Not every prospective buyer actually buys a business. In fact, out of 15 prospective buyers, only 1 actually makes a purchase. Sellers should remember that being a buyer can be stressful. The bottom line is that buying a business is usually one of the single largest financial decisions that a person can make. In this article, we are going to explore a few of the reasons why being a buyer can be both stressful and taxing. Keeping a buyer’s perspective in mind will help you on the road to successfully selling your business.
A prospective buyer has many decisions to make before he or she decides to buy a business. Many prospective buyers are employed, and that means they will have to leave their existing job in order to buy a business. Simply stated, a buyer will have to leave the safety and security of their job and “strike out on their own.”
There are also other substantial financial concerns for buyers as well. The majority of buyers will, in fact, have to take out loans in order to purchase a business. Additionally, the new owner will need to execute a lease or assume the existing list. At the end of the day there exist an array of weighty business decisions that a buyer must make.
Ultimately, a buyer has to decide whether or not he or she is ready to take a giant step and purchase a business. This is more than just a financial decision. The enormity of the decision to purchase a business is such that touches every aspect of a person’s life. Owning a business can be very time consuming and demand a great deal of one’s attention. The end result, is that buying a business has a direct impact on both one’s financial life and one’s personal life. Owning a business can be extremely time consuming and this is particularly true for new business owners.
Prospective buyers need to weigh all the factors involved in buying a business. Caution must be exercised. Buyers need to step back and fully assess whether or not owning a business is right for them both on a personal and financial level. When sellers put themselves in their buyer’s “shoes,” things begin to look a bit differently.
When it comes to buying or selling a business, the assistance of a business broker is invaluable. A business broker understands what is involved in owning a business and can help both buyers and sellers evaluate the pros and cons of any transaction.Read More
Business owners considering selling should realize that they have many different types of prospective buyers. Today’s prospective business buyers are more sophisticated and diverse than ever before. Let’s take a closer look at the different types of prospective buyers and what you should know about each of them.
1. Family Members
Family members often buy businesses from other family members. There are many reasons this happens. For example, a family member is already very familiar with the business. If a family member is treating the responsibility seriously and has prepared years in advance for the responsibility of owning the business, then selling to a family member can work.
However, there are many potential problems when it comes to selling a business to a family member. One problem is that the family member simply lacks the cash to buy the business. This can cause disruptions. If the family member is unprepared to run the business, then the business can suffer a range of disruptions leading to a loss of business. Any family member that buys a business must be ready for the responsibility. An outside buyer usually solves all of the problems that come along with a family member buying a business.
2. The Individual Buyer
Most owners of small to mid-size businesses like the idea of selling to an individual buyer. Often these buyers are older between the ages of 40 and 60, and bring with them a good deal of real world business experience acquired in the corporate world. For these buyers, owning a business is a dream come true. Many individual buyers have the funds necessary to buy.
An individual buyer who is looking to replace a job that has been lost or downsized is often an excellent candidate. On the downside, individual buyers quite often have not owned a business before and may be intimidated by what is involved. At the end of the day, the individual buyer is often easier to deal with than other types of buyers.
3. Business Competitor
It is quite common for business owners to look to their competitors when it comes time to sell. No doubt, the approach of selling to a competitor makes sense, as a competitor already understands the business and will likely see the value.
Additionally, a buyer may see buying a similar business as an easy way to expand and increase cash flow. That stated, it is extremely important to work with a business broker in this situation. By going through a business broker, it is possible to have a secure confidentiality agreement in place so that the prospective buyer doesn’t learn the name of the business or other details before signing the agreement.
4. The Foreign Buyer
Foreign buyers often have the funds they need and look at buying an existing business as a way of addressing such issues as language barrier, licensing difficulties and other problems. Business brokers can be very helpful when working with foreign buyers, as they have experience with the obstacles a foreign buyer may face.
5. Synergistic Buyers
A synergistic buyer is one that feels that a particular business would complement his or her existing business. The idea is that they can combine the two businesses and in the process, lower their cost and acquire new customers. These are just a few of the advantages for a synergistic buyer, and that is why they are often willing to pay more than other buyers.
6. Financial Buyers
Financial buyers can come with a long list of demands, criteria and complications, but that doesn’t mean that they should be discounted. With the assistance of a business broker, financial buyers can still be good prospective candidates.
It is, however, important to remember that these buyers want maximum leverage and are often a good option for the seller who wants to continue to manage a company after it is sold. It is common for financial buyers to offer a lower purchase price than other types of buyers. After all, buying the business is strictly for financial purposes and it isn’t attached to fulfilling a dream or a family tradition. Financial buyers are looking for a business that is generating sufficient profits so as to support the business and provide a good return to the owner.
Working with a business broker can help you find the right kind of buyer for you. Every business is different and every prospective buyer is different. A business broker can help you navigate the possibilities so you find the right buyer for your business.Read More
ATLANTA-March benchmarking revisions upgraded Georgia’s employment gains from 102,100 job additions to 120,600 in calendar year 2016. Thus, employment in 2016 grew by 2.8%, a maintenance of the job growth pace since 2014, according to Rajeev Dhawan of the Economic Forecasting Center at Georgia State University’s J. Mack Robinson College of Business.
“Employment in domestically demand driven sectors was revised strongly upwards, while employment in globally connected sectors was also revised up, but to a lesser extent,” Dhawan wrote in his quarterly “Forecast of Georgia and Atlanta” released Thursday, May 18, 2017.
“This will have implications for future purchasing power, as jobs in domestically demand driven sectors such as hospitality, education, construction and government are typically lower paying, while globally influenced sectors such as large corporations and manufacturing are higher paying,” he said.
“Manufacturing employment creation has decelerated over the past few years, likely due to the strong U.S. dollar. Furthermore, Georgia’s exports also are falling,” said Dhawan.
“An increase in corporate jobs due to the large contingent of headquarters has generated demand for housing, especially in that Midtown and core area, which has resulted in a surge of multifamily permitting in particular,” Dhawan wrote. “Construction activity also was boosted by the hospitality sector.”
Thirteen hotel projects are currently in the pipeline, bringing the number of rooms in the city over 97,000 by 2020. Atlanta’s occupancy rate of 73 percent in 2016 was one of the highest levels in recent history.
Georgia’s corporate job additions are expected to continue to grow, albeit at a slightly slower rate.
“Even within the corporate sector, the lowest wage earners saw stronger growth than those in technical or management positions,” Dhawan wrote in his forecast.
According to Dhawan, the real issue is what the purchasing power of the jobs created will turn out to be.
“We can see from Georgia’s personal income growth that it has been on a moderating trend since the start of 2015,” the forecaster said.
Going forward, however, as President Trump is expected to undertake tough measures on trade deficits with our trading partners, Georgia’s job growth, especially in high-paying, but globally-connected, sectors, will moderate, according to Dhawan.
“Eventually, this will affect spending on big-ticket items like homes and vehicles, as the ensuing trade skirmishes raise long-term interest rates,” he said.
Looking beyond Atlanta, a decrease in tonnage movement at the port of Savannah led to a downward revision for the metropolitan statistical area (MSA). Athens, Albany, Gainesville and Macon also had jobs numbers revised downward. The Columbus MSA was revised downward near zero.
The Dalton and Warner Robins MSAs bucked the trend of downward revisions and were revised upward to growth of 1.4 percent and 2.6 percent, respectively.
Dhawan pointed out that MSAs outside metro Atlanta will be more immune to Trump’s trade actions than Atlanta with its globally-connected economy.
“However, Trump’s other administrative initiatives will provide a boost to small business activity and buoy overall growth. But employment will still moderate due to the negative effects of trade skirmishes,” Dhawan said.
Highlights from the Economic Forecasting Center’s Report for Georgia and Atlanta
- Georgia employment will gain 88,800 jobs (18,400 premium jobs) in calendar year 2017, 73,300 jobs (15,600 premium) in 2018 and 68,200 (14,300 premium) in 2019.
- Nominal personal income will increase 4.9 percent in 2017, 5.3 percent in 2018 and 5.4 percent in 2019.
- Atlanta will add 64,500 jobs (13,800 premium jobs) in calendar year 2017, 53,600 jobs (11,900 premium) in 2018 and 49,100 jobs (10,400 premium) in 2019.
- Atlanta permitting activity in 2017 will decrease 1.1 percent, fall another 2.5 percent in 2018, but then rebound and increase 3.2 percent in 2019.
Immigration attorney Elena Kochutin discussed immigrant and non-immigrant options for business owners at the June 27, 2017, meeting of the Georgia Association of Business Brokers.
The GABB is the state’s only association of professionals who work to facilitate the purchase and sale of businesses and franchises. The group includes business brokers as well as lenders, attorneys, business appraisers, insurance agents, environmental specialists and other professionals. GABB’s member business brokers work with businesses of all sizes to help them through all steps of selling their company — valuation, marketing, financing, and closing. Aspiring business owners also work with business brokers to purchase existing businesses at a fair price.
Ms. Kochutin is the founding attorney of EK Law Office, and she specializes in Immigration and Nationality Law. She gave a brief overview of the immigrant and non-immigrant options for business owners, briefly covering the EB-5 investor program, and two non-immigrant visa classes, E-1/E-2 for treaty traders/investors and L-1A for multinational executives or managers.
Ms. Kochutin received her JD from Georgia State University, College of Law and is a member of the State Bar Association of Georgia. Ms. Kochutin is fluent in English and Russian. Ms. Kochutin also has an MBA in International Business from Georgia Institute of Technology and an MA in Linguistics from the Urals State Pedagogical University in Russia. Ms. Kochutin helps businesses, entrepreneurs, families, and individuals with their U.S. immigration needs. Because the U.S. immigration law is federal in nature, Ms. Kochutin can assist clients in all fifty states of the United States as well as in any other country of the world.
GABB meetings start at 10:30 a.m. at the Atlanta Realtors Center at 5784 Lake Forrest Dr. NW, Atlanta, GA 30328. The meeting will be preceded at 9:45 a.m. with a free networking session with coffee and pastries.
GABB Treasurer Thomas Crumpton of Commercial Experts, Inc., sponsored the meeting.
Directions to the GABB meeting location at the Atlanta Realtors Center:
From the South: I-75 north to I-285 east or I-85 north to I-285 west. Exit at Roswell Road south and turn right onto Northwood Drive. Turn right onto Lake Forrest. The Atlanta REALTORS® Center on the left at the stop sign (intersecting Allen Road).
From the North: Take GA 400 south and change to I-285 west. Continue as above via Roswell Road.
From East or West: I-285 to Roswell Road. Continue as above.
There is no charge for parking.
For more information about the GABB, contact Diane Loupe at email@example.com or GABB President Mike Ramatowski at 770-634-0428.Read More
ATLANTA-After a tax cut for the middle class by the end of 2017, expect gross domestic product (GDP) growth above 2.0 percent in 2018 and 2019, according to Rajeev Dhawan of the Economic Forecasting Center at Georgia State University’s J. Mack Robinson College of Business.
“While President Trump pursues trade skirmishes, the economy will experience pain in the second half of 2017,” Dhawan wrote in his “Forecast of the Nation,” released Thursday, May 18, 2017. “Part of the damage will be an increase to the sub-4.0 percent mortgage rates the housing market has become accustomed to, because of lower demand for treasuries by Asian nations as they sell less to us due to temporary tariffs and other trade measures.”
These trade skirmishes will be felt in the manufacturing and transportation sectors attributable to lower exports from the strengthening dollar and affect job creation in the short run.
“A good middle class tax cut, followed by a minor corporate tax cut, will be enough to mollify the financial markets after the trade skirmish induced pain,” Dhawan predicted.
Due to this pain, the president will be able to negotiate his tax deal. If not, Dhawan expects Congress to suffer in November of 2018.
“Following these tax reforms, economic growth will be above the 2.0 percent mark consistently in 2018 and 2019. Consumption will soar above 3.0 percent in each quarter of 2018 as these personal income tax cuts will be spent,” said Dhawan.
Dhawan also envisions increased business investment aiding job growth. But to get to 2018, the economy will go through some pain during 2017.
As a result of increased long bond yields, which are a side effect of Trump’s trade measures, the Federal Reserve will be able to stand pat following their June rate hike. Dhawan believes rate hikes will resume in early 2018, after trade skirmishes die down.
“The first quarter of 2017 indicates a disconnect between the soft indicators and the hard economic data,” he said.
Business and consumer confidence have shown sharp increases since the election, but first quarter GDP grew an anemic 0.7 percent. The number was dragged down by an inventory correction, warm weather that led to less spending on utilities and a drop in vehicle sales.
“The good news is the weather is hotter than usual now, inventories will get replenished soon and future reductions in vehicle sales will be gradual.”
Dhawan pointed out the economy has yet to see the “Trump bump” the stock market and a business friendly administration would predict.
“The harsh reality is retail sales were lackluster in February and March, and business investment indicators have not shown momentum,” Dhawan said. “Investment is a risky proposition, and no CEO or board wants to be caught spending based on promises. The daily drama in Washington does not help.”
Highlights from the Economic Forecasting Center’s National Report
- Following GDP growth of 0.7 percent in the first quarter of 2017, growth in the second quarter will rebound, but will be subpar in the last half of 2017 due to trade skirmishes. Overall, the economy will expand at 1.9 percent in 2017, 2.2 percent in 2018 and 2.6 percent in 2019.
- Business investment growth will be 4.6 percent in 2017 and 4.2 percent in 2018, then rise to 4.8 percent in 2019. Jobs will grow by a monthly rate of 141,000 in both 2017 and 2018, and a better 157,000 in 2019.
- Housing starts will average 1.206 million units in 2017, rise to 1.211 in 2018 and 1.266 in 2019. Auto sales will be 16.6 million units in 2017, 16.3 in 2018 and 16.2 in 2019.
- The 10-year bond rate will rise to 3.0 percent in 2017, 3.6 percent in 2018 and 4.3 percent in 2019.