Negotiating From a Business Owner Business Broker Perspective

As a Small business owner or Entrepreneur, we find ourselves always negotiating. We negotiate with our vendors for better prices/terms. We negotiate with our spouses to spend just a few more hours at the office before we come home for dinner. I believe everyone’s views and methods of negotiation are as different as our taste in music. My profession as a business broker certainly involves negotiations at most every step of the long process of buying and or selling a business. Someone “needs” to sell their business, he “needs to sell at this price”, according to all the other businesses for sale , his price is 3 x what other like businesses are asking, I find myself “negotiating or discussing” the merits of his target price. My previous position as an owner of a small business with 25 employees and handling manufacturing, transportation, multiple office locations, and distribution required constant negotiation. I used to formally review my employees on an annual basis. They generally expected a raise.

Before the meeting, I would calculate what the company could afford, set a range and meet with the employee. I never viewed this process as a meeting that allowed negotiation on wages. I viewed it as a means to allow di-directional feedback, but the wage increase was not an arbitrary number. Very often employees would ask for more, I think just because they thought that is what they were supposed to do- which is fine with me. They viewed this as a negotiation, I viewed it as something else.- This was just part of my personality or philosophy on negotiation. I had fantastic long term employees and we would later negotiate days off, holiday pay and other items, but raises were not a point of negotiation. Again, I think we all have our own unique views and ideas on negotiation. Very often how ones negotiates may be a matter of his or hers personality. Other time “someone told me or taught me” how to negotiate and that becomes the norm. Currently as a business broker I do have to negotiate terms and conditions of me helping a business owner sell a business. The line between negotiation and discussion does become blurred and for me I think it is fine to have business negotiations and business discussion become one and the same thing.

1. I find I don’t get so caught up on the concept of negotiation and semantics. I find that we have a business decision to resolve, we have 2 parties seeking to resolve it, and the 2 parties work together to seek resolution. Put yourself in the position of having options and the process has the potential for the best results.

2. Its not always about price. I have been through the process of negotiating leases on a facilities, annual purchase orders with major suppliers, and larger purchases of capital equipment and many other “negotiable situation. Very often the person that I am trying to reach agreement with is very strong and firm upon the price they believe is needed. And in many situations I have been willing to accept the price desired by the other party, BUT I make absolute sure the other party hold true to every other term and condition within the agreement. So my position is OK let us go with the price you desire, but it is mandated that delivery date, guarantees, support, followup and every other item involve with this matter is followed completely. At times I feel that such value can be added through the other terms that the actual price is really a value to both parties. Or as it relates to my current profession as a business owner selling a business, I will give you a $50,000 price reduction, but I want a personal guarantee on the buyer, I want 8% interest instead of the 7% interest the buyer is offering for me to finance my business, and I want the owner to stay on as a free consultant for an extra 3 months. SO the person buying the business gets the reduced price, and the seller gets some real added value.

3. One more point about price. How many times have we been working through a deal and felt the need to drive the price down to a level that the seller is willing to accept but not really happy with. Then a week later when we want this little extra help or assistance or concession and we hear “We’re already losing money on this deal and we really cant help you with that”.

4. Really a good deal is a deal that is good for both parties. Sometimes one party can leave the “negotiating table ” knowing that it is a great deal for him/her, and knowing that the other party is “taking a hit”. How does that help sustain an ongoing relationship. There are businesses that are OK with the “one and done” concept and have little regard to the effect on the other party. I think our globe is fairly small, and getting smaller and I aspire, plan and count on all business relationship being perpetual. Again the example about buying or selling a business. If you are selling a business and you want a price that is higher than the actual business can justify, and if you provide some seller financing to the buyers, what is going to be the result of you getting this inflated price. Very likely it results in the buyers of the business, not being able to make payments to you, going into default, and you having to deal again with the business that you originally sold because you had not longer wished to be dealing with it.

5. Don’t mistake negotiating with wishing or hoping. If you know the terms that you need to attain to make the deal make sense to you, be prepared to walk away from the deal. Are you making an offer and hoping /wishing the other party takes it because you know you want or “need” this product or service? Be prepared to walk away form the deal, again try to put yourself in the position of having options. If someone is wanting to buy a Towing Business and makes a bottom line offer to someone selling, it helps the potential buyer knows that there are 3 other similar towing businesses for sale in the area and is fully prepared to pursue these other options.

Best Business Laptops For Your Business Needs

The ultimate business laptop is perfect to carry around and be unnoticed, can be used to compile quick business reports and spreadsheets, and pretty much anything that goes with a business meeting should be integrated into one of these computing machines.

It goes without saying that a business laptop should be highly connectible so you never miss an important email or can attend a web conference without physically being there. It should also allow you to access certain features which keep your business up and running, so if your business is an online business, then you will probably be accessing the social media places such as Twitter, Facebook (if you have that kind of page for your business) and many others. You will be communicating with your business partners, and since it’s better to actually see who you’re talking to, a nice built in webcam should do the trick just fine.

It is important you know what makes a laptop good for business and what makes a laptop a standard consumer laptop used for everyday online activities.

That being said, let’s go through some features a business laptop should have:

Laptop size:

The size of the laptop is pretty important. It goes without saying that a small laptop, a 10 inch mini computing machine probably won’t be capable of storing much, or actually making huge calculations some software demands. Or perform pretty well when it comes to installed software. A decent size for your business laptop should be one that suits your business. If there’s a lot of data to be carried around, a decent sized laptop would probably be used to create presentations and spreadsheets. These are two things that business laptops should be able to handle. A visual representation of data is always more handy than just numbers, so make sure your portable computer can handle such tasks.

The standard size is the probably one you should go with. A 15.4 inch screen laptop is perfect if you don’t know yet what you will be using the laptop for. Also, go with a laptop configuration that is a bit above the average, to make sure it can handle itself with all the types of software it can encounter.

Power – It always boils down to power

Processing power I one important aspect of any laptop, not just business laptops. Some new models carry quite the powerhouse with them, having quad-cores and whatnot. These can get a bit expensive, but if it helps your business and increase overall productivity, then you should go for it. Just remember that a big processor on your laptop will mean a big power requirement. High end CPUs tend to empty a battery much quicker than regular ones. It’s the price you pay for high performance.

Portability – The laptop goes where the business takes you

A business laptop should be very portable so you can take it everywhere with you and don’t perceive it as a brick you have to carry around. If the business requires only a few simple computing tasks, then the best business laptops should be the ones that are small and still carry enough processing power to handle easy tasks. Think of small sized 10 inch screen diagonal laptops which you can fit into your briefcase along with other documents you might be carrying around with you. These are not powerhouses, but they simplify the whole way you do business and can store up on a lot of information.

Connectivity – Business on the go

You want to make sure that your business laptop is highly connectible since you’ll be carrying it a lot with you and you need to stay in touch with business partners or possible clients. Make sure it comes with Wi-Fi connectivity, or search for the ones that can use the mobile phone networks to access the internet. At the office you can probably use the wired connection, or, if your office is equipped with a wireless router, you can still take the laptop with you around the office and keep connected.

Laptop Looks

Get a feel for the business laptop you will be using. If it’s a business laptop, then it should go nice with a suit. It should be a standard black model and should not carry any colorful distinctive marks to attract attention to it. The laptop you carry around represents the way you do business. If you would carry a pink laptop around with you, how would that impact your business credibility? This is more of an appearance feature rather than a performance one. Choose the laptop that goes with what you do, not a laptop that’s in total contrast with your business ethic.

Laptop graphics capacity

When choosing the laptop for your business, you won’t need to look at its graphics card. High-end graphics cards are great for gaming laptops, but if its business you are doing, it’s simply not a necessity since you won’t be fooling around playing games all day long.

The best laptop for business will carry a built-in graphics card which will probably be using some of the available system RAM to run properly. Make sure your laptop is stocked up on RAM before making the choice.

In conclusion, the very best business laptop is the highly portable one, which packs quite a bit of processing power and looks great when you take it with you on a business meeting. It should be easy to use and it should also improve the way you work and never act as an obstacle in the way you do business.

Why Business Owners Need to Know The Value of Their Business Today

This article will discuss the fundamentals of business valuations and why you need one. Valuations are usually triggered by the following common events:

1) Transaction Support (for buyers and sellers)
2) Buy-Sell agreements
3) Divorce
4) SBA Financing
5) Employee Stock Ownership Plan (initial, recurring)
6) Assessment of Damages
7) Estate and Gift Tax
7) Bankruptcy and Reorganizations
7) FAS 157 Fair Value Reporting
8) Other

Business owners often overlook a valuation as a strategic tool to maximize the value for their business. The time to get a valuation is not immediately prior to a sale, but on the first day of ownership. When a business owner considers valuation in the management of a business, the business will likely be more valuable and sell faster when the time comes. Some businesses will take several months or even years to maximize value.

The value of your business is determined by what a buyer will pay. Different types of buyers will pay different amounts for a business. An industry insider will pay little or nothing for goodwill. The industry insider will pay book value or liquidation value which tends to be a lower price than what a financial buyer would pay. A financial buyer generally buys a Main Street business with a sales price of less than $2,000,000. These types of buyers will be concerned with discretionary earnings, cost to replace and debt capacity. Buyers seeking businesses above a sales price of $2,000,000 are considered corporate buyers that will rely on more sophisticated valuation techniques. They will employ excess earnings, discounted earnings, capitalization of earnings and multiples of earnings before interest and taxes (EBIT).

Valuations are mathematical calculations that arrive at a price, but the challenge is in the details. Figuring out what assets and liabilities to include in the valuation, choosing a standard of measuring their value, and then actually determining what each asset and liability is worth. For example, many business balance sheets may not include the most important business assets such as internally developed products and proprietary ways of doing business. If the business owner didn’t pay for them, they don’t get recorded on the balance sheet. Businesses without its special products or services that make it unique become a less valuable opportunity for a buyer. Business owners must be aware of this fact and structure the business to make it easy for buyers to see the true value of the business.

As you work tirelessly to meet the everyday challenges of running your own business, you may feel like you’re wasting your time reading an article on valuing your business. You’re not; if you fail to structure your business for maximum value, you will surely sell your business for less money. You may not even be able to sell your business if the value isn’t apparent to picky buyers. The U.S. Department of Commerce estimates that 3.6 million businesses are offered for sale every year, but only 250,000 are sold. Don’t be the 90% of business owners that never sell their business. Know what your business is worth and start increasing its value today.