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Business Buying Opportunity – Profit Potential Created by Adversity?

Adversity has created a unique business buying opportunity if you are prepared to think like a contrarian. Warren Buffet claims that he likes to buy when others are selling, because popular opinion is almost always wrong. Being a contrarian, and taking advantage of the opportunities created by an unusually weak economy will seem unnatural to you at first. It may have also seemed unnatural to Mr. Buffet initially.

If it seems so unnatural, why should you consider adversity as a great business buying opportunity? There are actually a couple of very good reasons. First of all there will be businesses available for sale where the owners have become so tired of their many difficulties that they just want out. And they want out at any price. However, you will not likely find very many good businesses where the owners will want out at any price. So deals where you can almost name your own price will be quite rare. Owners may be tired but not to the point of being irrational. But in real estate parlance many will be highly motivated to try to make some kind of deal.

The other reason that you should consider adversity has created a great business buying opportunity relates to timing. When revenue and profit are down considerably from what is considered normal, most of the shortcomings of the business and its method of operating become exposed. And they will be easy to identify. You will learn what the worst is, without having to work very had to discover it. Things that good times, and reasonable results may tend to obscure, will become glaringly apparent under the bright light of adversity. You will be able to easily identify the shortcomings and determine which if any you can easily and inexpensively remedy, and those that will be more challenging and more costly

After identifying all the shortcomings. And you have rated them according to ease and cost of remedying, you will be in a good position to really determine how good a business buying opportunity you are evaluating. You can then conduct your own valuation to determine how it compares with the asking price. You may find that they are very close, although owners are frequently a bit short sighted about the various shortcomings of their businesses. The list of shortcomings that you have compiled and rated will give you objective arguments for use in price negotiations. And in concept it comes down to this. If you can buy for a price that is less than your adjusted valuation, you will likely do well. But there is a proviso.

The proviso again relates to timing. You need to examine the extent of the risk that buying at this time will expose you to. And that mostly depends on your assessment of the timing of the return to more normal market conditions. If you had to bet, would you bet that circumstances are more likely to get better or get worse. You need to be very realistic, and try to base you bet on objective measurements. Because it is your money. If you bet that things will get better, and they get worse, what will being a contrarian cost you? And can you afford it? Remember that despite the importance of great systems and processes, they are not a cure all. They are unable to put money in customers’ pockets so they can buy from you. They will enable you to perform relatively better than other businesses, but will that be enough.

Most of you will remember a public company called Nortel. At one time it was the darling of the telecommunications fans. After its price started falling, many people bought it because it looked cheap, because the price was down. They focused solely on price, and did not examine the cracks in the foundation of the underlying business. They found that what looked cheap, could get an awful lot cheaper. Those that understood that, and examined the underlying fundamentals objectively, avoided the stock.

So adversity can create great business buying opportunities for those that know what they are doing. Competition for business will be way down. And competition is a reflection of demand. So facing reduced demand, with no corresponding reduction in supply, basic economics tell us that prices will fall. And that is independent of any other fundamentals.

If you are familiar with the industry, and can properly assess the downside risk, you should adopt a contrarian point of view. If the economy is at the low point in the business cycle, things will only get better, and with them, the prospects for the business you are evaluating. The trick is identifying that exact time. And being able to hold on if you are wrong.

When you decide to take advantage of the great business buying opportunity provided by any adversity, try to wear a belt and suspenders. Don’t knowingly step in front of a freight train by buying when you think conditions are due to decline again. And when you make your offer, try very hard to include some kind of contingent pay out as part of the price. You may have to give up a bit of future earnings, in exchange for obtaining the needed downside protection. That’s OK. Remember that downside risk involves real money, whereas future earnings are what is called in the movie the Maltese Falcon, talking money rather than coin of the realm. I would much rather lose talking money than coin of the realm. Wouldn’t you?

You are right. This business of trying to estimate your downside is definitely something that is easier said than done. At least with any degree of precision. That your estimate will lack precision should not be a deterrent to doing it. There is great value in doing the thinking associated with estimating your downside and dealing with it to some degree. And knowing that you will never be completely accurate or precise should keep you from obsessing over it.

Remember, trying to get that type of downside protection should not be restricted to buying under adverse circumstances. For most prospective business owners giving up a little of the upside in exchange for downside protection should be as normal as getting insurance. Consider the bit of upside you forgo as the premium you pay for the downside protection. Just like an insurance premium.

For more actionable information that will help you in assessing a business buying opportunity take a look at the information at http://www.selling-a-business-without-stress.com/freereport.html. Although it is written to help sellers of businesses, it will work well for you. It is written from the perspective of what buyers should look for in a business, and accordingly what business owners should provide.

How Can I Get Money to Start My Own Business? 6 Tips on Where to Get Funds For Starting Up

Starting up a business big or small usually requires some type of financial investment. Wether it be a large or small amount of financial investment sometimes we need help when it comes to starting up. You may be wondering like many new entrepreneurs ‘how can i get money to start my own business?’ First things first, you need to establish a projected estimate of how much you need. You should have a good idea if you have completed a business plan. If you have not done a business plan you may want to see my article ‘Why Businesses Fail – 7 Reasons Why A Business Can Be Unsuccessful.’ After completing a business plan you should have a good idea of what your start up costs and first year of working capital needed will be. Once you have an idea of how much you will need you will have a better idea of what resource is best for you. Here are 6 tips to look at when considering ‘how can i get money to start my own business?’

  1. Savings: Having your own business might be something you’ve been dreaming about for a while and you may have already thought ‘how can i get money to start my own business?’ So you started saving. That is great! If you haven’t regularly started setting money aside, it is never too late to start. Having money in savings will be very beneficial for your business. Here are a few other ways to seek financial aid.
  2. Selling Unwanted Items: You could also create money by selling items that you don’t need or go unused that still have value to them. Use the funds to add to your savings.
  3. Credit: One advantage to credit is it can be a quick way to get unsecured funds. Getting a separate line of credit and/or credit card for your business can be one solution to ‘how can i get money to start my business?’ Be careful though, this can be quite costly with high interest rates when a balance is carried.
  4. Friends and Family: Isn’t there a saying out there that says it’s all about who you know? If your friends or family are able to invest in your business this possibly the best answer to ‘how can i get money to start my own business?’ I say this jokingly only because you will most likely get the best ‘loan agreement’ with reasonable terms of paying back the funds.
  5. Business & Home Equity Loans: There are advantages and disadvantages to both the business loan and home equity loan. Applying for a business loan as a opposed to a home equity loan might be a better option when one considers ‘how can I get money to start my own business?’ In the event of a home equity loan, you could borrow up to 85% of the appraised value of your home. The disadvantage to this is if the business fails and you can’t pay the loan back, you could lose your home. Many do choose the home equity loan because it can be difficult to be approved for a business loan. Banks are not particularly keen on lending money to new start ups. Having a detailed business plan will be significant value when applying for a business loan. Try to receive a business loan first before putting your home at risk.
  6. Government Grant: Research which grants you can apply for. You may be surprised at how much you are eligible to receive.

I hope these methods of ‘how can I get money to start my own business?’ help your business start up! If you are having trouble coming up with the funds to make your dream a reality consider running your business from home as a way to cut back on expenses.

A Home Based Business is Perfect For Financial Growth

The goal in a given state should be to have as many home business opportunities available for people who were previously unemployed as possible. A home based business can really spur economic growth. It can also spur some badly needed creativity in a given area. A lot of given states need a lot of economic development right now. There are a lot of states who need a lot of dollars and economic development in order to get back on their feet.

You can start a business at home in any number of states. All of the states in the union are looking for a way to spark commerce. The best state in the union to start a business in very well may be the state of Virginia. Former Governor and current United States Senator Mark Warner left the business climate in very good shape during his one term as Governor. Warner was very proud of the job he did with economic development during his one term as Governor. A Governor is only allowed to serve one term at a given time as Governor of Virginia.

You want to start your home based business in a state with a very good tax situation. You do not want to start your company in a state that has too high of a tax rate. You do not want to see the profits from your business taxed into oblivion. If you lived in Virginia under Governor Mark Warner, this certainly would not have happened. The state of North Dakota has a very low unemployment rate, certainly in comparison to the rest of the nation. This could partially be because of the very low and reasonable business and corporate tax rates that the state has.

Governor John Hoeven would want you to start your business at home in the state of North Dakota. You can even take the time to start a home business that sells replacement windows in the state of North Dakota. Hoeven tries to make his state as business friendly as he possibly can.

Jennifer Granholm is willing to listen to ideas on how to create more home based businesses in the state of Michigan. Is she willing to give the tax incentives necessary to spur the necessary economic development and creativity it takes to create a business from home? She simply may not be willing to do so

The people of Ohio see the huge amount of unemployment they are suffering through on a statewide basis and the hope is that home based businesses will play a role in alleviating some of this problem. People will have to band together in order to form successful companies.

The public sector employees such as Congressman do not have all of the answers. The private sector is truly the people who have the majority of the answers. This is certainly true when it comes to home based businesses. Dingell and Stupak want to support small businesses.

A home based business can be a great tool for economic development. You need a lot of office supplies in order to properly run a home based business. This means that the retailers can make a lot of money off of the fact that you run a business. It can be good for business to business commerce.

To get the newest legitimate home based business for your home, you want the best source of information. Many websites can point you in the directions you want to go to start a home based business.