• 8/6/2009	Buying a Non-Performing Business
	Buying a Non-Performing Business Most people shop for a business that is generating a good profit. But sometimes you discover a business that is either not making money, or because of the record keeping habits of the owner, profitability is difficult to verify. While walking away from these is the general word of advice, some of these businesses make great investments for the right person. Find Business You Can Improve by Better Management: Keep in mind that most non-performing businesses generally suffer management challenges that can be significantly improved. Michael Gerber, author of The E-Myth, says “If they don’t fail outright, most businesses fail to fully achieve their potential. That’s because the person who owns the business doesn’t truly know how to build a company that works without him or her... which is the key.” Look for businesses that lack excellent customer service, an effective marketing plan, measurement and control programs, specific processes and systems, and other business basics. Make observations and understand how the seller manages the business. Many business owners start off creating companies around a skill they have, but they never develop a thriving business that can sustain the rigors of the marketplace. Hold Off Spending Money on Physical Improvements: Avoid buying existing businesses that require tons of capital to get the business up and running right. This does not mean that you have to wait to find the perfect business that fits your dream image. If the business has a leaking roof, or has a bunch of broken equipment that is essential for its operation, then you may want to keep looking for another business. But if the changes that the business needs to be profitable are primarily managerial, you should consider whether you can lead the business toward success Hold off on the remodel or the big capital investment – at least for a several months. Fix the managerial needs first and see how the business runs. Build up cash flow. You might discover that you don’t need as many capital improvements as you initially thought. You might discover that your vision of changes has adjusted after running the business, allowing you to make even more effective improvements tailored to your client’s needs and wants. Always Create a Written, Organic Business Plan: No matter whether you are starting a business from nothing, buying a new franchise, or buying an existing business that is doing well, you must have a plan. It needs to be in writing and specific. It does not have to be long and laborious, but you need to put a great deal of thought, research and knowledge into it. Share it with others you respect – people who care enough to challenge you. Make your business plan organic; you need to continually make sure your plan fits the current conditions of the market place. But always have a written plan. Don’t fool yourself by thinking you can keep it all in your head. Others need to understand it as well. If you don’t have the time and energy to put a plan in writing, don’t bother investing in a business. Compare the Non-Performing Business to Starting a Business from Scratch: Other than the lack of profitability, does it meet many of your needs and wants. Create a list of needs and wants of your ideal business (location, size, equipment, etc). Compare it to other business investment options. Many times you can get a non-performing business, or even a closed business with all the assets in place, for much less than it takes to build a new one. Talk to anyone who has built a new business from scratch and ask them how much it cost to get it open. Remember to consider build-out costs, permits, cost overruns, and all kinds of expenses that are easy to overlook when planning. Factor in the expense of not being in business while you are in the planning and build-out phase which often goes longer than you anticipate. Compare to Buying an Existing, Profitable Business: Realize that a profitable business will typically demand much higher price compared to a non-performing or closed business. If you can fix the managerial aspect of the non-performing business, and apply your business plan effectively, you might be able to save a great deal of money. Non-Performing Start-Up Existing Closed but Set Up Current SDE – monthly None, Little None Med to High $0 Cost to Get In & Doors Open Low High High (figure 2.5 times SDE) Low Cost to build-out Low High None Low Cost to Market the Business High High Low High *SDE – Seller’s Discretionary Earnings or the total economic benefit the owner derives from the business; for larger companies one might consider EBITDA Below is a very simple example. It is not designed to give you real figures, but to provide an idea of how to layout and compare choices. Non-performing Start-Up Existing Closed but equipped Example Pizza Shop #1 Pizza Shop #2 Pizza Shop #3 Pizza Shop #4 Current SDE – Monthly $0 – Breaking Even None $5,000 / m None Cost to get In $50,000 $0 $150,000 (2.5 x SDE) $10k Transfer / finders Build Out $10,000 - New sign, paint… $175,000 – Equipment, build out, permits… $5,000 – minor modification $10,000 - New sign, paint… Marketing Cost – Monthly $500 $500 $500 $500 Expected Opening Time 1 month 4 months 0 1 month Cost of not being open $1,500 $9,000 $0 $1,500 SDE at 6 months $4,000 (assume $0 until then) $3,000 (assume $0 until then) $6,000 (assume $5,000 until then) $3,500 (assume $0 until then) SDE at 12 months $8,000 $8,000 $8,000 $8,000 Total 12 month Cost including start-up & marketing $67,500 $192,000 $161,000 $27,500 Estimated SDE in first 12 months $24,000 $18,000 $66,000 $21,000 Next 12 months $96,000 $96,000 $96,000 $96,000 How Much Should I Pay: Remember the rule – “buy potential, pay for performance”. The price should be significantly less than the cost to create a brand new one in a similar location, or buying a profit-yielding business. If the performance of open non-performing business is zero or negative, look at the asset value – tangible and intangible. Tangible would include the value of equipment, vehicles, and computers. Intangible assets include things like the reputation, brand, and the fact that at least some customers are coming in. Most buyers fail to recognize the intangible value of the business. Remember to do your research on the cost of a start-up; seek input from one or two people who have created similar businesses in the last few years. Take into account the cost of getting started and going for a period of time without cash flow. Summary: Many businesses are not making money because the right management processes have yet to be put in place. Shopping for businesses during an economic decline following a flourishing economy provides great opportunities for business buyers. Many businesses that did well in a thriving economy struggle in a sluggish economy. As a result, many such businesses have come on the market. It is worth considering businesses that interest you, to determine if your skills and abilities make it worth taking advantage of the savings you can experience by purchasing a non-performing business. Good luck in your search. Buy a business, begin a dream.

• 8/5/2009	Welcome aboard Pete Harrison
	Pete is a very experienced, professional business broker. He brings on tons of success matching business buyers with great listiings. We are glad to add Pete to the team and look forward to learning great things from Pete.

• 8/4/2009	Business Broker / Intermediary Training Classes
	Classes August 6 and 7. Next classes in September. Join our team and become the best. For upcoming classes call us or write a request at Info@BuyBizUSA.com.

• 7/10/2009	Free Seminar - Business Value Essentials - July 10 2009
	Business Value Essentials! by Legacy Venture Group Understand business value and key things to look for in any business. Join American Business Inter-Network, Inc Friday, July 10, 2009 Perkins 612 N. Dale Mabry Hwy Tampa, FL 33609 11:30 a.m. to 1:30 p.m. Minimum $5.00 order required from menu Reserve a seat. 813.404.3570 Sleutzing@bizjournals.com Sara Leutzinger 513.460.3355 Come learn or come network. These guys are great!

• 6/29/2009	Britney Spears buy Tampa business
	Britney Spears buys HEAT NUTRITION & TANNING - 15303-B Amberly Dr., Tampa 33647 This might not be the Britney Spears that first comes to mind, but this young woman’s story will impress you. This 19 year old has wanted to own a tanning salon for several years. On June 19, 2009 Britney purchased HEAT Nutrition & Tanning – a beautiful shop known for its’ high-powered nutritional products, awesome energizing smoothies and great tanning. Britney began searching for a great business about six months earlier. She knew she wanted a business that interested her but one that also fit her budget and skill set. She looked at a number of spas and salons but it took a while to find one that seemed right. She contacted Legacy Venture Group, Inc. (BuyBizUSA) for help in her search. After narrowing her search Britney decided to make an offer on HEAT back in February. She had some cash but not enough to pay full price. Banks weren’t lending much (most still are not). She wrote an offer requiring seller financing but the deal fell apart while negotiating on a final terms. She waited patiently and kept any eye out for new opportunities. Then about six weeks ago the owner of HEAT decided that seller financing might be acceptable and even lowered the price. Legacy contacted Britney with the new information. She continued to negotiate and this time she and the seller found a win-win solution that they could agree to. Nearly 50% of American adults dream of owning their own businesses, according to surveys by the International Business Brokers Association. Still, very few 19 year olds have the ability and vision to buy an existing business. When we checked in on her after her first weekend, Britney was working long hours getting to know the business. Customers were helping her learn their favorite smoothies. And overall, Britney seemed happy and energized with her new business. Britney did many things right. • She created a business plan and a marketing plan. She outlined what she wanted to do and how she was going to achieve her goals. She has already begun to work on her new company website. • She gathered her team of advisors. She consulted her father, her friends, and some professionals, including a business broker, to help her find the right business. • She also knew her limits. Britney kept to a budget and made sure her investment did not use up all her cash so that she would have some working capital. • She was also willing to walk away from a business she really liked and had spent months to find. In the end, it worked out well for her and the seller. Both came out winners. • She researched her business. HEAT had an existing track record, an up-and-running location, and a complete system in place. Starting up a similar business could have cost two or three times as much as she paid and may have taken one, two or more years until it made a profit. This proven location, amidst great restaurants, hair stylist, nail shops, and a Lifestyles fitness center, attracts clients interested in looking and feeling healthy. She jokes “You can’t be a Ten without a Tan.” So when you are near Amberly Drive, just off Bruce B Down, in Tampa, drop in to see this great tanning salon and meet this impressive young entrepreneur. Contact info@BuyBizUSA.com or 813.571.7700 for more details. Legacy Venture Group’s Business Intermediaries help great people buy and sell legacy businesses every step of the way. They strongly support entrepreneurship worldwide. Those interested in business ownership, and business owners who are also interested in the process of business ownership transition are encouraged to call for more information at 813.571.7700 or visit the company’s website at www.BuyBizUSA.com.

• 6/29/2009	SBA - Get money for your business
	ARC loans help small business owner. I have just received the following information regarding the paperwork needed to apply for the ARC Loan. Below is also an editorial about the first week of ARC approvals as well. The paperwork needed to apply for an ARC Loan is the same as you would submit if you were applying for a brand new SBA 7A loan with the addition of a new form SBA 2315, which specifically addresses your economic hardship as well as your ability to qualify for the ARC Loan. This five page form consist of some boilerplate regarding restrictions on Federal Financial Assistance Programs, however the first two and a half pages are the crucial questions ranging from traditional character questions to questions about your business and the use of funds. To get these forms you will need to contact the lender so you get their appropriate forms for submission. Keep visiting http://www.sba.gov most up to date information. If you want us to help prepare your package let us know. We are receiving many request to assist and we are advising our client that they can do this on their own but if they want assistance we are charging a consulting fee of $950.00. For that amount we will provide two hours of consulting as well as prepare your package for submission to the lender of your choice for you to present it to them. “The Small Business Administration says that in the first week of the program, which kicked off last Monday, lenders approved 72 loans totaling $2.4 million. While the SBA is pleased with the numbers, business owners who have been waiting months for the loans remain discouraged. The program, called America's Recovery Capital (ARC), was authorized in February's Stimulus Bill.. Businesses are eligible to apply for a loan worth up to $35,000 to cover existing debt if they have been profitable in one of the past two years, and have been adversely impacted by the recession. The ARC loans are interest-free to the business owner, who has up to 12 months to make the first payment and another five years to pay back the entire principal. They are administered by banks and other lenders and are 100% guaranteed by the SBA, meaning that if the borrower defaults, the government picks up the tab. The SBA had estimated that these loans would reach 10,000 businesses by the time the program is slated to end on September 30, 2010. (It will shut down sooner if funding runs out.) But if things continue at the pace set in the debut week, fewer than 5,000 businesses will end up receiving loans.”

• 6/26/2009	We Are Expanding - Congrats Stacy Snow Feiler
	Stacy just joined our brokerage and got licensed. She just closed and completed the sale of a great tanning salon and now is about to close another. We are delighted to see her making things happen. Brian