U.S. Stock Market, Business Investment Hold Keys to Future Fed Hikes
After growing only 1.5 percent in the third quarter of 2015, real GDP is expected to grow 2.7 percent in the fourth, for an annual rate of 2.4 percent. It will expand at 2.6 percent in 2016 and 2.4 percent in 2017.
Business investment will grow by 3.2 percent in 2015, rebound to 5.2 percent in 2016 and 4.4 percent in 2017. Expect jobs to grow by a monthly rate of 214,000 in 2015, 182,000 in 2016 and 155,000 in 2017.
Housing starts will average 1.112 million units in 2015, rise to 1.212 in 2016 and 1.287 in 2017. Expect auto sales of 17.3 million units in 2015, 17.0 in 2016 and 16.5 in 2017.
The 10-year bond rate will rise to 2.32 percent in 2015 and should rise to 3.57 percent before the end of 2017.
Georgia Job Growth Appears Weak, but Income Metrics Say Otherwise
Georgia employment will gain 75,100 jobs (16,900 premium jobs) in calendar year 2015, 74,000 jobs (15,800 premium) in 2016 and 80,800 (17,500 premium) in 2017.
Nominal personal income will increase 5.0 percent in 2015, 4.6 percent in 2016 and 5.3 percent in 2017.
Atlanta will add 61,700 jobs (14,700 premium jobs) in calendar year 2015, 59,800 jobs (13,400 premium) in 2016 and 62,600 jobs (15,900 premium) in 2017.
Atlanta permitting activity in 2015 will increase 9.6 percent, grow 6.1 percent in 2016 and by 7.4 percent in 2017.
Happy employees mean happy customers and clients. An unhappy employee can mean loss of business or worse. How does a business owner create happy and contented employees? It all starts with the hiring process – hiring positive people to start with certainly helps. Offering as many benefits as your business can afford is also a plus.
However, one of the big keys is simply for the business owner to treat employees well, and appreciate their contributions. Some owners expect their employees to have the same dedication to the business as they do. They are not owners and don’t have the same privileges as an owner does. In most cases, the business is an owner’s life, whereas the employee has a life outside of the business. It is important that the owner understands this difference.
In the long run, positive and happy owners have happy employees. But if being a good role model doesn’t do the job with workers who remain negative, your only recourse is to get rid of them. Reward your people with praise, and every once in a while give them a dinner gift certificate for two – or their birthday off – anything to let them know you appreciate their work. It’s an inexpensive way to increase profits and subsequently the value of the business. When a potential buyer checks the business, and they will, being waited on by a happy employee can seal the deal.
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If your business is not location-sensitive, that is, if your business location is immaterial to its success, then the following may not be important. However, lease information is usually helpful no matter what the situation. The business owner whose business is very dependent on its current location should certainly read on.
If your business is location-sensitive, which is almost always true for a restaurant, a retail operation, or, in fact, any business that depends on customers finding you (or coming upon you, as is often the case with a well-located gift shop) – the lease is critical. It may be too late if you already have executed it, but the following might be helpful in your next lease negotiation.
Obviously, a very important factor is the length of the lease, usually the longer the better. If the property ever becomes available – do whatever it takes to purchase it. However, if you are negotiating a lease for a new business, you might want to make sure you can get out of the lease if the business is not successful. A one-year lease with a long option period might be an idea. Keep in mind that you might want to sell the business at some point – see if the landlord will outline his or her requirements for transfer of the lease.
If you’re in a shopping center, insist on being the only tenant that does what your business does. If you have a high-end gift store, a “dollar” type of store might not hurt, but its inclusion as a business neighbor should be your decision. Also, if the center has an anchor store as a draw, what happens if it closes? The same is true if the center starts losing businesses. Your rent should be commensurate with how well the center meets your needs.
What happens if the center is destroyed by fire or some other disaster – who pays, how long will it take to rebuild? – these questions should be dealt with in the lease. In addition to the rent, what else will be added: for example, if there is a percentage clause – is it reasonable? How are the real estate taxes covered? Are there fees for grounds-keeping, parking lot maintenance, etc? How and when does the rent increase? Who is responsible for what in building repair and maintenance?
A key issue for many business owners is determining who holds ultimate responsibility for the rent. Are you required to personally guarantee the terms of the lease? If you have a business that has been around for years, or if you are opening a second or third business, the landlord should accept a corporation as the tenant. However, if the business is new, a landlord will most likely require the personal guarantee of the owner.
The dollar amount of the rent is not necessarily the most important ingredient in a lease. If the business is successful – the longer the lease the better. If it’s a new business, the fledging owner might want an escape clause. And, in any case, the right to sell the business and transfer the business is a necessity.
Once the decision to sell has been made, the business owner should be aware of the variety of possible business buyers. Just as small business itself has become more sophisticated, the people interested in buying them have also become more divergent and complex. The following are some of today’s most active categories of business buyers:
Members of the seller’s own family form a traditional category of business buyer: tried but not always “true.” The notion of a family member taking over is amenable to many of the parties involved because they envision continuity, seeing that as a prime advantage. And it can be, given that the family member treats the role as something akin to a hierarchical responsibility. This can mean years of planning and diligent preparation, involving all or many members of the family in deciding who will be the “heir to the throne.” If this has been done, the family member may be the best type of buyer.
Too often, however, the difficulty with the family buyer category lies in the conflicts that may develop. For example, does the family member have sufficient cash to purchase the business? Can the selling family member really leave the business? In too many cases, these and other conflicts result in serious disruption to the business or to the sales transaction. The result, too often, is an “I-told-you-so” situation, where there are too many opinions, but no one is really ever the wiser. An outside buyer eliminates these often insoluble problems.
The key to deciding on a family member as a buyer is threefold: ability, family agreement, and financial worthiness.
This is a category often overlooked as a source of prospective purchasers. The obvious concern is that competitors will take advantage of the knowledge that the business is for sale by attempting to lure away customers or clients. However, if the business is compatible, a competitor may be willing to “pay the price” to acquire a ready-made means to expand. A business brokerage professional can be of tremendous assistance in dealing with the competitor. They will use confidentiality agreements and will reveal the name of the business only after contacting the seller and qualifying the competitor.
The Foreign Buyer
Many foreigners arrive in the United States with ample funds and a great desire to share in the American Dream. Many also have difficulty obtaining jobs in their previous professions, because of language barriers, licensing, and specific experience. As owners of their own businesses, at least some of these problems can be short-circuited.
These buyers work hard and long and usually are very successful small business owners. However, their business acumen does not necessarily coincide with that of the seller (as would be the case with any inexperienced owner). Again, a business broker professional knows best how to approach these potential problems.
Important to note is that many small business owners think that foreign companies and independent buyers are willing to pay top dollar for the business. In fact, foreign companies are usually interested only in businesses or companies with sales in the millions.
These are buyers who feel that a particular business would compliment theirs and that combining the two would result in lower costs, new customers, and other advantages. Synergistic buyers are more likely to pay more than other types of buyers, because they can see the results of the purchase. Again, as with the foreign buyer, synergistic buyers seldom look at the small business, but they may find many mid-sized companies that meet their requirements.
This category of buyer comes with perhaps the longest list of criteria–and demands. These buyers want maximum leverage, but they also are the right category for the seller who wants to continue to manage his company after it is sold. Most financial buyers offer a lower purchase price than other types, but they do often make provision for what may be important to the seller other than the money–such as selection of key employees, location, and other issues.
For a business to be of interest to a financial buyer, the profits must be sufficient not only to support existing management, but also to provide a return to the owner.
When it comes time to sell, most owners of the small to mid-sized business gravitate toward this buyer. Many of these buyers are mature (aged 40 to 60) and have been well-seasoned in the corporate marketplace. Owning a business is a dream, and one many of them can well afford. The key to approaching this kind of buyer is to find out what it is they are really looking for.
The buyer who needs to replace a job is can be an excellent prospect. Although owning a business is more than a job, and the risks involved can frighten this kind of buyer, they do have the “hunger”–and the need. A further advantage is that this category of buyer comes with fewer “strings” and complications than many of the other types.
A Final Note
Sorting out the “right” buyer is best left to the professionals who have the experience necessary to decide who are the best prospects.Read More
ATLANTA– Shirlynn Brownell of the Georgia Department of Economic Development, the State of Georgia’s sales and marketing arm, spoke about Georgia’s economic climate for small- and medium-sized businesses at the Nov. 17 meeting of the Georgia Association of Business Brokers (GABB).
GABB members represent owners of Georgia businesses and help them establish the sales price of their business, create marketing plans and strategies for the sale of their business, identify and qualify potential buyers, and work to protect the confidentiality of the entire process.
Here’s the text of Ms. Brownell’s remarks:
For the second year in a row – Georgia has been named the No. 1 state in the U.S. for business by Site Selection AND Area Development magazines. Using an integrated approach – our goal is to create jobs and investment opportunities.
Global Commerce: In September, Gov. Nathan Deal announced that our Global Commerce division helped createa total of 26,951 new jobs and generate $4.75 billion in investment during FY15. We kicked off 2015 with Mercedes-Benz USA announcing they were relocating their headquarters from New Jersey to Sandy Springs. Landing one of the world’s most prestigious and recognizable brands brought an incredible victory for our state.
One of things that we heard from Mercedes-Benz leadership was the excellent quality of life here in Georgia which puts a spotlight on the cost of living.
Georgia’s pro-business climate, world-class infrastructure and talented workforce provide anideal business environment for companies who are establishing their headquarters in Georgia.
Key Industries in FY15: Job creation was up in key industries including headquarters, software and technology, aerospace and food processing expansions and relocations.
For the fifth consecutive year – Georgia had a record-setting year for international trade in 2014.
In fact, Georgia is ranked as the 11th-largest exporting state.
As home to the world’s busiest international airport and the fastest-growing container port in the nation, Georgia knows how to move products quickly and efficiently all around the world. It is important to note that Georgia has more international representation than most states in the Southeast, with representatives in 11 strategic markets around the world helping to grow jobs and investment in Georgia.
CENTERS OF INNOVATION: Small, innovative and growing companies can also take advantage of our Georgia Centers of Innovation. Our six Centers are exclusive to Georgia and cover six strategic industries: Aerospace, Agribusiness, Energy Technology, Information Technology, Logistics, and Manufacturing.
WORKFORCE: Our Workforce division is playing a key role in ensuring we have a talented and prepared workforce for the future.
Go Build Georgia: Since its launch in 2012, Go Build Georgia has been educating students about the benefits of high-demand careers in skilled labor trades. This initiative focuses on 5 key industries including manufacturing, logistics, energy, construction and telecommunication. More than 290 Go Build Georgia teams are positioned throughout the state, within high schools and other educational facilities. The goal of the program is to grow this number, so that every student, educator, guidance counselor and parent in Georgia is exposed to the importance of skilled trade careers in our economy.
TOURISM: Tourism is a vital driver of Georgia’s economy – in almost every community in Georgia. 2014 was another record-breaking year for the tourism industry generating $57.1 billion in economic impact – up 6.7 percent from last year. Just over 10.2 percent of the state’s payroll workforce are employed by the tourism industry with more than 425,000 jobs. Our tourism assets not only draw in millions of visitors, but they also create a better quality of life for those who call Georgia home as well as increasing investment opportunities by making Georgia a great place to live and do business.
ENTERTAINMENT: Georgia-made feature films and television productions generated an economic impact of more than $6 billion during fiscal year 2015 (July 1, 2014-June 30, 2015).
The 248 film and television productions that shot in Georgia during this time represent the $1.7 billion in spending in the state.
Today in Georgia, there are 47 film and television projects in production or preproduction.
The Georgia-filmed “Goosebumps” starring Jack Black opened at #1 in theaters.
“Hunger Games: Mockingjay Part II opens on Nov. 20.
And, the Season 6 of “The Walking Dead” premiered to huge ratings a few weeks ago.
The entertainment industry has been one of the fastest growing in our state. To meet the needs of this industry – Governor Deal established the new Georgia Film Academy which will provide the resources to people who are interested in working in this thriving industry. During the recession – our Film office heard from numerous home builders and lumber suppliers about gaining access to this industry. Many of them started working with the film industry to build sets, sound stages and beyond. In fact, the Cofer Brothers – a family owned and operated building material supply company in Tucker – credits the film and television industry for keeping them in business through the recession.
ARTS: The Georgia Council for the Arts supports Georgia’s creative industry representing 4.7% of the state’s employment – generating $29 billion in annual business revenue. Being able to provide a company and its employees a good quality of life and access to diverse cultural opportunities is essential to maintaining Georgia’s status as a leader in the global marketplace.
Strength in partnerships: We are all ambassadors for economic development. What makes Georgia stand out as an ideal location for business activity is our partnership approach to economic development – from state, local, international, business community, educational sectors and beyond, our teamwork collaboration continues to meet the unique needs of companies that locate here.
Ms. Brownell is project manager of Life Sciences and Corporate Solutions at the Georgia Department of Economic Development. Ms. Brownell was hired in early 2012 as a project analyst on the Centers of Innovation team in the Department. In September of 2014 she was promoted to a project management position on the Life Sciences and Corporate Solutions team, which is responsible for exposing Georgia’s business advantages in the Corporate Headquarters, Life Sciences, and Information Technology industries. Once a lead is generated, the team works with the prospect until they locate a facility in Georgia. Team responsibilities include marketing, site location assistance, providing assistance to expanding companies and performing various community development and public relations functions.
Ms. Brownell received her Master’s degree in Strategic Communications from Troy University, and her Bachelor of Arts in International Affairs from the University of Georgia. Ms. Brownell is also a licensed Realtor affiliated with Berkshire Hathaway Home Services in Midtown Atlanta. An active member in the Atlanta community, she is involved with several initiatives around the state including the Atlanta BeltLine Young Leadership Council, the Liberian Consulate of Georgia, and a host of other organizations.
The GABB is composed of professionals who work with owners of Georgia businesses. Many of today’s business buyers are individuals who have decided not to re-enter corporate America, but are ready to control their own destiny by purchasing and operating a Georgia business. The GABB’s monthly meeting is at the South Terraces Conference Center at 115 Perimeter Center Place, Atlanta. For more information about the GABB, contact GABB President Greg DeFoor at firstname.lastname@example.org or call Diane Loupe at 404-374-3990.Read More