of micro-lending. It is very important for prospective buyers to realize that since SBA loans are government backed, lenders are typically much more willing to offer a prospective buyer a loan. Impressively, the SBA will cover seventy-five percent of a lender’s loss in the event that a loan ultimately goes into default. Many entrepreneurs find the issue of collateral to be a challenging one. Once again, the SBA can be of assistance. In some cases, an SBA loan may bypass the need for collateral altogether. Overall, SBA loans do in fact have a good deal in common with other types of loans. Prospective buyers … [Read more...]
Key Steps for All First Time Buyers
Are you a first-time business buyer? If so, it is critical that you work with a business broker or M&A advisor. If you’ve never purchased a business before, you simply can’t anticipate all that is involved in buying a business. Buying a business is vastly different than buying a home, which is typically the largest purchase that most first-time business buyers have made. Sometimes buyers assume that since they have made large investments before, they will have a leg up in the business buying process. However, they typically quickly find out that they still need a great deal of assistance to navigate the complexities of the business buying process. Business brokerage professionals know the process, the lay of the land, and the players involved. Additionally, business brokers and M&A advisors know where the traps and pitfalls are located. When it comes time to buy a business, all prospective business buyers can benefit from a guide. Let’s take a closer look at some of the … [Read more...]
Four Questions to Ask Yourself Before Purchasing a Business
Truly understanding a business is much like understanding the condition of a car. It is necessary for a skilled mechanic to “pop the hood” to access the true condition of a car. In much the same way, you and your team of experts need to “pop the hood” of the business in order to understand the business’s long-term health and viability. Here are four things to consider before signing on the dotted line. Will You Enjoy the Work? Owning a business, especially if you are planning on being an owner-operator, can be a demanding path. You will likely have to log many hours, especially in the beginning. For this reason, you’ll want to select a business that you will enjoy owning. Life is too short to own a business that you would not want to be involved in. Importantly, if you do not like the business you own, the odds of facing burnout and losing interest are higher. It goes without saying that these kinds of obstacles can dramatically harm your business. Think long and hard before selecting … [Read more...]
How Leases Factor into Business Sales
If you’re planning to buy or sell a business that involves a lease, this can lead to an extra level of complication. Oftentimes, such as in the case of a restaurant or retail establishment, the location is essential to the success of the business itself. That means that if you’re buying a business, you’ll have to make sure any lease issues you might encounter are straightened out before you sign on the bottom line. But even if you’re buying a business that isn’t location-sensitive, you’ll still want to iron out all the details about your lease ahead of time. Negotiating a Lease If you’re buying a business with a lease, one word of advice is to have a clear way out of the lease in the near future. After all, with a business so new to you, you might make changes in the short term. The general recommendation is to negotiate a one-year lease that has an option for a longer period of time. In many instances, the buyer of a business with a lease will find that he or she doesn’t have too … [Read more...]