Monthly Archives: February 2017

Information About Selling Business Or Retiring

The majority of business owners are planning on the proceeds from the sale of their business to fund their retirement. However, the 2013 State of Owner Readiness Survey revealed that over 80% of business owners have no formal transition plan. Historically, only 25% of businesses up for sale actually sell. Those odds are likely to become worse as millions of baby boomers attempt to sell their businesses over the next decade in the Exit Bubble®.

Combine the lack of readiness with the historically low success rates for selling a business, and you could be looking at the perfect storm for business owners. Below are five tips to increase your odds for a successful business sale:

1. Start planning NOW! It is never too early or too late to start planning the sale of your business. You’ll need to become informed on the emotional aspects to anticipate, and educated on the numerous tactical complexities of the business sale process. This will help put you on a level playing field with buyers and increase the odds of a successful sale.

2. Create a clear vision of what comes next. One of the biggest reasons businesses don’t sell is that business owners don’t have a vision of what they will do next. They can’t imagine not being the owner of “XYZ Company,” and the fear of the unknown causes them to walk from a deal at the last minute (cold feet).

For you, what comes next might involve working in a different occupation, dedicating more time to charity work or becoming a coach. Taking the time for this introspection early in the sale process greatly increases your odds of successfully getting to the closing table.

3. Be armed with the facts. It is natural that, as a business owner, you value your business higher than most buyers. You have spent years of blood, sweat and tears building your company and know it inside and out. Unfortunately, buyers don’t have that same level of understanding or legacy. Before buyers begin to ask questions, perform your own pre-sale due diligence on your business. View your business through the eyes of a potential buyer to identify impending issues and arm yourself with detailed facts about the business. Sellers who can answer detailed questions with facts and data (as opposed to opinion and anecdote) instill confidence in buyers and make the due diligence process easier.

4. Minimize surprises. Surprises are fun for birthdays but not when selling a business. When dealing with a potential buyer, it is human nature to want to avoid discussing a negative issue such as a troubled customer relationship. Especially for proud business owners who feel confident the relationship issues can be resolved. Buyers may not have that same confidence without the years of history with that customer. Instead, identify potential negative issues during your pre-sale diligence, and disclose them immediately while you still have negotiating power. Once you sign the letter of intent, a negative surprise in due diligence could result in a reduced purchase price or a failed deal.

5. Don’t take it personally. Due diligence is the most personal thing you will do in business, and it’s critical you don’t take it personally. Buyers routinely perform due diligence to confirm what you have told them and to find potential reasons to reduce the purchase price. This is standard business practice. Buyers question everything about the business and want facts to support the answers you have provided. You might feel like you are being attacked and a buyer is criticizing your business. By having a vision for your life after you sell, and by being prepared to answer the difficult questions, you can keep your emotions in check and get to the closing table.

You may not be planning to sell your business anytime soon, but you might find yourself needing to sell your business. An unexpected illness (yours or a family member) or a significant change in your financial situation may bring you to the negotiating table sooner than anticipated. Preparing yourself and your business now will increase your odds of a successful sale when the time comes.

Choose the Best Credit Card for Your Business

Looking for a credit card for your small business? There are plenty out there. Every major issuer has a special card for small business owners. The names might be catchy but how do you pick the right card for your business?

Do You Need a Credit Card?

Money isn’t pouring in yet. You have bills and expenses due today but that big check from a client is running late. A major piece of equipment broke but there isn’t enough money in your bank account to cover the cost. This is when a credit card becomes a lifeline.

As a young startup, you’re not likely to secure a line of credit from a bank or investor. Your best bet is seed money from family or friends but maybe you’ve exhausted that option or you don’t want to give up any equity in the company. A credit card is the perfect way to cover expenses when cash is running low.

Did you know that businesses have a credit file too? Your D&B (Dunn and Bradstreet) score is the business equivalent of a FICO score. In order to build your businesses credit score you have to utilize credit. Since credit is hard to secure at first, the best way to build your score is likely through the use of a credit card.

But be careful. Overspending can lead to disaster. Just as credit cards have driven families into bankruptcy, they can do the same with small businesses. Don’t use a credit card to buy what your business can’t afford. Use it to cover expenses until payments from customers arrive.

How To Find the Right Card

1. Be Realistic

Are you going to pay the charges in full each month? If you are, look at rewards cards. Getting a free flight simply by using your card is a great deal. There are some that offer travel rewards, cash back (in the form of statement credits), and other rewards.

But those rewards are small compared to the interest you pay if you carry over a balance. If you’re paying interest, you’re quickly wiping out any reward you receive.

If you’re going to hold a balance, first look at the interest rate. If you’re disciplined enough to not pay interest, look at the quality of the rewards.

2. Keep Yourself Honest

A credit card and a charge card are different. A charge card requires that you pay the balance in full after a certain period—often after one month. A credit card allows you to roll over the balance month to month. The American Express Plumb card is considered a charge card. It gives you 60 days to pay without any charges and offers a discount if you pay early. After 60 days, charges apply.

3. Look at the Terms

Do you travel outside of the country for your business? Make sure your card doesn’t have a foreign transaction fee. Most don’t but don’t pay up to 3% in fees because you didn’t read the fine print.

4. Be Careful of the Teaser Rates

That 0% introductory APR is certainly enticing but what happens after it expires? Before reading the pretty, colorful ad copy on the credit card’s home page, find the disclosure page—normally a link at the bottom. Read about the rates and fees and then go back and read about the card benefits.

5. Dig Deep Into The Rewards Program

After deciding which type of rewards program fits you the best (travel, cash back, etc.) read the fine print. If you’re looking for travel rewards, make sure the card company offers rewards for your airline of choice. If you’re already a super-double-diamond-high-roller flyer with a certain airline, you want a rewards program that works with that airline.

If you have a lot of vehicles, a credit card that offers bonus points for gas purchases is certainly a plus.

6. How Do Extra Cards Work?

How do you get extra cards for your employees and is there a fee? Can you set spending limits on employee cards? Some business cards come with an impressive list of ways to monitor and limit employee spending. Others are nothing more than an additional authorized user.

7. What are the Penalties?

You don’t plan to make late payments but what if it happens? Do you lose your rewards points? Is there a penalty APR that goes into effect? What is the late fee? Sometimes paying bills a little late is unavoidable. As you’re shopping for a card, compare those terms and conditions as well.

8. Beware the Annual Fee

Some cards have a lot of perks—concierge services, purchase protections, free insurance for your rental car, and more. But is it worth a hefty annual fee?

Small Business Grants

Wouldn’t it be nice if a person or entity would give you money to grow your business? The truth is, that isn’t likely to happen unless the funders are your friends or family. There are plenty of grants available for a small subset of business that are in certain industries. Here’s the truth about grants that you should know.

1. Small business grants are hard to find

If you’re a small business owner or you will be soon, you’ve probably heard of the United States Small Business Administration or SBA. The SBA is the government agency in charge of helping you find success as a small business owner. However, according to the SBA it, “does not provide grants for starting and expanding a business.”

The federal government has grant programs along with some state and private organizations but most fund non-profits.

2. Grants are specific

If you’re hoping to find something similar to a loan but you’re hoping not to pay it back, that’s not how grants work. Grants are often designed to foster growth or serve the public good. If an organization can give somebody money to fund research that may someday cure a disease or clean up the environment, that’s money well spent in the grantor’s eyes.

There’s very little good that comes from giving small businesses money for general growth.

3. Strict reporting requirements

If you receive grant money, expect very specific rules on how you can spend the money. And expect the paperwork to take a significant amount of time. Grantors know better than to give a business money and forget about it. Not only do they have a fiscal responsibility to their donors, raising more money requires convincing their donors that the money won’t be wasted.

4. The money may not be free

Before you go after grants, you’ll want to have some money saved of your own. Grants are often awarded based on matching funds. For every dollar the grantor gives you, you have to put up the same amount either through cash or financing. They want you to have “skin in the game” as well.

5. Grant writing is an art

Grant writing is tough. It takes a lot of time and there’s an art to completing the request. Many people looking for grants hire a grant writer for help. If you’re not the greatest writer and/or have no experience writing grants, get some help—at least for the first couple.

6. There’s a TON of competition

People in the grant business know where to look to find offers that might pertain to them. Because of the amount of competition you might be perfectly suited for the grant but don’t get it because so many others are too. Don’t make a business plan around getting grants.

How to Find Grants

But what if you are the type of business or organization that grantors look for? How do you find a list of grants? Start with the SBA’s Loans and Grants Search Tool. Here, you can research different funding options that might apply to you. You can also try grants.gov for a long list of government-funded grants.

For other opportunities, visit the website or call groups and organizations related to your industry. If you’re a woman, for example, you could call you state branch of the Women’s business center and research Amber Grants to get started.

Sometimes the biggest stumbling block in obtaining funding is finding the grants that apply to you. This is where old-fashioned networking becomes one of your allies.

Consider an SBA loan

It’s not a grant but the SBA can help you get a small business loan. By going through certain SBA-approved banks, you can get a small business loan guaranteed by the SBA. This guarantee allows lenders to lower their lending standards. If you’re just starting or were turned down for a traditional loan, go to the SBA’s website and research the types of guaranteed loans available to you.