Everyone has been hearing that the oil leak in the Gulf of Mexico is huge and could take several months to be plugged.  Hurricane season is officially about to start.  What happens if there is a major storm?  No only will that affect the shoreline, any storm surge could carry oil inland.  I am not a meteorologist however if a storm surge hits the coast of Florida or even goes up by the Gulf Stream up the east coast of United States, the impact could be devastating. (more…)

Normalized earnings is the profit that would continue to the new owner after the old owner left the business.  In theory, it is the profit after the owner is paid a reasonable salary that would be earned after the business is sold.  What should be factored into this calculation?  There is no standard of what to include and not to include the businesses is becoming more international, there are many more things affecting a business.  Should you consider them before offering a price for the business for sale? (more…)

Many businesses buy and sell products from foreign countries.  They may buy from one country and for example export to the United States.  What happened if the old owner of the business purchased foreign exchange contracts to cover his/her exposure to fluctuations in the exchange rate.  If he bet properly, he/she saved a lot of money.  If he/she made a wrong guess and it cost the company money, is the error part of normalized earnings? (more…)

You have decided to buy a business, you have been thinking for months that this is something that you would like to do.  You have been searching for businesses on www.thebusinessplace.com and now you have found a business which sounds interesting.  Now what, how do you proceed? (more…)

When a person is looking to buy a business, you assume that the purchaser has money to close the sale of the business.  You assume that the purchaser has researched the type of financing that is available for himself before looking for a business.  Is this a correct assumption?  When you are selling your house, you take a deposit from the purchaser and have no proof whatsoever that they will have the funds to close the sale of your house.  As a general rule, people do come up with the money but there are cases where the financing is no longer available and they cannot close. (more…)

What is the easiest size of business to sell ?  When you sell your house, depending on the city and the price of the house that you live in, you can sell it in a day or in a year.  When you sell a business, it is rare that you would sell your business in a day, on average, it takes six to twelve months to sell your business. (more…)

You have owned and operated your business for many years, in fact, you may have created this business from scratch. You have kids and it is your desire to have your kids continue to run the business after you retire.  Is this a good idea? (more…)

The goal of many business owners is to maximize profits which can be done by increasing prices or decreasing costs.  Many companies have tried to do both but concentrate on minimizing prices.  First they reduce staff levels or they may automate and change the manufacturing process to achieve efficiencies.  Others have outsourced manufacturing to foreign countries. (more…)

If you are thinking about selling your business, you need to get things prepared in advance.  What should you do to prepare?  When you are selling your house, many people are staging their house to make it look good and for potential buyers to see the house without being distracted by items which are personal in nature and are not going to continue on with the new owner.  Selling a business is exactly the same concept. (more…)

When you sell a business, everyone wants to know how much money does it make?  Although that may seem like a very straight forward question, the answer is not that straight forward.  Private business owners typically put in many personal expenses through their business, they may income split with family members, they may put a variety of other expenses through that will not be a required expense for the new owner.  The definition of normalized earnings is the earnings that should be enjoyed by the new business owner after he/she acquires the business? (more…)