DBA vs. LLC
Latest Forbes Post: ACA Grandmothered Plans Help Small Business
Obamacare was promoted to the approximately 5.8 million small business owners in the U.S. as a mandate which would not apply to them, nor result in a penalty if they chose not to offer health insurance to employees. Unfortunately, for those same small business employers who previously offered health insurance coverage as part of an employee’s total compensation package there is no place to hide. Premiums are skyrocketing.
The True Cost of Debt When Growing a Business
Many small business owners borrow money to start and grow their business. And is often the case those same business owners find themselves hitting credit limits established by banks and other lenders causing enormous growing pains for the business. Simply stated, running out of business capital when you’re growing a business is difficult at best.
![How to Calculate Debt Service Coverage Ratio [Tool]](https://exitpromise.com/wp-content/uploads/2017/02/iStock-502733644.jpg)
How to Calculate Debt Service Coverage Ratio [Tool]
Debt Service Coverage Ratio compliance often is required or necessitated by covenants in a bank loan agreement. A bank loan covenant regarding the debt service coverage ratio will specify the amount of income a business and/or its guarantor must generate relative to the debt principal and interest payments on an annual basis to remain in compliance with the covenant. The business owner, or his or her CFO or Controller, should monitor this ratio carefully on a monthly basis so the covenant is not unintentionally broken.
Latest Forbes Post: 5.6M Small Businesses Blindsided by Obamacare
What is a Debt Service Coverage Ratio?
The debt service coverage ratio is a measurement used by lenders to determine if a business is able to meet its debt servicing obligations through its operating income during a given period of time. In most cases, a lender wants the operating income to exceed the debt servicing costs by some measure. This ratio defines the extent to which a business’s operating income (or other defined measure of cash flow) exceeds the cost to service its bank loans.
Latest Forbes Post: Bank Loan Alternatives in 2014
Finding money to grow a business has changed tremendously since the great recession. Whether sourcing capital in the form of debt, equity, or something in between, also known as mezzanine, it’s safe to say entrepreneurs have more multiple options than ever to pursue. That doesn’t make the task an easy one to accomplish. Unfortunately for the entrepreneur, the additional options have only served to increase the confusion surrounding their need for cash.
Adjusted EBITDA Definition
One of the many questions asked by entrepreneurs as they plan for the sale of their business is related to the Adjusted EBITDA definition.
Latest Forbes Post: WhatsApp $16B Business Valuation Method
Latest Forbes Post: Understanding Bank Loan Covenants
Surviving Due Diligence & Contract Negotiation
You have endured multiple meetings with potential buyers. You’ve written dozens of emails and suffered through several rounds of negotiations to secure the best price and deal structure. At last you have decided on the offer to accept. That’s the worst of it over then? Think again – you have yet to experience the joys of due diligence and sale contract negotiation.
How to Calculate Customer Concentration Risk
If a customer’s total revenue for the year represents 8% or more of all revenue for the same year, you have a customer concentration risk.
Latest Forbes Post: Obamacare Medicare Taxes — Increasing Your 2013 Tax Bill {Infographic}
Exiting The Business, But Not Entrepreneurship
For Bill Hinchey, his entrepreneurial journey was one of rapid growth. Just not in the way he initially hoped for. In just 13 years, he saw the sun care product company he started with two partners in a Pennsylvania basement develop into a worldwide leader in the medical device industry.
Going After the Next Opportunity
It’s the late 1980’s and Bill Hinchey just saw his young company, Solar Care Technologies, featured in a complimentary Wall Street Journal piece. Hinchey, along with two other guys he met while working for consumer products giant Proctor and Gamble, had recently set up shop in a business incubator in Pennsylvania’s Lehigh Valley to develop a sunscreen towelette.
Latest Forbes Post: Year-End Tax Tips Every Entrepreneur Needs To Know — Before They Expire
A Father’s Wish, an Entrepreneur’s Rise
Non-Solicitation Agreement | How to Keep Your Best Employees
If you’ve grown a valuable business, there is no doubt your employees are a big part of your success. You also know that hiring, training, and managing a great team of productive employees is a difficult task. And keeping your best employees is yet another accomplishment! But the painful truth is your competition would be very pleased to hire away your best employees.
Latest Forbes Post: How Obamacare Affects Employers
Multiple Business Structures: Their Combinations & Tax Consequences
Check out the website of your favorite fast food chain and you will see most have multiple business entity structures noted in the fine print. For a large business, this practice has been commonplace for decades. It involves layering one form of a business entity either alongside or in conjunction with an operating business.
Latest Forbes Post: 11 Tangible Ways Entrepreneurs Can Help Veterans
What Happens to Debt When Selling a Business?
Many business owners are under the wrong impression that their business debt will disappear when their business is sold. In some cases, the debt is absorbed or is assumed by the buyer. But usually this is not the case.
Latest Forbes Post: Business For Sale: 9 Roadblocks Entrepreneurs Must Overcome
What a Letter of Intent Expiration Date Means?
When the Letter of Intent (LOI) expiration date and time is defined, the buyer is putting the seller on notice that he or she must either agree to the terms defined in the letter or lose the opportunity to sell the business to the buyer authoring the LOI.
6 Things Successful Entrepreneurs Always Do
Business Buyers: Finding the Perfect Match When Selling Your Business
In many cases, the Entrepreneur finds it difficult to know who they should target as a potential buyer for their business. At first glance, any buyer with a checkbook may be attractive. In practice finding the right buyer when selling a business is both an art and a science.
Latest Forbes Post: How To Sell Your Business To Yahoo!
Latest Forbes Post: The 4 People Who Made Entrepreneurship Sexy
Latest Forbes Post: 7 New Tax Changes Every Entrepreneur Needs To Know
Latest Forbes Post: How To Tell If Your ‘Right-Fit’ Employee Is Wrong
Latest Forbes Post: Could Your Banker Trigger Your Exit?
Definition of Alternative Business Capital
Latest Forbes Post: The 5 Things Entrepreneurs Must Know When Selling A Business
It Takes a Village to Sell a Business [Infographic]
Selling a business is one of the most exhausting endeavors an entrepreneur will undertake. Unfortunately, many simply do not succeed. In fact, only one out of ten entrepreneurs will actually complete the business sale process and transfer their business to another. Selling a business involves many different parties, all of whom have a special role and a unique skillset. Most importantly, they must all work together. Those entrepreneurs who succeed recognize ‘it takes a village to sell a business’.
4 Ways to Increase the Value of a Business
Often, business owners ask me one of those “quick questions” – what can I do to maximize the sale price of my business? The answer? Not as simple as you may think. But there are 4 factors that can increase the value of your sale price.
10 Steps to Selling a Business [Infographic]
Selling a business for the entrepreneur often is a tumultuous, emotionally draining experience. Unless the entrepreneur has sold a business previously, the journey feels awkward and is marked with multiple high and low points. To guide the entrepreneur, we’ve created the 10 Steps to Selling a Business Infographic.
Entrepreneur Executes his Exit Plan
After enduring the economic downturn, this entrepreneur executes his exit plan with the assistance of an experienced exit planner.
What is a Bank Workout Group?
The Bank Workout Group is a department in a bank that handles what is known as the bank’s special assets. Banks send their troubled loans to this department to handle negotiation and management of the bank’s forbearance agreements.
Is Selling A Business A Do-It-Yourself Project?
If you have ever endured the process of selling a business with the assistance of professional advisors who specialize in mergers and acquisitions, you will agree with me that this is not something to try at home!
Weathering the Economic Storm Before Exiting a Business
Success doesn’t come without its obstacles. Just ask Richard Hagerty, a 40 year business veteran and successful entrepreneur.
No Good Deed Goes Unpunished (in the Boardroom)
As we gathered last week, instead of receiving the financial documentation we were promised, we were all relieved of our duties. Isn’t that a nice way to say “you’re fired”?
IMPAQT’s Richard Hagerty | Exit Interview: Emerging Market Opportunity
This three part series tells how one entrepreneur took a chance on an emerging market, weathered an economic storm, and exited with a bright future.
Right Place at the Right Time
It almost seems like cliché advice a commencement speaker would offer to a group of graduates.
Keep your ear to the ground, work hard and always be on the lookout for the next big thing. And when that next big thing does indeed come, don’t be afraid to take a chance on it.
Definition of EBIT
EBIT is an acronym for Earnings Before Interest and Taxes. This is a term Bankers often use as a measure of a business’s earnings from operations. The EBIT reveals operating profitability without non-recurring or unusual income or expenses.
When Selling a Business, Valuation is a Factor and Timing is Everything
As I meet with entrepreneurs, I’m often asked the same question: “When is the best time for me to sell my business?” The answer to this question is not the same for every business owner, for many reasons.
Definition of EBITDA
EBITDA is an acronym for Earnings Before Interest Taxes Depreciation and Amortization. EBITDA is often used as a measure of a business’s cash flow. Also it is used frequently in many business valuation formulas, depending on the business’s specific industry.
How To Structure Multiple Businesses Under One Roof
In part 1 of this series, we discussed the various options to incorporate multiple businesses while keeping each business as a separate entity. But what if you want to keep all of your businesses under one roof?
What Does Gross Revenue Mean to Your Profitability?
Profitability is directly related to a company’s gross revenue, particularly as it relates to its varied customer types. What does gross revenue mean to your company’s profitability? Everything. Let’s back up to review the concepts we’ve covered in previous posts so we may explore gross revenue further.
Do You Recall the Laughter of Your Childhood?
Recently I took my nine year old daughter and a carload of her friends to our town’s Volunteer Fireman’s Carnival for an evening of ferris wheels, funnel cakes, and laughter–of course! It was a Friday night after a long week. Truly, I would have benefited from a simple dinner at home to unwind from the week. Sound familiar? However, I intuitively knew that the laughter of those children was most important and desperately needed…so off we went.
Entrepreneurs Get What They Have Given as They Sell a Business
Last week was one of those weeks I will never forget. Over the course of a few days, we closed a business acquisition and celebrated with another client his retirement after forty plus years of entrepreneurship. These back-to-back events served to prove the truth that in life one will get what one gives.
How to Increase the Value of Your Business
The best solution to a problem lies in uncovering what the root cause of the problem really is. So often, this is the case when an entrepreneur is struggling with profitability in their business. Over the past few posts, we have discussed the concepts of how a minimum order policy and Pareto’s Principle applied to the customer/client base can be very powerful to help an entrepreneur improve the value of their business.
Devil is in the Details: Letter of Intent to Sell a Business Edition
If I have said under my breath once, I have done so at least one hundred times… “The devil is in the details!” As we work with business owners and deal makers on the hunt for profitable businesses to acquire, this expression has become our theme song!
Increase Profit Using 80/20 Rule
If you own a business, you want to know that your entrepreneurial efforts will result in making money. However, many entrepreneurs struggle to recognize where they are making money and where they are not!
The Importance of a Minimum Order Policy
Most entrepreneurs find themselves extremely reluctant to turn away an order for any reason. The notion of telling a client or customer that their business or order is too small is frightening to even the most seasoned entrepreneur. However, if you don’t want to leave money on the table, and instead desire to make more profit, setting and enforcing a minimum order policy is absolutely necessary!
Kauffman Foundation Venture Capital Report: Will VC Be Your Super Hero?
I continue to be surprised as I meet with entrepreneurs who truly regard Venture Capital as their Holy Grail. It’s as though they are looking for a Super Hero to make their dreams of entrepreneurial success come true. But having spent more than a few sessions on the entrepreneur’s side of the table in negotiations with venture capital firms, I know better. And it seems there are others who share my opinion!
“It’s Not About You!” & Other Hard Lessons for the Entrepreneur
Not long ago, one of my dear friends abruptly stated “it’s not about you” after patiently listening to my long story about a business relationship which changed, without warning. I just love this friend and how she was able to candidly share her observation which has proven to be brilliant and incredibly powerful.
Legal Structure of a Business
It takes a special kind of person to start a business: a rare combination of drive, ambition, creativity, tenacity and impatience for action. But even within the community of business experts and entrepreneurs there is a special breed of person known as a “serial entrepreneur.”
The Most Dangerous Traits of an Entrepreneur
As I listen to the stories told by many entrepreneurs, it reminds me of the dangers they face in part because of their own abilities. Many entrepreneurs are literally jack of all trades. They are very good at doing many things! This trait has allowed them to strike out and start their own business. How in the world could this trait be bad you wonder?
This Too Shall Pass: One Entrepreneur’s Battle Cry
Working with successful entrepreneurs who are dedicated to growing and selling a valuable business offers me the opportunity to learn from the best. I pinch myself most days as I am invited into the lives of my clients and have the privilege of experiencing the ups and downs of entrepreneurship. Truly, it is my pleasure!
Resolving the Equal Partner Deadlock When Selling a Business
It is a unique pleasure to find two equal partners or shareholders acting in harmony over selling a business. Unfortunately, when I say “unique”, I mean rarely ever. Please understand, it is not as if this never happens. It is just so unusual, that when faced with the situation, I find myself warning both parties before they proceed to sell their business.
Have You Made Room for Forgiveness in Your Business?
Recently, I had the good fortune to attend a conference where a gentleman and his wife shared their personal story about forgiveness in their business and personal lives. It was an unforgettable story that hit home.
Look Carefully at what Pareto’s Law Applied to Business is Telling You
When applied in a business situation, Pareto’s Principle likely will reveal to the entrepreneur that thier business is serving (at least) two very different sets of customers/clients. And in trying to do so, he or she and their staff will suffer anxiety, frustration, and the loss of company profit.
Bank Alternatives: Sourcing Business Capital When a Company is Not Bankable
Often entrepreneurs find themselves in a situation where their commercial bank considers their existing line of credit too risky to extend or renew. This places the entrepreneur and their banker at odds, and many times pushes the business owner to take drastic steps to keep their company’s doors open and paychecks coming. Has this happened to you or one of your fellow entrepreneurs?
Lean Startup Business Lessons
The Great Recession has been a great teacher for many seasoned entrepreneurs. Those who have survived have been the ones willing to truly look at their businesses objectively. And in doing so, they have learned many lessons.
Business Is Personal, According to the Entrepreneur
Just recently, one of my colleagues Bernadette, whom I have known for several decades, called me for help. As I listened intently on the phone, this successful woman entrepreneur shared with me that one of her biggest clients said something to her that was devastating. Before she even began to share her story with me, I could tell by the tone of her voice she was very upset.
Indemnification Clause in the Sale of a Business
When you sell a business, typically you will find language in the Stock or Asset Purchase Agreement that defines exactly what the Seller and the Buyer agree to do or guarantee as part of the transaction. In other words, each may agree to make the other party not responsible. The term used to identify this particular form of guarantee is indemnification.
Defining the Indemnification Basket: Deductible Baskets & Tipping Baskets
The “indemnification basket” is one of the most important deal terms found in the Letter of Intent and ultimately in the Purchase Agreement and is often misunderstood by both the buyer and seller of a business. Buyers want the basket to be as low as possible and Sellers want it to be as high as possible. Baskets may be one of two types: a deductible basket or a tipping basket.
2 Ways to Increase Profit in a Business
If indeed, a greater amount of profit remaining at the bottom of the Profit & Loss Statement is what a business owner is striving for, then one should consider undertaking this exercise before attempting to grow the business by increasing sales.
How a Business Continuity Plan Unfolds
Recently I found myself looking around for a candid camera and asking “is this really happening?” You see, over the past three weeks or so, my own business continuity plan has been tested and tested and tested again.
Pivoting Your Business When Using Loan Alternatives
Many people discuss the importance of pivoting in the context of a startup business. And I agree, once a business launches, the entrepreneur must be mindful of what is working and what is not. That’s when it is time to pivot the startup.
Business Continuity Planning For Dummies
Before I share with you part two of my story about my own need to execute the business continuity plan as a result of my sudden and extended illness, I want to thank those of you who reached out to me to express your concern for my welfare. Thank you. Truly, I am doing very well and I very much appreciate your good wishes!
Stay Bonus Plan Definition
Defining Successful Entrepreneur When It Matters Most
Recently, small business owners and people who start a business were identified in both the Rasmussen Reports and the Harris Poll with the highest favorability ratings. These two reports confirm what I have observed for decades. Entrepreneurs are good people who work very hard, create opportunities and help others succeed.
Defining Special Assets Two Ways
Bankers and Entrepreneurs rarely see eye-to-eye. Recently, my observation of this unfortunate reality caused me to chuckle as I sat with one of my clients and her business banker. What made me laugh was how two extremely accomplished individuals could define the term “special assets” so differently.
Developing Ground Rules for Selling A Business With Partners
There are ways to improve the likelihood you will achieve a successful sale of your company if you take the time to develop ground rules with your business partners. The sooner you do so in the process of selling a company, the better.
5 Common Mistakes When Starting a Business
It never ceases to amaze entrepreneurs how certain seemingly simple decisions, made during the early years of their business startup, can become fatal errors down the road. After meeting with many business owners across a broad spectrum of industries it’s common to find them enduring the consequences of the same, or similar, errors over and over again.
3 Great New Years Reflections for Entrepreneurs
Just a few days before everyone rings in the New Year, I have a ritual that I undertake and enjoy immensely. It doesn’t involve highly caloric food, expensive Champagne or making a resolution. I have shared my New Year’s ritual with successful entrepreneurs and have always received a positive response. It’s really simple. It requires you to ask yourself three questions. What happens next, is up to you.
Business Valuation: What’s Irrelevant In Business Today?
I believe that paying attention to those things around you which are becoming irrelevant may reveal something which will save your company from failure. In fact, if you want to increase the value of your business, pay close attention to what is becoming irrelevant in the world around you! It may be the best thing you could do for your company.
Business Derailments — Getting Back on Track
When you are running your business, do you have those moments where you stop and ask yourself “where did that come from?” Truly, you never saw it coming. Did you?
Business Distractions, Detours and Derailers
Interruptions are normal for every successful entrepreneur. In fact, if you are not interrupted several times before you reach for your second cup of coffee each morning, I would bet you may wonder if your email or cell phone service is not working… Yes, I am guilty of expecting to be interrupted and wondering what’s wrong when I am not!
Business Detours: What Do You Do?
No, I am not talking about those annoying detours that involve orange cones, stiff fines for speeding and wasted time. Although, I have to admit each of these will help me make my point in today’s blog.
