seattle: Types of Leases
- 04/02/08 11:01 AM
The type of leases you give as well as the clauses contained can make a significant impact on your cash flow. Here are some common types of leases: Triple Net (NNN) Lease. A triple net lease is one where the tenants pay for your operating expenses, such as your taxes and common area maintenance. For instance, you own a strip mall and charge $28 per square foot + $4.50 per square foot NNN. If the vacant space were 1,000 square feet, the rent would be calculated as follows: $1,000 square feet * $28 per square foot = $28,000. This is the rent … (2 comments)
seattle: Selecting the Right Tenants
- 04/02/08 10:59 AM
One of the biggest mistakes landlords make in leasing out their building is being too desperate in the attempt to lease out the building. When the building sits vacant and there is a mortgage payment coming, it is tempting to lease out the space to whoever would come along. However, time has proven again and again that it is worth the wait to find the right tenant, because having the wrong tenants can cost you dearly. In commercial property, the value of your building is directly tied to the income it generates, and the income it generates is directly tied to the … (1 comments)
seattle: Commercial Property Sale Process
- 04/02/08 10:57 AM
Selling commercial property is more complex than selling residential property, and the buyers of commercial property have a different mentality than those of residential homes. Buyers of residential housing tend to be concerned with the emotions of living in the home, while buyers of commercial property view the property as an investment vehicle designed to generate income. If the numbers make sense, a bidding war is likely to occur. If the numbers do not make sense, the sale could be tough. The sales process for commercial properties is much more business-like, and the buyers tend to be much more sophisticated. They … (2 comments)
seattle: Levels of Diversification
- 04/02/08 10:50 AM
If acquisition is the strategy of choice, the next question is what type of companies one should acquire. There are firms that acquire related businesses, and firms that acquire completely unrelated businesses simply for diversification purposes. How diversified should your firm be? There are 3 possible scenarios: First, remain in the dominant business and not diversify at all. Second, purchase a related business for medium level of diversification. Third, purchase unrelated businesses for high level of diversification. Research and our experience agree that scenario 2 is the best way to go. In other words, the firm's performance is typically the highest when … (0 comments)
seattle: Should You Outsource Instead?
- 04/02/08 10:47 AM
Before acquiring a company, you should consider whether it makes more sense to outsource instead. There are 2 considerations that help firms determine whether it should perform the activity in house, or outsource it. Strategic value of activity. How important is this activity to your firm? Relative competence of your firm compared with the best supplier. How good is your firm at performing this activity compared with others? If this activity is very important to your firm, and your firm is very good at it, you should perform this activity in house. If this activity is not important to your firm, but … (0 comments)
seattle: Reasons for Acquisitions
- 04/02/08 10:46 AM
Corporate mergers and acquisitions can increase the firm's competitive advantage, or end up as a fiasco. To acquire a company is an expensive proposition, and one must utilize this strategy for the right reasons. There are 5 common reasons a firm should consider acquisitions part of its strategy: To increase market power. There is an advantage to being big. The firm can negotiate better deals with suppliers and buyers, expand its distribution and service networks, achieve economies of scale or scope, and even form political coalitions. To overcome entry barrier. In competitive corporate environments, there are often entry barriers into a … (1 comments)
seattle: Should You Use a Business Broker?
- 03/25/08 09:44 AM
Selling a business is a complex process that requires professional expertise. Many business owners that try to save money by selling the business themselves often end up spending all their energy selling the business, and losing focus on running the business. The business goes downhill without the focus and attention of the owner, which scares away potential buyers. Some business owners know a friend that is a real estate agent, and ask the friend to sell the business for them. As you may know, real estate is a vast topic and contains many specialties. There are agents that only work with … (0 comments)
seattle: Increase Your Business' Worth
- 03/25/08 09:10 AM
Your company's value depends on many factors, some of which include cash flow, asset values, financial history, condition of equipment and premises, lease attractiveness, competition, potential for improvement, location, industry type and the economy, among many others. This month, i'll discuss some simple things you can do to dramatically improve the value of your business, should you decide to sell. Most business owners sell their businesses at the wrong time-they only sell it when they have to. The best time to sell a business is when your business is doing well. If you wait too long, you risk a downturn and … (0 comments)
seattle: Know When To Sell
- 03/25/08 09:07 AM
Previously, I shared with you the 10 Secrets to selling your business profitably and confidentially, but before you get that far: How can you tell if now is the time to sell your business? Remember back to why you got into the business: Was it because you were tired of working for someone? Was it because you wanted to create financial security for you and your family? Maybe you were the type of person who had a lot of ambition, energy, and drive and you wanted to create a great future for yourself. No matter what the reason was, you became … (0 comments)
Aaron Muller is a leading authority on selling businesses in Washington State. Having sold over 100 companies and done over 40 SBA loans, Aaron shares his advice on business valuations and the best ways to get a business sold.
The type of leases you give as well as the clauses contained can make a significant impact on your cash flow. Here are some common types of leases:
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