Business Funding Secrets

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Positive quotes to get you thru the week.

Things turn out best for the people who make the best of the way things turn out. John Wooden

Without self discipline, success is impossible, period. Lou Holtz

Commitment to the team, there is no such thing as in between, you are either in or out. Pat Riley

Coaches who can outline plays on a blackboard are a dime a dozen. The one's who win get inside their players and motivate. Vince Lombardi

The best teams have chemistry. They communicate with each other and they sacrifice personal glory for the common goal. Dave DeBusschere

Success is never wondering what if. Dale Carnegie

You can make more friends in two months by becoming interested in other people than you can by trying to get other people interested in you. Lee Iacocca

If you can dream it, you can do it. Walt Disney

Short sayings
often contain
much wisdom.

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Financing Goodwill

When a large business is sold it is usually done by purchasing the “stock” of the company. When smaller businesses are sold it is usually an “asset” sale. Assets of a small business consist: 1. Real Estate, 2. Furniture, Fixtures, & Equipment, 3. Inventory, 4. Goodwill.

When purchasing or financing a business, each type of asset needs to be valued separately at its current value. This is typically done by a third party that does business valuations.

It is usually easier to value real estate and the tangible assets. Goodwill can be more difficult to value.

Goodwill is defined as an intangible saleable asset arising from the good reputation of a business, resulting in steady trade, and the expectation of continued patronage. However, it can also include patents, trademarks, customer lists, specialized software, etc. The goodwill of a company may also be divided into two types: 1. Goodwill derived from the location, advertising, market reputation, and business name. 2. Personal goodwill from the expertise and reputation of the business owner and employees.

When a business is sold the sale price will reflect the perceived value of the goodwill. Sellers are proud of what they have accomplished and will typically value the goodwill at a higher value. Buyers typically want to purchase the goodwill at a lower value for obvious reasons, but also because goodwill cannot be depreciated. Due to the buyer and seller valuing the goodwill differently the final purchase price will reflect the negotiated value - what the seller is willing to accept and the buyer willing to pay.

Goodwill can become a significant factor in the purchase price of a business. The elements of goodwill provide value over and above the value of the company’s other assets. When it comes to financing the purchase of a business, goodwill most certainly will be included as an asset of the existing business.

SBA 7(A) loan guarantee is often used for business acquisition financing in the U.S. and has a loan size from $250,000 to $2,000,000. It should be noted that with the current capital conditions there is a maximum limit of $250,000 allowed for goodwill when using SBA 7(A).

If the purchase price and financing of the business exceeds $2M or consists of more than $250,000 in goodwill, then alternative sources of funding (beyond SBA) will be required.

Tips:
1. Since goodwill involves intangibles, and is related to the cash flow of the business, only the portion that can be verified should be part of the transaction. If a seller states that large amounts of money have been withdrawn from the business (but these cash flows are not currently shown on the financial statements), and the seller wants to use this information for inflating the purchase price, then the money trail must be verified. Don’t purchase, or try and finance smoke and mirrors.
2. Accountants working for the seller may be reluctant to verify a money trail because they don’t want to admit to possibly doing something improper.
3. Understanding the industry, average ratios for that type of business, and what should typically be accepted will assist in determining and verifying goodwill.

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Are you using the Internet
to expand your business profits?

There have been some major changes in using the Internet for marketing. If you are using, or want to learn how to use, the Internet for marketing your business these changes are critical and something you need to know about.

Changes include:
1. How Google, Yahoo! and MSN have changed and how to get (or even just maintain) top 10 listings!
2. Maximizing your profits from email promotions and making sure they get to your customers' inbox and not get you labeled as 'Junk'!
3. How to make money in the Pay-Per-Click search engines... even after the big guys keep changing the rules and most business are losing big!
4. What web design strategies and sales copy techniques are working in 2007 (many of last year's strategies don't work anymore... do you know which ones?)

..... the list goes on.....

Companies that are expanding their online presence need to be aware of the realties happening with Internet marketing. The good news is you can receive tools, tips, and strategies about Internet marketing from one of the most successful Internet Marketing companies in the world.

To find out who and what I am talking about click here to read what others are discovering.

This is valuable information. There are some incredible stories that you can learn a ton of valuable information from!

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Incorporating

Are you an Investor in either residential or commercial properties? For reasons of asset protection consider the wise advice from another investor, “Every front door should have its own corporation.” For assistance with incorporating check out: TheInformedInvestor

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Funding a Project

For assistance in funding a project please review information from
The Project Corporation, a professional consulting firm with
expertise in business funding.

For more information on obtaining funds from the capital marketplace please visit www.BusinessLoansAndVentureCapital.com

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To your capital success,,

Brad MacLiver