Buying A Business - The Basics
Whether you are starting your own business from scratch, going into a business opportunity, or buying a business, you need to have certain characteristics, traits, skills, and goals in order to succeed. So how do you know if you are ready to own a business? Basically, you need to ask yourself some hard questions and give yourself honest answers. If you don’t have the time and commitment to start a business, you need to look elsewhere for your income. You may be better served accepting a job with a company. There are those that need structure and a job is the place for them. But, if you are inclined to owning your own business, then lets discuss some necessary items. First, you need to have a plan. The plan can come from your own imagination, the franchisor, or the company offering the business opportunity. It doesn’t have to be something set in stone, and it doesn’t have to be fancy. It just needs to be a basic outline of what your business will be, what you will sell, how you will sell it, and what your operating costs will be. It is recommended that you include at least three months of operating expenses into your start up costs budget, which also needs to be determined in your plan. The next item is paramount to your success. It is the infamous 4 letter word and that is work.
I get asked this question all of the time. Mainly, this question comes from people I run into that own and operate a small business and have always done things for themselves. The business may have a few employees, own some assets and is quite profitable. When speaking with them, I always hear "I don't really have any legal problems so why do I need a lawyer? Business is good and my employees love me." Well, when I hear this, I know what I am getting into.The first thing I ask these people is: how is your business structured? LLC? Corporation? Once we determine that answer, the next questions become: Do you have an operating agreement if you are an LLC or by-laws if you are a corporation? Do you have annual meeting minutes? Seven out of ten times people respond "no" to these questions. This is why they need a business lawyer. If they are not following corporate formalities and organizational protocols and someone would sue the company, the chance of that plaintiff piercing the corporate veil and attacking the owner's personal assets increases exponentially. Another question I ask is: do you have written contracts for the work you perform and the business dealing you are involved in? About 4 out of 10 say no. Again, this is why they need a business lawyer. The handshake agreement doesn't work in today's society. Everything should be in writing, not because you can trust no one, it is because you need to protect your rights. If they don't have contracts they use or have written them themselves, you can bet that they will spend insane amounts of money to settle disputes that could have been prevented by working with a business lawyer from the start.Lastly, I usually ask them if they understand the various federal and state employment laws that govern the employer-employee relationship. Most respond with "Pennsylvania is an employee at will state and I can fire anyone at anytime." This is what I call a ticking time bomb. Yes, it is true that Pennsylvania recognizes employment at will; however, there are various laws that give employees protection from discrimination, unfair treatment, unfair wages, etc. Most of the time these business owners have no idea what they don't know and end up doing something that costs them ten of thousands of dollars to settle. This is why they need a business lawyer. So as you can see, there are many reasons to work with a business lawyer when you own a business from the start. People improperly assume that the only time they will need a lawyer is in the event that they get sued. However, a good business lawyer will help you run your business in a way that limits the reasons for which you could be sued at a fraction of the cost it will take to litigate and resolve a dispute down the road.
Buying a Business - Steps
On the face of it, it should be a lot less risky now than it used to be to buy a business from a stranger. Most (but not all) States and Governments in the developed world have brought in stringent disclosure rules which aim to even things up between the supposedly rapacious seller and the innocent purchaser.Certainly these rules will expose or prevent blatant fraud and misrepresentation, but they can also lull you into a false sense of security. The very worst thing you can think is "Oh well, if the figures don't turn out right I'll just take them to court and sue the pants off them".If you're stuck with a dud business as a result of being deliberately deceived you certainly can take them to court. But you don't need me to tell you of the costs of litigation, the time it takes (years!), and the very real chance you may not succeed anyway.And in the meantime you have to spend your days desperately running a business that may not generate enough to cover these legals. Remember also that lawyers will only take on work on a contingency basis when they think their chances of success are pretty good. It's way, way better to get it right in the first place.Even though most sellers usually turn out in the end to be nice ordinary honest people, I as a valuer always look at them and their businesses with a suspicious mind, and you should too. Because the truth of the matter is that they know far more about the business and what is happening in the industry than you do, and they are quite within their rights to not tell you everything. If you don't ask, you may not find out until it's too late. "Caveat Emptor" is the Latin for "Let the Buyer Beware" and it is still true today despite all the well-meaning but bureaucratic attempts to shield you. Some of the traps I have listed in this and following articles may be legislated against in some jurisdictions and others may have to be disclosed by the vendor. But it pays to know about them anyway.I'll give you these tips roughly in the sequence in which I would check them out. Let me tell you now that everything is wrong with the business I select, but of course I don't know that when I start out. And if it were real I would walk away very early in the piece.I have chosen a retail business to illustrate these traps, but most of them apply equally to service and manufacturing businesses. I have not specified what type of retail business it is, for very good reasons.First, the facts and figures have been made up and do not represent any particular type of business. Second, the same type of business can be totally different in the way it operates and in its risk level from one country to another and even from state to state. Third, I would not want to give any type of business the bad name that this (imaginary) one deserves.So let's assume it is a general type of retail business and call it the GRB (General Retail Business) Shop. Let's also assume that it is a reasonably secure type of business, though somewhat sensitive to competitionLocation is paramount for retail and most service businesses (though the internet is changing that) but less so for manufacturing enterprises.The business broker gives me a half dozen businesses to look at. I select one that seems to be in the right price range - the asking price is $230,000 plus S.A.V. (Stock, (or Inventory) at Value) - and not too far from home. So I pay a visit.It's in a small suburban shopping mall that looks about 20 years old. The mall is busy for early Monday morning, which is a good sign. The shop is well located within the mall with good traffic flow and prominent signage, but is a little bit tired in appearance. A quick check shows it is the only one of its type in the mall. The owners seem friendly and cooperative. I ask if they do home deliveries. They do and take me for a ride around the area covered. There is a new housing estate going up close by which they say will increase business in the future, and the next nearest business of its type is some distance away.Trap 1. Not Being Told of Known Competitor Plans:I leave and decide to have another look at the housing estate. At the far end of it I discover a large sign announcing the imminent construction of a mega shopping mall with a GRB type of business already signed up. So the business is under threat from new competition nearby.The message here is, don't just check the location, check what is happening in the area. Talk to other shopkeepers, talk to locals, visit the council, and look at the demographics to see if they match the market for your products or services. There may be a new highway going through in five years time resulting in a property resumption, or a diversion of traffic away from your site - or it could be good news as well.
Owning Your Own Business - The 10 Things You Must Know
Creating a business from home is not as difficult as people may think. There are a multitude of home businesses that offer people the chance to earn income from the comfort of their own home. All you have to do is find the right home business opportunity to join. Better Business Bureau is a non-profit organization that gives people the opportunity to get an objective review on most home business opportunities. If you are searching for the right opportunity, this non-profit organization is a safe place to see if an opportunity is legit or not.According to home business magazine, marketing contributes to 58% of a business's success.Once you find the right opportunity, you will have to use effective marketing techniques. Being involved with the right opportunity is half the battle, you will have to use up-to-date techniques in order to get the best attention from the marketplace. Below are some effective marketing techniques to use when you are launching your marketing campaign. 1. Seasonal marketingSeasonal marketing is a great way to attract new customers for your brand. For retailers like Hallmark, Valentine's day represents the biggest portion of their business, according to Google. I would recommend that you do some research as to when your products are most in season for your market. If you know when your products and services are in season, you will be able to find demand and promote your products at the best possible time. I would recommend that you go on any search engine and search for free trend-tracking services in order to see when it will be the best time for you to market your product.2. PR marketingThis type of marketing is expensive. If you have a big budget, you can use the power of public relations in order to bring awareness to your product. When Steve Jobs was alive, apple constantly held press conferences to announce new products. You can go on any search engine and research the best public relation marketing services in order to get started. I suggest that you start off with the lowest possible budget first before going to the more expensive packages. 3. Online marketingOnline marketing has elevated to a new level. You can use a multitude of online marketing services, like e-mail lists, in order to come in direct contact with the people who are interested in what you have to offer. To succeed in e-mail lists, you will have to master the art of prospecting and closing. Once people respond to your promotional e-mails, it is best to call them in order share what your product has to offer.You can master the art of calling leads by getting prospecting and closing scripts on any search engine.According to home business magazine, any person who is affiliated with a home business opportunity can succeed as long as they master effective marketing techniques.
I Own a Small Business, Do I Need a Business Lawyer?