This article was excerpted from the blog ran by Richard Parker of Diomo Corporation. It makes a great deal of sense.
You can send Richard your questions or otherwise contact him by visiting the Diomo Corporation website and clicking on "Contact".
Using - The B.O.S.S. Theory - to Quickly Evaluate a Business
It is often difficult in the early stages of reviewing a potential opportunity (especially for first-timer business buyers) to really determine if it is a good business. There may so much information to digest in some cases that it becomes overwhelming, while with other listings, the complete lack of any comprehensive detail makes the task almost impossible.
Having purchased ten businesses, I have developed a regimented set of guidelines ('The B.O.S.S. Theory') that I follow that allows me to quickly access any opportunity. While my rules may not be completely applicable to you, they will, nevertheless, provide you with an excellent idea of how to go about the review process.
Before going into the specifics, it is important that any buyer understands that you must divide your evaluation in two distinct compartments. The first is the undeniable data, or what I like to call the ‘deal facts'. These are all of the parts that are black and white.
For example, the financials of a business fall into this category. Although there may be some discussion or debate regarding add-backs, numbers don't lie. It is plain old mathematics. There's no gray area, or shouldn't be. Another example would be licensing: if the business requires a specific skill-related license that you must hold (i.e. engineering degree, general contractor license, etc.), or having a government license of sorts, then these are again black and white issues that are simple to evaluate.
The second compartment is actually the bigger issues that come into play in all of the gray areas where ‘The B.O.S.S. Theory' can helpful. When I look for a business, here's what I want in place amongst the less than obvious attributes:
Bland - Means it ‘flies under the radar' and is less vulnerable to mass competition
Operationally Sound - Fundamentals in place (not a turnaround)
Sustainable - No looming threats that could impact the historical financials
Scalable - Identifiable growth opportunities.
Here are the more descriptive points of each:
I am not a fancy guy. I like plain vanilla businesses. The more bland, boring and un-sexy it is, the happier I am. These businesses generally attract less attention (competition and otherwise) and you can plod along with great results and effectively build them while nobody is looking. Further, they generally slip by the average business-buyer who tends to look for ‘hot' industries or glamorous businesses. I have always subscribed to the notion that I don't need the fame; I need the money.
One of the greatest aspects to buying a good existing business is that you will immediately benefit from having all of the necessary fundamentals in place. Ideally, you should get the keys on Monday and take a paycheck on Friday. With a good existing business, the infrastructure is in place. There are trained employees, functioning systems, reliable suppliers and a stable of customers. The phone will ring as soon you open the doors and the business is already humming. In other words, it is the complete opposite of a start-up and that is precisely what you want.
When you buy a good existing business, a great part of the allure is being able to count on the continuation of the past historical financial activity and profitability. That is exactly why the purchase price will be a multiple of that figure. You want to be certain that there are no known looming threats that can adversely impact the numbers. You want them to continue at least at the recent levels and definitely not decline.
Common examples that can influence the past financials can be customer concentration issues where a disproportionate amount of volume rests in the hands a few clients or a business that relies heavily on location to drive its revenues yet there is a short lease that cannot be extended.
In the former example, if one or two of the customers stop buying, the business can face a massive and potentially unrecoverable situation. Likewise with the premises, if you can't continue to occupy a location long-term that drives customers through the door, you may be out of business very quickly after getting into it.
While it is crucial to have a sustainable business model to build upon, you want to identify and exploit realistic growth opportunities. These are not the ‘pie-in-the sky' ideas that many delusional business buyers imagine. You want to be satisfied that there are concrete initiatives you can take to grow. For example, opening up a second location, expanding the product line, or acquiring other complimentary businesses. These are real objectives.
Do not get lulled into believing all of the wonderful recommendations the seller presents that may make it seem easy to grow. They may suggest you hire more salespeople, attend trade shows, advertise more or other ‘brilliant' ideas. While some may be good, the truth is they have likely attempted most of these things or if they are so easy why haven't they done it? It may very well be that growing the business is not as simple as they may articulate.
On the other hand, if you subscribe to ‘The BOSS Theory', then identifying and acquiring a good business that can become great with you as the owner, is a lot less difficult that you may imagine. You can send Richard your questions or otherwise contact him by visiting the Diomo Corporation website and clicking on "Contact".
Internship: Junior Associate
King & King Business Advisors is seeking a home-based intern to support experienced deal-makers with client marketing, research, and documentation tasks. To accomodate initial orientation and training intern candidates should reside in the Washington-Baltimore area.
Interns will assist the firm's professionals involved with evaluation, marketing, and negotiation of seller client
engagements and buyer representation projects. This position would be excellent experience for a qualified student seeking a career in investment banking, financial business management, or business valuation analysis. The intern's primary career focus should be business finance, not accounting or administration.
Other tasks will include maintaining client and prospect database records and file content, and supporting various levels of Seller and Buyer research projects.
Tasks involve critical activities which can have an impact on the success of a business buy/sell
(merger or acquisition) transactions. The intern will gain exposure to a very wide variety of business and industry environments and to the mid-market merger and acquisition industry.
· Minimum of three years' college completion
· Currently enrolled in business, finance, entrepreneurship and/or law curriculum
· Understanding of business finance; financial statements and analysis and enterprise valuation concepts
· Excellent business English communication skills: verbal and written
· Strong telephone personality and usage skills
· Intermediate to advanced computer skills requiring MS Word, MS Outlook and MS Excel.
· Strong internet research skills
· Maintenance of strict confidentiality and ethics standards
· Previous work in a professional environment conforming to professional conduct standards.• Use of written & electronic communications media to communicate with clients and customers effectively
Length of internship: Six (6) weeks
This is a part-time non-paid intern position.
James M. King, President
King & King Business Advisors
Application Method: Telephone or - via Email to:
I encourage all of you who are interested in buying a business to check out the information on SBA loans that can be found on the Small Business Development Center Network website http://www.sbdc-wmd.com/
Below you will find some information on the Low-Doc SBA loan program.
King & King can help you find the right business and get it financed.
SBA's LOW-DOC PROGRAM
Deals Under $150K
Principals can not have any Police Record
Guaranty Fee - 2-3% of Guaranty Amt - paid by Customer (can be financed)
No Set Equity %
Can't use for refinancing old debt
2 Page Application
SBA agrees to notify the bank of approval/denial within 3 days of submission
Documentary Requirements still require Proformas, Personal Financial Statements, and Tax Returns
Bank Initiates Request to SBA - Bank Must Be "On-Board"
Interest Rate Charged - Bank's Market Rate with the following caps:
7 yrs & up - NY Prime plus 2.75%
Less than 7 yrs - NY Prime plus 2.25%
Loans under $50K may carry a higher Interest Rate
For more information please call us or send an email to email@example.com.
We have openings for business brokers. We will train you for your new career in business brokerage.
King & King can help you to use the Patriot Express program to achieve your entrepreneurial goal to purchase a business. If we don't have your business in inventory we will coop with other brokers to find you a business or we will launch a direct mail/telephone campaign to find you a business to buy. If you have a business for sale we will market your business to Patriot Express candidates. Read this article below from the Office of Small Business Administration:
SBA's Patriot Express Loan Initiative Over $100 Million and Counting
More Than One Thousand Loans Go To
Military Service Members, Veterans, and Spouses
WASHINGTON, D.C. - In the eight months since its launch, the U.S. Small Business Administration's Patriot Express Loan Initiative has produced 1,007 SBA guaranteed loans amounting to more than $100 million, with an average loan amount of nearly $101,000, the SBA announced today.
"Each day sees the number of Patriot Express loans rise and the number of participating lenders, currently more than 773 nationwide, rise as well," said
SBA Administrator Steve Preston. "We thank these lenders, and those coming
aboard, for their special efforts on behalf of entrepreneurial veterans and others in our military community."
The Patriot Express initiative builds on the more than $1 billion in loans SBA guarantees annually for veteran-owned businesses, and the counseling assistance and procurement support it provides each year to more than 100,000 veterans, service-disabled veterans and Reserve members.
"We have received a remarkable amount of support for Patriot Express from the lending and military communities since we launched the program," said Preston. "It is important for us to continue to support our servicemen and women. I am particularly appreciative of the news media's efforts in big cities and small towns alike, to get the word out on this vital program that helps vets and our military community as it grows day by day."
Patriot Express is a streamlined loan product based on the agency's highly successful SBA Express Program, but with enhanced guaranty and interest rate characteristics.
Loans are available up to $500,000 and qualify for SBA's maximum guaranty of up to 85 percent for loans of $150,000 or less and up to 75 percent for loans over $150,000 up to $500,000. For loans above $350,000, lenders are required to secure all available collateral to back the loan and may obtain collateral for smaller loans depending upon individual bank requirements.
Interest rate maximums for Patriot Express loans are the same as those for regular 7(a) loans: a maximum of Prime + 2.25 percent for maturities under seven years; Prime + 2.75 percent for seven years or more. Interest rates can be higher by two percent for loans of $25,000 or less; and one percent for loans between $25,000 and $50,000.
Patriot Express is available to military community members including veterans, service-disabled veterans, service members leaving active duty, Reservists and National Guard members, current spouses of any of the above, spouses of active duty members, and the widowed spouse of a service member who died during service, or of a service-connected disability.
The Patriot Express Pilot Loan Initiative can be used for most business purposes. Details on the initiative can be found at www.sba.gov/patriotexpress.
Patriot Express loans have been approved in all 50 states, the District of Columbia, the U.S. Virgin Islands, Puerto Rico and Guam and currently range from $5,000 to $375,000 in individual loan amounts. After loan applications are approved by the bank, they are submitted to SBA for approval. Most applications are approved by SBA within 24 hours.
# # #
1. Web-based press kit:
2. List of Approved Patriot Express Lenders:
Pasted below you will find an article written by Leo Vidal, JD, MA, CPA regarding the EquityAccess program:
By: Leo J. Vidal, JD, MA, CPA
What are the biggest obstacles to closing the sale of your medical practice? In my experience it comes down to not just price but finding a buyer willing and able to pay what you want to receive in the sale. Related to this is the buyer's ability to come up with the capital and financing needed to make the purchase at the price you want. (This is especially difficult for young professionals burdened with debt from student loans, buying a home, etc.)
The EquityAccess program solves these problems and others that arise when trying to sell a medical practice. EquityAccess provides medical professionals a potentially tax-free sale of their practices. Once the EquityAccess program is put in place, finding a buyer and closing the sale are almost foregone conclusions.
Top Three Problems the EquityAccess program solves for medical practices:
1. Security: replaces an installment sale of the medical practice with a secure asset for retirement and estate planning.
2. Ownership transition: provides economic efficiencies in transitioning practice ownership which insures the highest possible after-tax proceeds from the sale.
3. Easy Financing: provides financing for practice ownership transitions without limiting the buyer's ability to finance ongoing working capital needs, nor requiring large amounts of capital upfront.
Monetizing the value of the medical practice
EquityAccess is a way for medical practitioner to monetize the value of the practice, i.e., to turn a non-liquid asset into money. This money can then be used to provide a secure financial future for the business owner and his or her family. It can provide securitized tax-free retirement income as well as achieve all of the professional's estate planning objectives.
The unique features of EquityAccess include:
1. Superior turn-key lending terms, put in place before the sale
2. Customized tax planning, leading to potentially a tax-free sale
3. Customized retirement planning, including tax-free income for life
4. Customized estate planning, with maximum after-tax wealth transfer
5. Efficient access to business equity to achieve succession planning
Keep checking back on this blog for follow up information on this exciting program such as:
Financing the sale
Summary of benefits of EquityAccess
Finding a buyer is easy
Setting the purchase price
Interest-Only loan need never be repaid
No business personal assets are used as collateral
Sale proceeds are insured against loss
Sale proceeds are not subject to income tax
Example-Selling a dental practice
King & King Business Advisors is proud to announce that we have been chosen by Leo Vidal Financial Consulting as their exclusive partners for the purposes of bring this exciting new concept to the market.
Bethesda, MD - Working with a local expert, Leo Vidal Financial Consulting, King & King Business Advisors and EquityAccess have teamed to bring business owners an entirely new concept that works like a "Reverse Mortgage" for business owners to unlock the equity value trapped in their businesses.
Additionally, this new "turn-key" program gives business owners and professionals, (physicians, attorneys, dentists, CPA's, etc.), unprecedented capital gains and income tax benefits. The program is called Equity Access, the selling owner is allowed to exclude the value of the business from his or her income taxes.
"The key is how the sale is funded and structured," said Mr. Vidal, a former Regional Tax Director with the CPA firm Deloitte & Touche. "My firm will structure and finance the transaction to give the business owner maximum tax benefits, and several other key financial benefits as well."
For example, Mr. Vidal explained, his firm provides financing which does not require the buyer to borrow any money. In some cases the buyer does not need to have any cash at the closing. "This allows for the sale to young professionals, management team members or relatives who want to buy the business but don't have either the capital or the borrowing capacity," said Mr. Vidal. "It opens up an entire new category of potential buyers for business purchases," he said, "which is really important today when we are having a global credit crunch and banks are getting very strict on loan standards." He noted that the program is ideal for professionals such as physicians, dentists, CPAs, and lawyers who are looking for someone to purchase their professional practices.
"It's the best program I've ever seen for a business owner to convert business equity into safe and secure tax-free retirement income. It's also a fantastic way to pass on maximum wealth tax-free to heirs," Mr. Vidal said.
According to Mr. Vidal, the Equity Access program has the following benefits:
1. Provides financing for a buyer who does not have adequate capital and/or borrowing capacity to purchase the owner's business. (The seller sets the financing terms).
2. Gives the business owner the ability to set the sales price of the business at the level he or she desires, so long as acceptable to the buyer.
3. Allows for up to 100% tax-free sale of the business equity and value.
4. Provides for tax-free investment interest on the proceeds of the sale which are re-invested in the program.
5. Provides for tax-free retirement income payments (or other withdrawals) to the seller.
6. Protects the value of the business equity from the claims of creditors.
7. Provides for the value of the business to be passed on to heirs income tax-free (sometimes estate tax-free also).
8. Insures the seller against any losses on his or her re-invested equity.
King & King is making available a free consulting analysis and feasibility report for any interested business owner. To learn more about unlocking the trapped equity in your business or how to sell your business tax free, call Jim King at (410) 303-6378, or (888) 565-6468, or email Jim at firstname.lastname@example.org.
If you own or operate a business in the state of Maryland you need to pay very close attention to what is going on in Annapolis now that the Executive, Legislative, and Judicial branches of our state government are controlled exclusively by one party.
If it isn't Governor Martin O'Money himself pushing higher taxes and anti-business bills through in special sessions or behind closed doors its the legislators slamming these things through the house with little to no scrutiny, analysis or debate on how they will hurt small business people.
If you are a businessperson you need to visit the Maryland Chamber of Commerce website or blog at the very least once a week to learn what these shiftless and shameful, witless and wanton, fools that have never created one real job or made a payroll are doing that will hurt your business. Below I have inserted an excerpt from the Chamber Blog that cover three very important issues everyone of us business people need to keep an eye on:
February 21, 2008
Prevailing Wage Bill is a Bad Idea
Maryland Chamber Vice President of Government Affairs Ron Wineholt testified last week in opposition to HB 970 - Procurement - Prevailing Wage. This legislation would require contractors working on state or local public works projects that cost more than $500,000 and use any state funds to pay a state-determined wage level to their employees.
Current law applies this prevailing wage to projects funded with at least 50 percent state funds. This bill would make the prevailing wage applicable on projects that use any state funds.
Studies by the Department of Legislative Services in 1989 and 1995 determined that the prevailing wage law inflated the cost of public works projects by 5 to 15 percent. "The prevailing wage law undermines the competitive bidding process by requiring projects using state funds to pay a higher labor price than would be required through market based competitive bidding," Wineholt said. "At a time when Maryland needs to build more schools, this bill will cause us to build less."
For more information, contact Ron Wineholt at email@example.com.
February 20, 2008
Attention Business Property Owners
Legislation (SB 561/HB 676) has been introduced that would authorize counties to specify the classes of property that are subject to real and personal property taxation and to vary the rates of taxation among the classes. Defeating this legislation is a priority for the Maryland Chamber.
State law has long established the classes of property subject to county property taxation and required that counties impose one rate of tax that is applicable to all real property.
"If counties are authorized to set their own classes of property taxation and to vary tax rates among those classes, they will use that authority to push additional tax burden toward business property and engage in further tax discrimination against businesses," Maryland Chamber Vice President of Government Affairs Ron Wineholt said.
Significant real property tax burden is already shifted to businesses as a result of the real property homestead tax credit for residences and the business personal property tax rate that is 2.5 times the real property tax rate.
HB 676 will be heard by the House Ways & Means Committee on February 28. No Senate hearing has been scheduled yet. For more information, contact Ron Wineholt at firstname.lastname@example.org.
February 19, 2008
MD Chamber Opposes Unrealistic Global Warming Bill
The Maryland Chamber of Commerce testified today before the Senate Education Health and Environmental Affairs Committee in opposition to SB 309 - Global Warming Solutions - Reductions in Greenhouse Gases.
This bill would require Maryland to reduce greenhouse gas (GHG) emissions by 25 percent by 2020, and 90 percent by 2050 - the strongest mandate in the country. Passage would require Marylanders and Maryland businesses to make major changes in their daily lives and operations by driving 1/3 less and consuming 1/3 less electricity.
Maryland's man-made GHG emissions comprise approximately 1.5% of the United States' emissions and a very small percentage of the world's total emissions. Since GHG emissions disperse globally and Maryland's emissions are a very small percentage of the total global problem, this issue needs to be addressed on a national level in concert with international efforts.
"It is impossible for a small state, such as Maryland, to achieve a reduction goal as large as the 25 percent by 2020, and 90 percent by 2050," said Maryland Chamber Vice President of Government Affairs Allyson Black. "This legislation is counterproductive, and would make it extremely difficult for businesses to survive."
A number of Maryland Chamber members testified in opposition to SB 309 today, including Maryland Industrial Technology Alliance, Maryland Petroleum Council, Redland Brick, Inc., NewPage, Allegheny Energy, Mirant Mid-Atlantic, Constellation Energy and ArcelorMittall.
For more information, contact Allyson Black at email@example.com.
NAM: Maryland: Adding Regulations on top of Taxes
O'Malley supports limits on pollution
Posted by Will Burns at 4:52 PM to Environment & Energy | Permalink | Comments (0)
February 18, 2008
February 27 - Save Maryland IT Day
Join us in Annapolis on February 27 for Save Maryland IT Day, a media event and lobbying day to advocate the repeal of the computer services sales tax.
This tax will stifle economic development and job creation in Maryland. Whether your company is a user or provider of IT services, this tax will have a negative impact on your competitiveness. Unless repealed, the 6 percent computer services sales tax will take effect on July 1. We need you in Annapolis on February 27 to tell your story to the media and to lawmakers.
The event will begin at 10:30 a.m. at the Maryland Inn on Church Circle in Annapolis. We will hold a media briefing featuring a number of CEOs at 11 a.m. We'll also hear from some legislators who support the repeal of the tech tax at 11:30 a.m. Following the briefing, we will walk over to the House and Senate office buildings to urge lawmakers to repeal the tax.
The event is being held in partnership with the Tech Council of Maryland, the Fight the Tech Tax Coalition Partners and the Maryland Computer Services Association.
For more information, or to RSVP, contact me at firstname.lastname@example.org.
Posted by Will Burns at 9:59 AM to Budget & Taxation | Permalink | Comments (0)
Search the Blog
2008 Maryland Business Hall of Fame Inductees
Prevailing Wage Bill is a Bad Idea
Attention Business Property Owners
MD Chamber Opposes Unrealistic Global Warming Bill
February 27 - Save Maryland IT Day
MDOT Freight Plan Outreach Meetings
Remember to Vote on Feb. 12
Legislation Would Moderate Onerous Corporate Reporting Requirements
House Tech Tax Hearing Scheduled for March 12
Creative Small Business Financing: SBA 504 Program Panel Discussion
Start Date: Mar 05, 2008
End Date: Mar 05, 2008
Time(s): 8:00 a.m. - 11:00 a.m.
Address: Howard Community College; Gateway Campus Building, Room 6; 6751 Columbia Gateway Drive, Columbia, MD 21046
Registration Info: For more information or to register, contact Brenda Miller at the Business Finance Group at 703-352-0504.
Event Sponsor(s): j-ref, Business Finance Group and CommerceFirst Bank
Web Site: www.jref.org
Contact Info: Brenda Miller - J-Ref
Description: J-Ref, a small business financier in Howard County, is working with the Business Finance Group and CommerceFirst Bank to host this event: The SBA 504 program is a long-term financing tool for major fixed assets which has a significant impact on small business financing. This panel will explain who the program assists and how j-ref's fund can be used in conjunction with the program.
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I saw this on another site and i had to bring it to your attention. I think it is great. Click on the picture and watch the animation.
Recently while attending the International Business Brokers Association our leader, Jim King, got to shake the hand of yet one more of his heros, Mr. Tom Smith, the undisputed "GURU" of the Business Brokerage profession in the United States. Tom Smith is the President of Business Brokerage Press and publishes the Business Reference Guide. The annually published Business Guide has become the bible of business brokers all around the country for valueing small businesses.