Are you looking to market your business to the general public, preferably your targeted market? Your targeted market should be the individuals who are most likely to need what your business has to offer. For instance, if you run a professional resume writing business, you will want to target those who are currently unemployed or those who are looking for jobs. As important as advertising is, it can sometimes get time consuming and costly. The costly part is what often causes many small business owners to cringe. The good news is that there are a number of different ways that you can go about advertising your small business without having to spend more money than you need to.
One of the best advertising methods that people fail to realize the importance of is word of mouth. In today’s society, many consumers like giving a company feedback or ratings, literally or figuratively. That is why many consumers tell their friends when they find a nice new store; one that is worth visiting, or a store that they had a bad experience at. You should never underestimate the power of the customers that you already have. Not only will keeping your current customers happy increase the chances of them coming back again, it also ups the chances of them recommending your business to those that they know.
Another easy and relatively cheap way that you can go about advertising your small business to your targeted market is by carefully choosing where you choose to advertise your business. In keeping with the above mentioned example of running a professional resume writing businesses, you may want to think about distributing flyers or business cards to local coffee shops or college campuses. The same can be done for other types of businesses. For instance, if you run a dog grooming salon, you can advertise your business in local pet supply stores, vet offices, and such. Of course, you will need to get permission from other businesses before placing your business cards or flyers on their properties, but you may find that most are willing to assist you. In fact, you may even want to think about doing a flyer or business card swap.
In addition to handing out traditional business cards or flyers, you may also want to think about giving away free coupons. There are many consumers who like free stuff, even if it is only a few coupons. When a customer has a money saving coupon, they are more likely to buy what you are selling, whether it is a product or a service. If you are trying to target a specific group of individuals, like your targeted market, you may want to carefully choose how you distribute your coupons and how much in savings you give away. If you are just trying to generate as many sales as possible or create a “buzz,” you may want to think about contacting one of your local newspapers to put coupons inside their paper.
As it was previously mentioned, there are many consumers who love free stuff, even if it is just coupons. You are advised to take advantage of this well-known fact. For instance, you may want to think about holding a contest or a drawing for your customers. For instance, if you run a pet supply store, you may want to think about creating a pet gift basket, like one that may include food, treats, or grooming supplies. You will want to allow each of your customers, the ones who make a purchase, to enter into your contest. If the prize is nice enough, you may that some customers buy something just to get entered into the contest. Hosting a contest is a great way to generate sales and business “buzz.”
The above mentioned approaches are just a few of the many low-cost, affordable ways that you can go about advertising your business to the general public or even just to your targeted market. The decision as to whether or not you want to use any of the above mentioned methods is yours to make, but they are at least worth looking into.
Kindly yours.
Saturday, October 31, 2009
Monday, October 26, 2009
5 Key Components Of A Small Business Acquisition Loan
Major Challenges To Securing A Business Acquisition Loan
Qualifying for a small business acquisition loan can be quite an ordeal to say the least.
If the business being sold is very profitable, the selling price will likely reflect a significant amount of goodwill which can be very difficult to finance.
If the business being sold is not making money, lenders can be difficult to find even if the underlying assets being acquired are worth substantially more than the purchase price.
Business acquisition loans, or change of control financing situations, can be extremely varied from case to case.
That being said, here are the major challenges you'll typically have to overcome to secure a small business acquisition loan.
>>> Financing Goodwill
The definition of goodwill is the sale price minus the resale or liquidation value of business assets after any debts owing on the assets are paid off. It represents the future profit the business is expected to generate beyond the current value of the assets.
Most lenders have no interest in financing goodwill.
This effectively increases the amount of the down payment required to complete the sale and/or the acquisition of some financing from the vendor in the form of a vendor loan.
Vendor support and Vendor loans are a very common elements in the sale of a small business.
If they are not initially present in the conditions of sale, you may want to ask the vendor if they would consider providing support and financing.
There are some excellent reasons why asking the question could be well worth your time.
In order to receive the maximum possible sale price, which likely involves some amount of goodwill, the vendor will agree to finance part of the sale by allowing the buyer to pay a portion of the sale price over a defined period of time within a structured payment schedule.
The vendor may also offer transition assistance for a period of time to make sure the transition period is seamless.
The combination of support and financing by the vendor creates a positive vested interest whereby it is in the vendor's best interest to help the buyer successfully transition all aspects of ownership and operations.
Failure to do so could result in the vendor not getting all the proceeds of sale in the future in the event the business were to suffer or fail under new ownership.
This is usually a very appealing aspect to potential lenders as the risk of loss due to transition is greatly reduced.
This speaks directly to the next financing challenge.
>>> Business Transition Risk
Will the new owner be able to run the business as well as the previous owner? Will the customers still do business with the new owner? Did the previous owner possess a specific skill set that will be difficult to replicate or replace? Will the key employees remain with the company after the sale?
A lender must be confident that the business can successfully continue at no worse than the current level of performance. There usually needs to be a buffer built into the financial projections for changeover lags that can occur.
At the same time, many buyers will purchase a business because they believe there is substantial growth available which they think they can take advantage of.
The key is convincing the lender of the growth potential and your ability to achieve superior results.
>>> Asset Sale Versus Share Sale
For tax purposes, many sellers want to sell the shares of their business.
However, by doing so, any outstanding and potential future liability related to the going concern business will fall at the feet of the buyer unless othewise indicated in the purchase and sale agreement.
Because potential business liability is a difficult thing to evaluate, there can be a higher perceived risk when considering a small business acquisition loan application related to a share purchase.
>>> Market Risk
Is the business in a growing, mature, or declining market segment? How does the business fit into the competitive dynamics of the market and will a change in control strengthen or weaken its competitive position?
A lender needs to be confident that the business can be successful for at least the period the business acquisition loan will be outstanding.
This is important for two reasons. First, a sustained cash flow will obviously allow a smoother process of repayment. Second, a strong going concern business has a higher probability of resale.
If an unforeseen event causes the owner to no longer be able to carry on the business, the lender will have confidence that the business can still generate enough profit from resale to retire the outstanding debt.
Localized markets are much easier for a lender or investor to assess than a business selling to a broader geographic reach. Area based lenders may also have some working knowledge of the particular business and how prominent it is in the local market.
>>> Personal Net Worth
Most business acquisition loans require the buyer to be able to invest at least a third of the total purchase price in cash with a remaining tangible net worth at least equal to the remaining value of the loan.
Statistics show that over leveraged companies are more prone to suffer financial duress and default on their business acquisition loan commitments.
The larger the amount of the business acquisition loan required, the more likely the probability of default.
Qualifying for a small business acquisition loan can be quite an ordeal to say the least.
If the business being sold is very profitable, the selling price will likely reflect a significant amount of goodwill which can be very difficult to finance.
If the business being sold is not making money, lenders can be difficult to find even if the underlying assets being acquired are worth substantially more than the purchase price.
Business acquisition loans, or change of control financing situations, can be extremely varied from case to case.
That being said, here are the major challenges you'll typically have to overcome to secure a small business acquisition loan.
>>> Financing Goodwill
The definition of goodwill is the sale price minus the resale or liquidation value of business assets after any debts owing on the assets are paid off. It represents the future profit the business is expected to generate beyond the current value of the assets.
Most lenders have no interest in financing goodwill.
This effectively increases the amount of the down payment required to complete the sale and/or the acquisition of some financing from the vendor in the form of a vendor loan.
Vendor support and Vendor loans are a very common elements in the sale of a small business.
If they are not initially present in the conditions of sale, you may want to ask the vendor if they would consider providing support and financing.
There are some excellent reasons why asking the question could be well worth your time.
In order to receive the maximum possible sale price, which likely involves some amount of goodwill, the vendor will agree to finance part of the sale by allowing the buyer to pay a portion of the sale price over a defined period of time within a structured payment schedule.
The vendor may also offer transition assistance for a period of time to make sure the transition period is seamless.
The combination of support and financing by the vendor creates a positive vested interest whereby it is in the vendor's best interest to help the buyer successfully transition all aspects of ownership and operations.
Failure to do so could result in the vendor not getting all the proceeds of sale in the future in the event the business were to suffer or fail under new ownership.
This is usually a very appealing aspect to potential lenders as the risk of loss due to transition is greatly reduced.
This speaks directly to the next financing challenge.
>>> Business Transition Risk
Will the new owner be able to run the business as well as the previous owner? Will the customers still do business with the new owner? Did the previous owner possess a specific skill set that will be difficult to replicate or replace? Will the key employees remain with the company after the sale?
A lender must be confident that the business can successfully continue at no worse than the current level of performance. There usually needs to be a buffer built into the financial projections for changeover lags that can occur.
At the same time, many buyers will purchase a business because they believe there is substantial growth available which they think they can take advantage of.
The key is convincing the lender of the growth potential and your ability to achieve superior results.
>>> Asset Sale Versus Share Sale
For tax purposes, many sellers want to sell the shares of their business.
However, by doing so, any outstanding and potential future liability related to the going concern business will fall at the feet of the buyer unless othewise indicated in the purchase and sale agreement.
Because potential business liability is a difficult thing to evaluate, there can be a higher perceived risk when considering a small business acquisition loan application related to a share purchase.
>>> Market Risk
Is the business in a growing, mature, or declining market segment? How does the business fit into the competitive dynamics of the market and will a change in control strengthen or weaken its competitive position?
A lender needs to be confident that the business can be successful for at least the period the business acquisition loan will be outstanding.
This is important for two reasons. First, a sustained cash flow will obviously allow a smoother process of repayment. Second, a strong going concern business has a higher probability of resale.
If an unforeseen event causes the owner to no longer be able to carry on the business, the lender will have confidence that the business can still generate enough profit from resale to retire the outstanding debt.
Localized markets are much easier for a lender or investor to assess than a business selling to a broader geographic reach. Area based lenders may also have some working knowledge of the particular business and how prominent it is in the local market.
>>> Personal Net Worth
Most business acquisition loans require the buyer to be able to invest at least a third of the total purchase price in cash with a remaining tangible net worth at least equal to the remaining value of the loan.
Statistics show that over leveraged companies are more prone to suffer financial duress and default on their business acquisition loan commitments.
The larger the amount of the business acquisition loan required, the more likely the probability of default.
Friday, October 23, 2009
Finding and Choosing a Small Business Health Insurance Plan
Are you a small business owner?
If you are, are you interested in getting health insurance coverage for yourself and your small business employees? If you are, you will need to find a small business health insurance plan to buy. In the United States, it is also common to hear a small business health insurance plan referred to as a group insurance plan.
When it comes to buying small business health insurance for you and your employees, you may want to first focus on insurance companies. In the United States, there are a number of different health insurance companies that you could do business with. Many of these companies offer multiple health insurance coverage plans, like plans that include just medical coverage or plans that include medical coverage, prescription coverage, as well as dental coverage. Many health insurance companies have health insurance plans that are designed for small business owners, just like you. As previously mentioned, these plans are often referred to as group plans or small business health insurance plans.
If you don’t already know of a number of health insurance companies, you can easily find and familiarize yourself with a number of health insurance companies by performing a standard internet search. Your standard internet search will likely direct you to the online websites of numerous health insurance companies. You will want to take the time to thoroughly read through and examine each company’s website. By examining the online website of a health insurance company, you should be able to determine, often right away, whether or not they offer group insurance or small business health insurance. If they do, you may want to ask for more information.
What you do not want to do, when looking to buy small business health insurance for you and your employees, is buy the first group or small business health insurance plan that you come across. Different health insurance companies offer different insurance plans and at different prices. To prevent yourself from wasting your money and the money of your employees, you will want to make sure that you carefully choose which group or small business health insurance plan you purchase. You will want to purchase one that is affordable, but you also want to make sure that it is a plan that you and your employees can benefit from. In fact, if you have less than thirty or so employees, you may want to think about allowing your employees to have some say in the type of insurance purchased, especially since they will likely end up helping you pay for it.
Once you have decided to purchase a small business health insurance plan for you and your employees, you will be given additional information, like when your insurance premium payments are due. There are some health insurance companies who require that their payments be made in advance, like at the beginning of each year, while others do not mind receiving monthly payments. Whichever approach you take, it is important that your payments are made on time. Your small business employees and their families may rely on their health insurance and you don’t want to end up letting them down.
As you can see, from being outlined above, finding and buying health insurance for you and your small business employees is actually a relatively easy process. In most cases, you can find, research, and buy health insurance online, without ever have to speak to a company representative. However, if you do have any questions or concerns, it may be worth your while to contact a health insurance company representative for more information.
Till next topic.
best regards.
The Small Businessman
If you are, are you interested in getting health insurance coverage for yourself and your small business employees? If you are, you will need to find a small business health insurance plan to buy. In the United States, it is also common to hear a small business health insurance plan referred to as a group insurance plan.
When it comes to buying small business health insurance for you and your employees, you may want to first focus on insurance companies. In the United States, there are a number of different health insurance companies that you could do business with. Many of these companies offer multiple health insurance coverage plans, like plans that include just medical coverage or plans that include medical coverage, prescription coverage, as well as dental coverage. Many health insurance companies have health insurance plans that are designed for small business owners, just like you. As previously mentioned, these plans are often referred to as group plans or small business health insurance plans.
If you don’t already know of a number of health insurance companies, you can easily find and familiarize yourself with a number of health insurance companies by performing a standard internet search. Your standard internet search will likely direct you to the online websites of numerous health insurance companies. You will want to take the time to thoroughly read through and examine each company’s website. By examining the online website of a health insurance company, you should be able to determine, often right away, whether or not they offer group insurance or small business health insurance. If they do, you may want to ask for more information.
What you do not want to do, when looking to buy small business health insurance for you and your employees, is buy the first group or small business health insurance plan that you come across. Different health insurance companies offer different insurance plans and at different prices. To prevent yourself from wasting your money and the money of your employees, you will want to make sure that you carefully choose which group or small business health insurance plan you purchase. You will want to purchase one that is affordable, but you also want to make sure that it is a plan that you and your employees can benefit from. In fact, if you have less than thirty or so employees, you may want to think about allowing your employees to have some say in the type of insurance purchased, especially since they will likely end up helping you pay for it.
Once you have decided to purchase a small business health insurance plan for you and your employees, you will be given additional information, like when your insurance premium payments are due. There are some health insurance companies who require that their payments be made in advance, like at the beginning of each year, while others do not mind receiving monthly payments. Whichever approach you take, it is important that your payments are made on time. Your small business employees and their families may rely on their health insurance and you don’t want to end up letting them down.
As you can see, from being outlined above, finding and buying health insurance for you and your small business employees is actually a relatively easy process. In most cases, you can find, research, and buy health insurance online, without ever have to speak to a company representative. However, if you do have any questions or concerns, it may be worth your while to contact a health insurance company representative for more information.
Till next topic.
best regards.
The Small Businessman
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