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Buy a Business or Start a Business

Should You Buy a Business or Start a Business

The big dilemma most entrepreneurs face when deciding to go into a business is the decision to buy an existing business or start a new venture. There are pros and cons to both which we will discuss in this article.

If you have limited financial resources starting a home-based service business may be your best choice. The upside to this type of start-up is low overhead, and tax deductions for using a portion of your home and vehicle. Beware, home-based businesses are scrutinized by the IRS.

When starting a new business you will need a comprehensive business plan to guide this venture in the early stages.
A new business requires a real estate location, developing a supplier network and intense marketing to build your customer base. Since your new business has no performance record, it stands to reason that financing will be difficult. One last caveat, 50% of new businesses fail within five years.

If you’re serious about going into business and you have the financial resources your best strategy is buying an existing business. The advantages to buying an existing business are financial records that you can check before making the purchase. Established supplier alliances, a customer base, a physical location, and most important a company identity. Buying an established business is your best bet for success.

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Congress Takes Key Steps to Propel American Businesses Forward with End-of-Year Legislation

This news article is the first we will publish each week from various sources that we believe to be pertinent to small businesses. This week’s article is from the US Chamber of Commerce and the author is Niel Bradley.

Nick Santarone Blog Publisher

Congress Takes Key Steps to Propel American Businesses Forward with End-of-Year Legislation 

Author:  Neil Bradley
Executive Vice President and Chief Policy Officer, U.S. Chamber of Commerce

The past week has seen a flurry of activity in Congress, with resolutions on a large number of issues being worked on by the U.S. Chamber. While not all issues were resolved in the manner we desired, collectively, this final burst of legislation will provide greater certainty to the economy – bolstering American businesses, jobs, and families.

In addition to the final agreement on USMCA, which we expect to pass the House this week and the Senate early next year, below are several of the U.S. Chamber’s priorities that will become law before the end of the year:

Healthcare

What happened:

Permanent full repeal of the Cadillac Tax, the Health Insurance Tax (HIT), and the Medical Device Tax.
Extension of the “health extenders” through May 22, 2020.
Ten-year reauthorization of the Patient-Centered Outcomes Research Institute (PCORI).
Raising the legal smoking age to 21.
Why it’s important:
The Health Insurance Tax (HIT), the Medical Device Tax (MDT), and the so-called “Cadillac Tax” undermine employer-sponsored health care coverage, contribute to rising health insurance premiums, and hurt our nation’s economic growth and job creation.
Extension of the “healthcare extenders” will ensure the opportunity to continue to work on outstanding healthcare policy issues
Reauthorization of PRCORI ensures Americans have access to high-integrity, evidence-based information from research guided by patients, caregivers, and the broader healthcare community.

Retirement

What happened:

Enactment of the SECURE Act retirement package, which expands retirement options for small businesses, reduces the administrative burdens on employers and enhances retirement security for those in defined benefit plans.
Why it’s important:

The SECURE Act expands retirement coverage by making it easier for all businesses to offer coverage while keeping the important Federal protections under ERISA for employees.

Supporting American Exporters

What happened:

Seven-year reauthorization of the Export-Import Bank.
Additional resources to promote U.S. commercial interests through U.S. diplomatic missions.

Why It’s Important:

The Ex-Im Bank’s mission is to support domestic jobs by facilitating the export of goods when private-sector lenders are unable or unwilling to provide financing. This is especially important in helping small businesses turn export opportunities into sales abroad.
The reauthorization also included a vital provision that would establish an alternative procedure if there is a lapse in Ex-Im Board’s quorum, ensuring that Ex-Im can continue to serve its role in supporting U.S. jobs.

Insurance Provisions

What happened:
Seven-year reauthorization of the Terrorism Risk Insurance Act (TRIA).
One-year extension of the National Flood Insurance Program. This extension will provide an opportunity to work on long-term reauthorization next year.

Why it’s important:

TRIA has served as a vital public-private risk-sharing mechanism, ensuring that private terrorism risk insurance coverage remains commercially available and that the U.S. economy would more swiftly recover in the event of a terrorist attack.

Immigration & Tourism

What happened:

H-2B visa cap relief and other provisions that give H-2B employers additional certainty and flexibility to meet their seasonal workforce needs.
One-year reauthorization of the EB-5 Regional Center program.
Seven-year reauthorization of Brand USA, the public-private partnership that promotes international tourism to the United States.

Why it’s important:

With companies struggling to meet their seasonal workforce needs, additional H-2B visas prohibit onerous new compliance requirements, and the added clarity regarding the terms of employment for H-2B workers will ensure that more American businesses will be able to meet their personnel needs, expand their operations, and most importantly create new jobs for American workers.
The U.S.’s share of the international travel market has been declining since 2015, and many expect this trend to continue for the foreseeable future. The multi-year authorization of Brand USA, the public-private partnership that markets American tourist destinations to international visitors, is critical to reversing this trend and stimulating domestic job growth and economic activity.

Transportation Infrastructure

What happened:

Block the Rostenkowski Test, which would have required a $1.2 billion (12%) across-the-board cut to all transit formula funds in FY 2020.
Extension of the short line railroad tax credit.

Why it’s important:

These provisions will ensure that the public and private sectors can continue to invest in crucial infrastructure initiatives that keep American people and commerce moving.

Energy Innovation

What happened:

Record-high $425 million for the Advanced Research Projects Agency-Energy (ARPA-E) program at DOE, focused on high-risk/high-reward advanced energy technologies.
$230 million in new funding for an advanced reactor demonstration and research program aimed at reclaiming U.S. leadership in globally scalable emissions-free nuclear technologies.
Facilitating investment in energy projects in European and Eurasian countries.
Why it’s important:

Energy innovation is critical to developing and deploying the clean energy technologies necessary to address our climate challenge here and abroad. While business is leading, there is an important role to play for the government in fostering quicker development and adoption of tomorrow’s technologies.

Water

What happened:

New funding and authority for the study, regulation, and clean-up of specific per- and poly-fluoroalkyl substances (PFAS) that are of the greatest concern.
Funding for the administration of laws pertaining to regulation of navigable waters and wetlands, an important measure needed to implement the Administration’s revised definition of “Waters of the United States.”

Why it’s important:

It is crucial that Congress provide federal, state, and local authorities with the appropriate funding and oversight needed to address issues related to the presence of PFAS in environmental mediums across the nation.
The definition of “Waters of the United States” is a key aspect of administering many of the Clean Water Act’s permitting programs, which are essential to the business community. The funding will provide for more effective and streamlined decisions within these programs and will also ensure regulatory clarity for the business community. Additionally, these programs balance environmental and economic interests, allowing businesses to move forward with development projects.

Tax
What happened:
Extension of expiring tax provisions, including the controlled foreign corporation (CFC) look-through rules.

Why it’s important:
Extending certain tax provisions, such as the CFC look-through, would help American businesses compete in global markets.

Cybersecurity

What happened:

Significant new investments for cybersecurity including the U.S. National Institute for Standards and Technology, which received a $48.5 million increase.

Why it’s important:

NIST is a key partner of the private sector in designing effective ways to manage cybersecurity risks. NIST’s ongoing work with businesses—including crafting the NIST Cybersecurity Framework, producing a baseline for the Internet of Things (IoT) device security, and promoting industry-driven standards internationally—is critical to the defense and prosperity of the U.S.

Small Business

What happened:

Secured $30 billion in lending authority for the SBA 7(a) program – the most popular loan service for U.S. small businesses.

Why it’s important:

Banks that offer SBA lending rely on an annual appropriation to reliably provide small businesses with government-backed loans. The 10-month spending measure provides certainty for small business owners who rely on SCORE, Small Business Development Centers, and other services SBA provides that benefit new, established, and growing businesses.

Defense

What happened:

Repeal of current law that would have led to the U.S. Department of Defense disclosing proprietary technical data to outside competitors.

Why it’s important:

Protecting intellectual property is essential in government contracting in order to ensure suppliers are able to innovate without fear that their proprietary data will be shared with potential competitors.

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Are you considering selling your Business

Prepare yourself before you put your business up for sale. Navigating a business sale is an elaborate procedure and you need to ensure that you don’t make any mistakes if you want to close an effective deal. Preparing prior to sale will make it easier to find the right person searching for a business to purchase and obtain the best price for it. Here are a couple of things to consider before placing your business for sale.

Find A Business Broker

The initial step in preparing for a small business for sale is actually getting a professional business broker. An expert broker doesn’t just assist you understaning the business marketing procedure easily, he or she should also assist in the actual negotiations terms. Simply by hiring a business broker for your business sale, you can get the best price as well as the perfect buyer. The business broker may also understand some other professionals just like a lawyer and an accountant, who can aid you in selling your business.

Documentation of Finances

Selling A Business is Easy with a Business BrokerYou need to have all your financial documents prepared well in advance for your business for sale. You have to be in a position to move easily in case your buyer indicates considerable interest in buying your business. When a client is considering a business to buy, he/she examines just about all financial records related to your business for sale in fine detail with the help of experts. There are a lot of financail documents which are required prior to closing on a business sale. You will need written documents like P&L statements, income tax, standard bank statements, tool listings, employment tax revenue reports and even more to a buyer looking for a business to buy. Your business broker should also help in the preparation of your financial documents.

Information of the Client

Precisely how well you know your own customers can also be one particular query you need to answer while placing your business up for sale. Anyone looking for a business to purchase will ask detailed questions related to your clients. Ensure that you have enough information regarding your clients that you could respond to the buyer’s questions comfortably. You must know particulars like best customers, percentage of sales related to all of them, how much revenue is brought in with those customers etc.

You’ll will need to devote time and energy to prepare your business for sale. Start your prep well in advance, to be able to sell your business quickly and obtain your asking price for it.

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Things To Consider When Starting Your Own Business

What does it take to start your own business? Many people may think that starting your own business may be too daunting and give up before
they even start. Let’s analyze what a typical start-up needs:

Start-up Capital

There is no secret that money talks the loudest of all. As a future entrepreneur,
you may well know the fact that capital is perhaps the most essential
part of setting up a business, both online and offline. Lack of start-up
capital not only puts your business at a disadvantage, it also makes cash
flow a serious issue. Over time, it also makes it difficult for you to
expand your business.

Stresses of starting a start-upThe good side is that start-up capital in the form of small business
loans are readily available at most commercial banks around your country.
As long as you have a good credit rating, getting small loans should not
be much of a problem. One important thing to remember here is to never
borrow more than what you need to get started.

You loan amount need only cover for the basic necessities of business.
Start your business small and control your finances daily, monitoring
everything you spend on and trying to cut costs where ever possible. When
your business cash flow starts working in your favor, you are ready to
safely take out another business loan for expansion of business activities.

Business Experience

Most people are afraid to start their own business, simply because they
have “no experience”. Therefore, they never get started at all,
and never end up gaining that experience in the first place.

Most people are afraid to enter into a business venture because they
fear failure due to lack of experience. It’s a Chicken-and-Egg story,
or a Catch 22, or whatever else you can call it.

A Solid Business Plan

Any business is more likely to succeed if they have a definite plan of
action to follow. Unfortunately, in reality most small business and home
based businesses have no idea on developing a business plan that drives
them to success. That is the reason why 70% of businesses fail within
the first year. A solid plan needs to state exactly WHEN and HOW you will
make money.

Before you get into business, make sure your business plan is laid out
right to the very minor details. You need to know:

– Your target market

– The average cost of one product

– Your profit margin on each product

– Your expected break-even point

– Cash flow projections

Seek out a Mentor

A mentor is someone who you admire, someone in your line of work or business
that is already having the success you dream of, and can teach you exactly
how to achieve the same success yourself when you start your own
business. In reality however, it is difficult to find a mentor in your exact line of work. You may want to find a mentor that has a successful business but isn’t a direct competitor.

All these factors and many others need to be considered when starting your own business. By being diligent, working hard and seeking guidance from a mentor will set you on the right path.