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AHBBO Home Based Business Information Return to AHBBO Archives
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_______________________________________________________________ A Home-Based Business Online _______________________________________________________________ Issue 156 : October 21, 2012 Sent to 14,012 Opt-In Subscribers Editor: Elena Fawkner Publisher: AHBBO Publishing http://www.ahbbo.com Contact By Email _______________________________________________________________ _______________________________________________________________ IN THIS ISSUE _______________________________________________________________ 1. Welcome and Update from Elena 2. Home Business Idea of the Week 3. Feature Article - Buying Your Freedom 4. Surveys and Trends 5. Success Quote of the Week 7. Subscription Management 9. Contact Information _______________________________________________________________ 1. Welcome from Elena _______________________________________________________________ Hello again and a warm welcome to all the new subscribers who have joined us since the last issue. When it comes to making the break from the paid workforce to business ownership, you basically have two choices: to start a new business from scratch (often in your basement during the wee hours since you have to continue to work full-time in your Just Over Broke J.O.B. to pay the bills until your business gets off the ground) or to acquire an existing business. In this week's article, we look at the advantages, disadvantages, traps (and how to avoid them) and issues to be borne in mind when buying an existing business. "Buying Your Freedom" is at segment 3. As always, thanks for reading and I hope you enjoy this week's issue. Remember, AHBBO is for YOU! If you have comments or suggestions for topics you would like to see addressed, or would just like to share your experiences with other subscribers, I want to hear from you. Please send comments, questions and stories to Contact By Email . _______________________________________________________________ 2. Home Business Idea of the Week - Apartment Locator _______________________________________________________________ Ever moved to a new city and tried to find an apartment before you got there? Sure, there are plenty of online databases where you can enter your search criteria and get a list of apartments, but unless you're on the ground, how are you supposed to nab one? And one that will welcome pets, while you're at it? Why not meet the need by starting your own home-based apartment locating service? All you would need is a car to start and be in close proximity to an in-demand rental area. There is any number of online searchable rental databases so getting apartment listings is easy enough. You would just have to physically inspect the apartment to see whether it fits with your client's criteria and secure it for them. It would be a good idea to be set up to take photos of the apartment and surrounds, scan them and email them to your client for approval. But once you have the go-ahead from the client, you could then negotiate and sign the lease as your client's agent and you're done. From the landlord's point of view, you would obviously have to be in a position to facilitate credit checks and provide references also. This is an ideal internet business, as well. Often you will be dealing with clients from other parts of the country or from other parts of the world. These people are naturally going to start their search for you on the internet so allow yourself to be found. ----- This is an extract from just one of over 130 ideas from the new "Practical Home Business Ideas From AHBBO" e-book. Find out more at Unique Home Business Ideas . _______________________________________________________________ 3. Feature Article: Buying Your Freedom _______________________________________________________________ © 2017 Elena Fawkner If you're reading this article, it's probably because you're one of millions of people who dream of breaking free of indentured servitude to make it in a business of your own. When it comes to making the break from the paid workforce to business ownership, you basically have two choices: to start a new business from scratch (often in your basement during the wee hours since you have to continue to work full-time in your Just Over Broke J.O.B. to pay the bills until your business gets off the ground) or to acquire an existing business. In this article, we look at the advantages, disadvantages, traps (and how to avoid them) and issues to be borne in mind when buying an existing business. ADVANTAGES There are many advantages of acquiring an existing business rather than creating one from the ground up, including: => Less Risky If the business has been around for a reasonable length of time, it's survived the dreaded first cut - that alarmingly high proportion of new business ventures that fail within their first couple of years. => Proven Concept One of the most nail-biting parts of starting a new business is the worry that, while you THINK your idea will fly, you're really not sure until it's time to leave the nest. Acquiring an existing business should give you comfort that the idea behind the business works. => Existing Customer Base Without a doubt one of the most difficult, expensive and time- consuming duties of a new business owner is cultivating a customer base. When you acquire an existing business your customer-base is ready-made and you can hit the ground running. => Predicting Future Growth An existing business has a track record. You can review profit and loss reports, prior year tax returns and other financial information to see how the business has developed over time. This gives you an informed basis from which to predict the future growth of the business. => Reduced Need for Working Capital With an established business you have immediate cash flow from the business's existing revenues. This means you only need enough working capital to meet day to day requirements, not a great wad of cash to see you through the first slow, painful months until you start generating cash which is invariably the case with a startup. => Existing Suppliers Just as an existing business comes with a ready-made customer base, so too it comes with a ready-made supplier base and history of dealings. These suppliers will be keen to retain your business and so you will probably save a lot of time and expense that you would otherwise have had to expend to sort through competing supply terms. Existing suppliers are more likely to give you a good deal off the bat. => Capital Raising Obtaining finance will also be less difficult (note I didn't say easier!) since you will be able to point to a track record. DISADVANTAGES The main disadvantage of an established business compared to a start up is cost. At first blush, acquiring an existing business is more costly than a startup. Over time, of course, it may turn out that a startup is a much more costly venture, especially if that startup venture fails. ISSUES Assuming that you decide an existing business may be for you, what do you need to think about? => Deciding on the Type of Business That's Right for You This is a very personal decision and will depend on your answers to the following questions, among others: * Why do you want a business as opposed to a job? * What special skills and background do you bring to the table? * What is the nature of your work and/or business experience? * What are your hobbies and special interests? * How much can you afford to invest as a downpayment? * How much money do you need to generate to meet your living expenses? => Finding the Business That's Right for You Once you've decided on the type of business that you want to acquire, it's time to start the hunt. The most efficient way is to engage a business broker. Most vendors of businesses list their businesses with brokers rather than attempting to find buyers themselves. For this reason, you'll most likely find that the business that's right for you is listed with a broker. You could, of course, also directly approach the owner of a business you're interested in buying to see whether there is any interest in selling. Depending on whether you're in a buyer's or a seller's market, you may put yourself at a negotiating disadvantage by doing this. Only make such an approach in a buyer's market. => Financing Your Business Acquisition Probably the biggest hurdle you will face is getting finance for your small business acquisition. Here are your basic options: * Vendor Terms Sometimes a vendor will be willing to sell you the business on terms. For example, a 10% downpayment followed by future payments from the cashflow of the business. The vendor will usually retain a lien over the assets of the business until the purchase price is paid in full. * Loans There are various sources of loans. For small businesses, your best bet is probably not the major financial institutions. Try instead loans guaranteed by the U.S. Small Business Administration (or the equivalent in your country if outside the U.S.) and community banks. * Third Party Loan Guarantees If you're short on security, consider the possibility of a creditworthy friend or relative acting as surety. * Credit cards Credit card financing should generally be treated as a last resort but utilized judiciously, credit cards can be useful for cash flow purposes so long as the outstanding balance is paid off each month. Don't use them for asset purchases though. * Family and Friends Not a good idea for everyone, but consider asking family and friends to invest in your business. * Asset Sale/Leaseback Another good way to raise cash is to sell an asset you have acquired as part of the business to a friend or relative and have them lease it back to you. You free up your capital and your friend or family member has an asset-backed security. * Redeemable Preferred Stock A good option if your business is held by a corporation and you are prepared to give up ownership equity in exchange for capital. There are securities issues to be aware of here so be sure to consult your lawyer. => Cashflow Considerations Be sure the business generates enough cashflow to cover: * operating expenses; * your salary; * financing costs; and * a reasonable return on investment. TRAPS FOR YOUNG PLAYERS If your acquisition takes the form of acquiring the shares in a corporation rather that a simple asset purchase, beware. In these circumstances, the legal entity doesn't change, only the shareholders do. This means that if the corporation has any undisclosed debts, pending lawsuits and the like, these can still be sheeted home to the corporation despite the change in shareholding. In addition to these traps for the unwary, beware also of overstated earnings, poor employee relations, overvalued inventory and uncollectible receivables. AVOIDING THE TRAPS Fortunately there is much you can do to flush out these hidden traps before you commit yourself. => Get Professional Advice and Assistance First and foremost, do NOT attempt to acquire a business without the professional assistance of your lawyer and accountant. => Contractual Indemnities Your lawyer will no doubt try to include provisions in the purchase and sale agreement whereby the vendor indemnifies you for any liabilities accruing prior to the dale of sale. The effectiveness of the indemnity as a protective mechanism depends on the solvency of the vendor. => Due Diligence The best way to protect yourself is to educate yourself about exactly what it is you're getting yourself into. Your lawyer will guide you through the due diligence process which is nothing more mysterious than asking the right questions and making sure you get the right answers. Here's a checklist of things that your lawyer will help you do during the due diligence period: * Find out why the seller wants to get out of the business. * Review operating information. * Review all contracts to ensure there are no hidden liabilities. * Get a list of all the assets being sold including fixtures and equipment, patents, copyrights, trademarks etc. and make sure they are free of all encumbrances. * Get a schedule of all the debts of the business that you will be assuming. * Check the company's articles, bylaws and corporate minutes to ensure the company is what the vendor says it is. * Check to ensure the company is in good standing. * Get a list of shareholders as well as any special rights, stock transfer restrictions and pledges that may exist against the assets of the business or the stock. * Check all financial documents including bank statements, audited financial reports, and bank and financing agreements to ensure there are no undisclosed security interests. * Physical inventory and inspection of all assets. Acquiring an existing business is a major undertaking and one which must be accompanied by competent, professional advice. Assuming that you complete thorough due diligence so that you understand EXACTLY what you're acquiring (liabilities as well as assets), you may well find that despite the funds you invest, it's the most cost-effective way to go! ------ include the following resource box; and (2) you only mail to a ------ practical business ideas, opportunities and solutions for the work-from-home entrepreneur. http://www.ahbbo.com _______________________________________________________________ TURN $2.50 A DAY INTO $1,500 or MORE A MONTH. I didn't know how either until I was introduced to a business that has a system that works. Now turning $2.50 a day into $1,500+ to $4,500+ a month is a snap! A low stress, simple, legal, clean business THAT WORKS. Details at _______________________________________________________________ 4. Surveys and Trends _______________________________________________________________ © 2017 Ryanna's Hope The following is an extract from the current issue of Larry Wack's excellent weekly, "Surveys and Trends". Subscribe using the link below for the full issue. Here's why YOU should target the baby boomer market in your business ... ------------------------------------------------------------ HEALTH AND FINANCES OF THE BOOMERS ------------------------------------------------------------ Health 50-plus adults represent over $525 billion per year in direct healthcare spending today; this will grow to $1.1 trillion per year by 2017. The 50-plus market consumes 74% of all prescription drugs, a $100 billion market. The 55-plus spend $467 per capita on prescription drugs, more than double the average. They account for 51% of all over-the- counter drug purchases. Even though today's adults age 50-plus are more fit and active than any previous mature generation, there are 56 million men and women living with heart disease, 40 million with arthritis, 28 million with osteoporosis, and 14 million with diabetes. Healthcare spending for this population exceeds $525 billion a year, much of it related to chronic, rather than acute, conditions. Finance Today's 50-plus adults account for: More than $2 trillion in income. Over 50% of discretionary spending power - 2.5 times average per capita. 80% of personal wealth in financial institutions. 50% of all discretionary income - $13,286 per household. In addition, the 50-plus: Own over 70% of the financial assets in America. Control nearly $9 trillion in net worth of U.S. households - 70% of the total. Represent 40 million credit card users, owning almost 50% of the credit cards in the U.S. (Source: Baby Boomer Facts) _______________________________________________________________ _______________________________________________________________ 5. Success Quote of the Week _______________________________________________________________ People who exercise their embryonic freedom day after day, little by little, expand that freedom. People who do not will find that it withers until they are literally 'being lived.' They are acting out scripts written by parents, associates and society. -- Stephen Covey _______________________________________________________________ 7. Subscription Management _______________________________________________________________ To SUBSCRIBE to this Newsletter:
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