Insurance: A Dull Subject Unless You Need It

Most business owners faithfully renew their business insurance policies every year, but how many actually review the policies on a regular basis? Unfortunately, too many business owners have never read the policies. This means, among other things, that they don't know whether the policies are continuing to adequately cover the changing needs of the business. For example, is the new expensive computer system covered? Are all the weather contingencies covered? Is the employee health coverage up to date with today's medical costs? Does you company have business interruption insurance? If so, when was the last time you reviewed it?

Now might be a good time to review all of your insurance policies...
especially if you are considering the sale of the business now or in the future...

To read the full article... click here.

Hard Times?

Now may actually be a good time to sell a business.

Given the state of the financial markets and general economy, now may seem like an unlikely time to sell a company. But selling in the current market can actually be less challenging than you think -- and may even provide benefits you haven't considered.

Determining whether to sell is always a difficult and complex decision, involving many considerations specific to your plans and business. For example, how urgent is your exit plan and how much do you hope to realize from the sale? Although the current economic environment may factor into your decision, it shouldn’t be your primary consideration.

To read the full article... click here.

Personal Goodwill: Who Owns It?

Personal Goodwill has always been a fascinating subject, impacting the sale of many small to medium-sized businesses – and possibly even larger companies. How is personal goodwill developed? An individual starts a business and, during the process, builds one or more of the following:
• A positive personal reputation
• A personal relationship with many of the largest customers and/or suppliers
• Company products, publications, etc., as the sole author, designer, or inventor

The creation of personal goodwill occurs far beyond just customers and suppliers. Over the years, personal goodwill has been established through relationships with tax advisors, doctors, dentists, attorneys, and other personal service providers. While these relationships are wonderful benefits, they are, unfortunately, non-transferable. There is an old saying: In businesses built around personal goodwill, the goodwill goes home at night.

It can be difficult to sell a business, regardless of size, where personal goodwill plays an integral role in the business’ success. The larger the business, the less likely that one person holds the key to its profitability. In small to medium-sized businesses, personal goodwill can be a crucial ingredient...

to read the full article... click here.

4 Keys to Selling In a Buyer's Market

Don't leave money on the table that could have been in your pocket.

By Mike Handelsman
Entrepreneur.com, April 13, 2010

"This is a great article for anyone considering selling their business in this economy. It is possible to sell, but the better prepared you are...the less chance you will leave cash at the table... and that's where we come in." says Ralana D. Shelley, Certified Business Intermediary at Sunbelt Indiana Business Resource.

The business-for-sale market has been slowly recovering for the past few quarters, and the first quarter of 2010 was no different. According to industry data, the number of closed business-for-sale transactions rose slightly last quarter, by 0.3 percent, as compared to the first quarter of 2009.

Although this is a relatively small increase, it's a positive sign, especially given the deep declines in closed deals in the past two years. And evidence of a turnaround is more apparent when comparing Q1 2010 data to the prior quarter, which shows a healthy 6.3 percent increase in transaction volume.

While deal volume is up, there's still downward pressure on the business-for-sale listing prices... the data suggests that it's still a buyer's market out there. This is the result of a few factors, most notalby weaker financials for selling companies, a lack of confidence from buyers that the economy will improve quickly, and a dearth of capital available to those who want to buy a business.

For business owners looking to sell in this market, there are things you can do to improve the odds of closing the deal and to ensure you receive a good price for your business. These tips will get you started.

1. Price your business right.
2. Remember you're still running a business.
3. Be willing to share some of the buyer's burden.
4. Offer a roadmap to success.

It's a buyer's market out there, but that's not necessarily a reason to hold off on selling. Business owners who get it right are still closing deals at prices that can satisfy all of the parties involved in the transaction.

* This is a synopsis...to read the full article... click here.

Life Plan Before Business Plan

This blog post kicks off a three part series on Start-up Success for Small Business Trends. Great advice for anyone looking for success in their entrepreneurial path.

By Melinda Emerson, Smallbiztrends.com

Many people dream about owning a small business. You may be one of those people who have had a “notion” for years that someday you would be president of a company, successful beyond your wildest dreams. Turning that dream into reality is an evolutionary process. It involves not only having a solid business idea but also knowing the “business of running a business.” You will need to get your arms around stuff like accounting, marketing, and operations, but before you dive into crunching numbers for your business plan, consider this:

It is my strong belief that would-be entrepreneurs need to develop a life plan before they ever write a business plan. Why, you ask?

Because entrepreneurs who don’t get clear about what they want from life run the risk of starting a business that might not be a good business for them.

To read the full article... click here.

SBA Announces Maximum Fixed Rate

SBA Announces Maximum Fixed Rate

by Ethan W. Smith, Esq.
September 30, 2009

Historically, SBA has been permitted to publish a maximum allowable fixed rate for its guaranteed loans in the Federal Register, see 13 CFR 120.213(a). However, up to this point, the Agency has not done so. Lenders have been reluctant to make fixed rate loans under the 7a program because they have been restricted to a maximum rate equal to the Prime Rate (or LIBOR Base Rate) plus the maximum rate spreads identified in 13 CFR 120.214 (d) and (e) and 13 CFR 120.215. Currently, this results in a maximum rate of approximately 6.00%, which is not a rate most lenders are willing (or able) to lock in at for a long-term loan.

Yesterday, the SBA published in the Federal Register, its guidelines for calculating fixed rates for long term 7a loans, effective October 1, 2009.

The new guidance establishes a calculation for a "Fixed Base Rate" which is equal to the LIBOR Base Rate plus the average of the 5-year and 10-year LIBOR SWAP Rate (each as established on the first calendar day of the month). The maximum allowable fixed rate for 7(a) loans (excluding SBA Express and Export Express) will be calculated using the Fixed Base Rate plus the same spreads available on variable rate 7a loans, typically between 2.25% and 2.75%. See 13 CFR 120.214 (d) and (e) and 13 CFR 120.215.

Accordingly, the maximum fixed rate for loans with a maturity greater than seven years would be 9.17% using the September, 2009 LIBOR Base Rate (3.26), plus the average 5 and 10 year LIBOR Swap Rates (3.16), plus the maximum spread (2.75).

"This is good news for lenders and borrowers" says Bob Stephan of Coastal Securities, "Borrowers want to take advantage of this low interest rate environment to lock in a fixed rate, but lenders need a rate higher than what was previously allowed, in order to make offering a fixed rate feasible." Additionally, Stephan says that lenders can sell the guaranteed portion of their fixed-rate loans for a premium in the 4 point range and can still retain a 1% servicing fee, thereby reducing their exposure to these fixed rate loans.

The new maximum fixed rate policy is effective for loans submitted on or after October 1, 2009.

Restaurant Financing 2009 Update Re-cap

Restaurant Financing 2009 Update Re-cap
-From Colemanpublishing.com

September 15, 2009

2009 Restaurant Financing Update
-Roughly 50,000 SBA loans since 2000
-$11 Billion 7(a) and 504
-1 out of 9 SBA Loans finance restaurants
-15% failure rate
-12% of all Charge-offs since 2000
-1 Million Restaurants in United States
-(1 Restaurant for every 320 Americans)

Nathaniel Booker, President of First Innovative Financial Group, Inc. explains, "Quite often many of the deals that we have done are in strip centers, sometimes in malls. This is why it's very critical underwrite the business.

When you underwrite the business, you're underwriting the owner, management is very critical.

You want someone who has experience operating a restaurant. If they are opening up a second or third location you mitigate your risk of loss. When you're opening up a new location you need projections that are listed and supportable. Many of them don't do what I consider very critical analysis regard to table turn.

Chris Hurn, President & CEO of Mercantile Capital Corporation explains, "I want to see that they know their space well. If they're a sit down or fast casual, knowing what else is around that particular location is helpful.

"I'm a big believer that you can tell a lot about a company with the kind of measures restaurants have in place to try and make it such that the employee's enjoy what they do and then actually show it to the customers as well.

"Is the experience delivered consistently every single time? In the case of restaurants, do the waiters or waitresses check their attitudes at the door and they put on a performance when they're there. These are all non-financial, intangible items, but it's important to know that. It helps a lender contemplate doing a particular loan to know some of these things because it gives you a better feel for what this concept is going to be like and whether they should actually do it or not.

New SBA Changes

With its release today of SOP 50 10 5(B), the U.S. Small Business Administration dramatically altered its requirements regarding goodwill financing. The current rules, which were implemented on March 1, 2009, restricted lenders' ability to finance goodwill under the 7a program to the lesser of 50% of the purchase price or $250,000, whichever is less.

The new rules released today significantly modify the existing rules. In summary, the new rules provide that if the purchase price of a business includes intangible assets (including but not limited to goodwill, client/customer lists, patents, copyrights, trademarks, and agreements not to compete) in excess of $500,000, the borrower must provide an equity injection of at least 25% of the purchase price of the business to process the loan under PLP delegated authority. The new regulations further provide that the borrower's equity can be any combination of a direct contribution from the borrower and a seller note that is on full standby for minimum of two years. The new SOP provides that exceptions to this new policy may still be submitted under CLP or GP processing.

New requirements effective as of 10/1/09

Six Ways to Speed Up SBA Loan Approval

Six Ways to Speed Up SBA Loan Approval

By DIANA RANSOM

Attention small-business owners: Time is running out on an opportunity to access fee-free business loans that are guaranteed up to 90%.

Earlier this year, the Small Business Administration set aside $375 million to temporarily eliminate loan fees and increase the agency's loan guarantee to 90% for certain loans. The moves were part of the American Recovery and Reinvestment Act (ARRA), which was signed into law by President Obama in mid-February. So far, the SBA has used about 55% of those funds; they have translated to $6 billion in loans under the 7(a) and 504 programs, says John J. Miller, an SBA spokesman.

However, barring another act of Congress, SBA-backed loans will revert to their pre-Recovery Act status by the end of November or December, Miller says. The impact will be palpable. Loans made once the funds run out will only get a 75% to 85% guarantee, down from 90%. The decrease will make it tougher to get approved for a loan because lower guarantees raise a bank's risk, says Eric Grimstead, a business advisor at the Center for Economic Vitality at Western Washington University in Bellingham, Wash. In addition, business owners taking out loans through the SBA loan will have to pay a 2% to 3% loan guarantee fee again, he says.

November is more than two months away, but given that the SBA loan approval process can take as long as 120 days, applicants had better get cracking, says Dave Mulcahy, the director of the Small Business Development Center at Lamar University in Beaumont, Texas.

Here are six ways to speed up the application process for SBA loans:

Update your financials
To accelerate a loan's approval, prepare and provide at least three years of tax returns and up-to-date financial statements, including income and cash-flow statements, balance sheets and sales projections, says Tom Burke, the senior vice president of Wells Fargo SBA lending in Minneapolis. If you don't have a business plan, write one. And if you don't have a marketing plan, write one of those too, he says. "Business owners have to be able to show that they can pay everyone back," Burke says. (Click here for the SBA's loan application checklist.)

Tap a preferred lender
Use a preferred SBA lender such as TD Banknorth or KeyBank, Grimstead says. Conventional wisdom says business owners should consult a bank with which they already work, but if that institution doesn't currently work with SBA loan programs, the process can be take weeks longer than comparable loans at SBA-ready lenders, he says. Not only is there a massive learning curve when working with SBA programs, which are complex and change frequently, but nonpreferred lenders also have to send loans into the SBA for approval, which can take up to four weeks, Burke says. Conversely, preferred lenders are generally able to underwrite their own SBA loans, he says.

Ensure the right fit
When scanning the list of preferred lenders, find ones that cater to businesses like yours, Burke says. For instance, some banks won't authorize SBA loans to start-ups. Others may avoid restaurants or other similarly risky ventures, he says. Also, take into account differences in banks' credit policies. For instance, Wells Fargo will extend a real estate loan for 25 years, but other banks do so for just 20 years.

Hedge your bets
Even if you secure the word of a preferred lender, make sure you've applied to a couple other banks backups, Grimstead says. "Some borrowers get three or six or even 12 weeks into the process only to get a 'no' from someone at the bank," he says. To slash your risk of rejection, apply to a few different banks at the same time. (Note that going through the application process at several banks will not harm your credit, says Mulcahy, from the SBDC in Beaumont, Texas.)

Offer more backup
SBA loan programs often require less of a down payment than typical business loans, says Becky Naugle, the state director for the Kentucky Small Business Development Center at the University of Kentucky in Lexington. For instance, banks providing normal business loans might require owners to put 20% to 40% down, but banks working through an SBA program might require just 10% down. Despite this lower standard, consider putting more down or offering some sort of personal guarantee, she says. "If particularly risky business owners can mediate a [bank's] risk by having a personal guarantee, that could push it through faster," she says.

Get help
An experienced business advisor can also help push your company's loan through quicker, Burke says. Check out a local Small Business Development Center, or tap a volunteer business professional in your area via SCORE, a nonprofit business counseling service, he says. There's also at least one SBA district officer in each state whom business owners can ask questions about SBA loans.

Marketing in an Economic Downturn

Marketing in an Economic Downturn
By: Tony Fannin - President, BE Branded

Category: Marketing and Brand Development

In a down or tight economy the most rational thing for a business to do is conserve cash, cut costs, and invest less. Just hang on tight and hope your customers remember you and how wonderful you've been to them in the past. It happens time and again that I see the first thing to go is marketing budgets. Many believe that the best time to market is during the boom times.

The counterintuitive thing to do, and the most strategic, is to market as aggressive as you would if the economy is doing well. Here are several points why:

1. The chatter is down – what I mean by that is "everyone" is pulling back their marketing dollar, including your competitors. This opens up opportunity to be one of the minority of voices heard in the market space or your market niche.

2. The cost goes down – many media vehicles, including web, are ready to make deals. With the same marketing dollar you'll be able to garner more value from your investment because of simple supply and demand. With more supply, you'll be able to demand greater value.

3. Consumers find refuge in brands – this gets a little tricky because you'll need to have established your brand during the good times. When the economy tightens, research has shown many consumers fall back to brands they are familiar with and trust. Of course, there are always exceptions in various industry categories such as food (price is king here, but brands still dominate. i.e. McDonalds, Spam, Campbell's). But, if you've established your brand when the times are good, you've helped insulate yourself some when times are not so good.

4. You'll be stronger when the economy changes – because you've stayed visible while everyone else went dormant, your brand awareness and value will have given you an established platform to launch from when the economy gets going again. Plus, it will take less because your marketing machine is already in motion and hasn't stopped. Others will have to re-establish their brand and market value from a dead stop which means spending even more money and paying premium rates across the board because their will be less supply and more demand from magazines to web banners and everything in between.

Here are a few examples and comments from other marketers:

P&G, Colgate-Palmolive, Kraft Foods, Kellogg Co.

In a testament to how important advertising has become to their businesses, Procter & Gamble Co., Colgate-Palmolive Co., Kraft Foods and Kellogg Co. all have boosted or at least maintained their marketing budgets, even as they've had to implement cost controls elsewhere. And that trend looks set to continue as these giants are forced to hike prices in response to rising commodities costs – a move that will require them to continue pitching consumers on the merits of their brands.

P&G and Colgate last week reported stronger-than-expected organic sales growth, at least in the U.S., along with strong earnings growth. Both said private-label market shares were flat to down in their categories. The spending hike appears to have helped P&G pull out a surprising 6% sales increase in the U.S. last quarter, more than double the 2%-3% growth in retail sales it tracked in its categories and ahead of its 5% organic sales growth globally."

Bounty paper towels. It may reside in a commodity category where private label has been making big gains, yet Bounty has been gaining share throughout the downturn. Parent Procter & Gamble reported in January that Bounty's U.S. value share grew 1.5 points to more than 44%. The brand has continued to innovate within its premium product line without ignoring its lower-priced Bounty Basics line. Bounty has also maintained a strong marketing presence and honed its value messaging."

Anne Bologna – CEO, Toy

"In the Great Depression, Kellogg continued to market its cereals while rivals cut budgets. Kellogg pulled ahead of Post in sales, a change that has never been reversed. Point is, what you sacrifice now, you pay for later. Every thinking business person knows that, but few have the courage to invest. Be brave. You'll never regret it."

Joe Tripodi, CMO – Coca-Cola Co.

"Don't waste this opportunity to enhance brand love. This is the time to engage people and deliver experiences that excite them in unexpected ways. As an example, we recently introduced a new global marketing campaign around the idea of 'Open Happiness.' We are bringing it to life not only through traditional advertising but through the release of a music single, online experiences, social media, impactful point-of-purchase materials and the integration of the core creative idea into all of our existing properties, like the upcoming Winter Olympics in Vancouver. This is not the time to stop talking with consumers. If you use this opportunity to broaden your dialogue with the people who love your brands, you will come out of this period with a much stronger and deeper relationship with them."

In the end, it's about keeping your value and uniqueness out there, regardless of the conditions. In every downturn, there's opportunity. Being brave, bold, and unwavering in your brand and value your company brings is the only way to take advantage of the situation and not just trying to react to it.

Recovery Act Changes To SBIC Program Mean Increased Funding Available For Small Businesses

U.S. Small Business Administration


-- News Release --


*********************************************

Release Date: July 10, 2009
Contact: Dennis Byrne (202) 205-6567
Release Number: 09-47
Internet Address: http://www.sba.gov/news


Recovery Act Changes To SBIC Program Mean Increased Funding Available For Small Businesses

WASHINGTON – Effective today, small businesses that would otherwise have difficulty securing private equity or venture capital may find funding easier to get as a result of changes made as part of the American Recovery and Reinvestment Act to the U.S. Small Business Administration’s Small Business Investment Company program.

“The Recovery Act expands SBA’s venture capital program to increase the pool

of investment funding available to the Small Business Investment Companies licensed by SBA,” said SBA Administrator Karen G. Mills. “We believe those companies will be better equipped by these changes to help sustain and grow small businesses for their next important growth steps.”

SBICs are privately owned and managed venture capital firms which are licensed and regulated by SBA. SBICs use a combination of funds raised from private sources and money raised through the use of SBA guarantees to make equity and mezzanine capital investments in small businesses. There are approximately 338 SBICs with $17.4 billion in capital under management.

The changes made as part of the Recovery Act are:

•The Recovery Act makes SBICs eligible for greater SBA guaranteed funding and requires SBICs to invest 25 percent of their investment dollars into “smaller” businesses. Also, the amount of funding an SBIC may invest in a single small business is set at 10 percent of an SBIC’s total capital rather than the previous limit of 20 percent of an SBIC’s private capital only. This translates to an effective 50 percent increase in funding available to a single business by an SBIC.

•Maximum SBA funding levels to SBICs will increase up to three times the private capital raised by the SBIC, up to a maximum of $150 million for single SBICs, or up to $225 million for multiple SBICs that are under common control.
The cap for all licensees was set at $137.1 million before the Recovery Act.

•These limits are even higher for SBICs that are licensed after October 1, 2009, that certify that at least 50 percent of their investments will be made in small businesses located in low-income areas, up to $175 million for single licensees and up to $250 million for jointly controlled multiple licensees.

•Changes made to the SBIC program under the Recovery Act are permanent.

Industry associations have commended SBA for these changes and SBA continues to encourage new SBICs to apply for licensing and actively participate in the program.

The SBIC program was created to stimulate the growth of America’s small businesses by supplementing the long-term debt and private-equity capital available to them. Since the SBIC program’s formation in 1958 through April

2009, it has invested approximately $56 billion in more than 106,000 small businesses in the United States. For more information about the SBA’s Investment Division and SBIC program, go to www.sba.gov/INV or call 1-800-U ASK SBA.


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Webinar - Preparing Your Business For Sale: Using an Intermediary to Maximize Value

Sunbelt Indiana Business Resource is hosting a free webinar!

Preparing Your Business For Sale: Using an Intermediary to Maximize Value

If you have ever considered selling your business, you won't want to miss this free webinar. You will hear from two experts that will explain how the process of selling a business works, what you can expect from a professional intermediary, and how to maximize the value of your business. ANONYMITY - you will be able to log in and listen/participate without disclosing any information about yourself or your business.

If you are interested or would like more information, please email webinar@sunbeltindiana.com or call 317-218-8629.

SBA Lenders Pick Up Steam

SBA Lenders Pick Up Steam
Small Business Lender Sentiment Survey
On Lending and Employment
June 2009

More lenders lending again thanks to secondary market improvements!
The SBA is hiring more lending people than all banks combined.

This months’s survey provides promising news. More banks are lending again and the SBA is reporting significant improvement in the number and dollar volume of loan approvals. Almost all SBA districts are reporting sharp increases in loan activity in April and May. The PLP Approval Office is hiring credit staff as quickly as they can find them. This encouraging sign shows a strong commitment by the SBA to a continued quick turn on PLP approvals.

While more loans are being approved, credit remains as tight as it has been all year. However, the number of small business applications continue to rise. Those interviewed for this survey reported high loan applications. And it appears the customer is more willing than ever to meet the lender’s loan requirements to get approval. This includes additional capital injections and providing more collateral as requested. In addition, there is very little argument over the pricing of the loan.

Many lenders have reported that the biggest issue they are facing is real estate appraisals that continue to come in lower than required. This is particular true in hard hit states like Florida, Nevada and California. And apparently, sellers are more willing than ever to negotiate to make the deal work.

The industry is showing signs of improvement but, it appears that this economic recovery is going to be protracted. With growing delinquencies in commercial real estate loans, credit managers are not likely to loosen up approval parameters in the foreseeable future.
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Click HERE to view the rest of the article.

Using Technology to Increase Business Value Before a Sale or Merger

Using Technology to Increase Business Value Before a Sale or Merger

“My friend Norman Katz contributed this great article” Chris

Improvements in information technology and business processes can make an important difference in not just the perceived value of a business, but the actual value too.

Technology improvements that are visible to potential buyers are the business software applications that run the company. The Enterprise Resource Planning (ERP) system is typically the core business software application, encompassing functions such as purchasing, sales order processing, accounting, inventory control, manufacturing, and distribution. Sometimes separate applications for inventory control or fixed asset management can be implemented to gain quick control of chaotic situations. And with chaos controlled and business processes running smoother, a potential buyer will see a well-run – or at least better-run – enterprise. Further, new business software enables better reporting, showing the potential buyer information based more on fact than on fiction.

The use of barcode scanning for fixed asset management, inventory control, picking & packing, and receiving showcase a company that has kept up with available – and quite affordable – technologies and is operating more efficiently than one who still processes such information manually. In fact, such technology implementation may be required in order to provide potential buyers with satisfactory reports in regards to the company’s operations and financial position.

For companies who are required to conduct business with customers via Electronic Data Interchange (EDI) and have taken steps to integrate inbound and outbound data to business software applications (i.e. the ERP system) showcase to potential buyers that they are committed to reducing non-value-added manual processes such as data entry of information, which is also prone to errors.

And while the implementation of such up-to-date technologies does not mean that fraudulent activities have been reduced, there is an argument that the use of such technologies does go along towards the mitigation of fraud versus manual or paper-based transactions.

Advances have made these technologies achievable (affordable and available) for even small business owners to embrace and represent a worthwhile return on investment.

Norman Katz is President of Katzscan Inc., a consulting firm located near Fort Lauderdale, FL specializing in supply chain technologies, business operations, turnaround management help, and fraud & risk detection & reduction. For more information, please contact Norman through the company web site at www.katzscan.com.

Book: Selling Your Business for Dummies

Feel free to check out the book: "Selling Your Business for Dummies" by Barbara Findlay Schenck.

Foreword by John Davies, CEO of Sunbelt Business Brokers.

Stimulus Prompts Small Business Loan Scams

Stimulus Prompts Small Business Loan Scams

Though the SBA doesn't give stimulus package loans directly to small businesses, savvy scammers would have you believe otherwise

By Karen E. Klein

Q: My sons own and operate an architectural/engineering firm and a steel fabrication firm. These are Main Street firms, needing operating capital. What department of the stimulus package do they apply to for a loan?

—J.R., posted online

A: The American Recovery & Reinvestment Act (also known as the "stimulus package") signed into law last month provides $730 million to beef up the loan guarantee programs of the U.S. Small Business Administration. Part of that sum is supposed to reduce the fees that borrowers pay for SBA-backed loans and to increase government guarantees on the loans, making them more attractive for bankers. These measures are designed to help thaw the current credit freeze.

Another program in the works, a joint Fed and Treasury program known as the Term Asset-Backed Securities Loan Facility, or TALF, also aims to get credit flowing again to Main Street borrowers.

However, it is important for your sons and other small business owners to realize the government does not give loans directly to small businesses. The government works through commercial lenders, such as banks, by guaranteeing the small business loans of banks that participate in their loan programs.

The confusion on this point has unfortunately opened the door to fraudulent operators who charge fees purporting to help small business owners and individuals get government money, says Alison Southwick, spokesperson for the Council of Better Business Bureaus in Arlington, Va. "Anytime there's a story dominating the headlines, scammers are going to take advantage of it," she says. "When people hear the word 'stimulus,' they know that's something they heard about in the news, so it must be legitimate."

Hundreds of complaints have poured in to the BBB in the weeks since the stimulus package was passed, she says, most of them from people who responded to Internet ads leading to Web sites featuring "testimonials" from individuals claiming they got government money to start businesses or pay off bills. For a fee, many of the Web site pitches say, they'll send you a CD or a mail-order kit explaining how to have access to government stimulus money.

Lucky Winners?

These Web sites are extremely misleading, Southwick says, including some that incorporate blogs that appear to be written by the lucky winners of all that stimulus cash. However, not only is the government not cutting checks to would-be entrepreneurs, you don't need to pay for information about SBA loans or government grants (most of which are available only to nonprofit organizations or very specialized research companies).

"They're charging you for free information, in the first place. And maybe they send you a CD or maybe they don't. But what happens is that people's credit cards start getting billed and there's no way to stop it," she says. "A woman I talked to today said she started getting billed not only for the stimulus information but also $25 per month for a newsletter she didn't want, either."

Victims often wind up paying $60 to $80 a month, and if they don't realize it, the scam can go on indefinitely. "They keep on billing and hope that a certain percentage of people aren't going over their credit-card statements closely," Southwick says. Even those who catch the unwanted charges often find there's no way to stop the billing unless they cancel their credit cards.

The bottom line: Provisions of the stimulus package and other government programs are aimed at increasing access to government small business loans and getting the banks back in the business of loaning money again. Good information about SBA loan guarantee programs is available here. Other government sites offer free information about grants, student aid, and government benefits.

There is no reason to pay for software or guides to apply for government loans or grants. Companies that offer such information for a fee—when it is already available for free online—are likely to be scams, so stay away from them.

Karen E. Klein is a Los Angeles-based writer who covers entrepreneurship and small-business issues.

Good Time To Sell

Most news for small business owners isn’t so hot. Business owners believe that waiting out the economic storm and their retirement is a prudent fiscal move. While this notion has merit, awaiting better economic times does not necessarily ensure higher value(s) when the business is sold.

The unfortunate reality is that in many instances value deteriorates due to external forces (economy) as well as internal forces (the business owner). There was a study a number of years ago that suggested that an owner actually becomes less effective over time (7+ years) as the original enthusiasm wanes. As business owners approach retirement, it is not unusual to see a decrease in revenue and profits as the business begins “retiring” before the owner does. The result is that the business owner may delay retirement but not increase value equity.

The sale of a profitable company in this environment (or any other) is a viable strategy for business owners who are committed to sell. Value is a very fluid and timing often makes a difference in acquisition prices. Quality sells in any economic environment and profitable, motivated, flexible businesses that are properly positioned are still in demand.

Despite the economic conditions, limitation on credit, and changes to government backed loans, which are forecasted to continue for the near future; we have not experienced a significant slowdown in buyer inquires. However, over the last six months we have noted the following:

• Displaced “blue collar” buyers are seeking to “buy a job”
• Middle management individuals caught in layoffs are utilizing severance or their own 401(k)s to invest in going into business for themselves. Alternative investments such as the bank or the stock market are not nearly as attractive as they once were.
• Strategic (or synergistic) buyers and Private Equity Groups (PEGs) are actively seeking add on or platform acquisitions.

The Business Brokerage Press cited that the business value for most owners equates to approximately 75% of their net worth! This is a considerable statement when evaluating the time to sell and price positioning. Our experience is that planning is key to maximizing value. We have had clients who we started dialog with years ago who heeded (and some not) our advice on the necessary preparations and will fare well as we begin confidentially exposing their business to the marketplace.


For More Information Please Contact:
Ed Mysogland
Managing Partner
317-218-8616
emysogland@sunbeltindiana.com

Optimism Index: Article by Anita Campbell

This is an Article by Anita Campbell from Small Business Trends:

The NFIB’s latest report on small business sentiment is out. The NFIB’s Optimism Index is one of the longest standing indices of small business sentiment, and so I tend to place a lot of weight on it.

It shows that conditions and sentiment are not a pretty sight among small businesses.

Although there have been some tiny signals — albeit weak signals — from other sources suggesting things may be looking up in the economy, you wouldn’t know it from looking at the NFIB report. First of all, there’s this chart:


Pathetic looking, isn’t it? You don’t even have to know what the numbers stand for to know that’s a bad chart — the steep downward line speaks for itself.

Essentially, this chart is saying that the Small Business Optimism Index of the NFIB is near an all-time low – actually the second lowest reading in the 35 year history of the NFIB survey. Only during the 1980-1982 recession was the index lower.

Remember, this is a group of small business owners reporting their sentiment — how they feel — about the economy. The survey was taken during March 2009 of 867 small business owners.

And how do they feel? Not so hot.

Employment among small business firms is down. profits are down, capital spending is down — well just about any number you look at is down.

But there is a silver lining, according to William Dunkelberg, the chief economist of the NFIB. He says that such a sharp downturn as we are in now, is leading to pent-up demand for spending. That means we are likely to have a sharp upturn once the economy starts recovering, as he writes (emphasis added):

“Small business owners are clearly cutting costs at a very rapid pace (as are larger firms as well), which primarily involves reducing employment. Cost cutting is likely being over-done since there is uncertainty about the future, in particular when the recession will end, and earnings are in the tank. What this portends, however, is a rapid improvement in employment and earnings once the economy establishes a forward momentum. Sharp recoveries are possible only after sharp declines. Capital spending and inventory investment are at or near record low levels and, more importantly, have remained their longer than during any recession in the 35 year NFIB survey history. This is feeding an ever enlarging pool of “pent-up demand”. Consumers are accumulating a similar pool of unfilled spending needs as well. Car sales will not continue all year at the 9 million rate recorded at the start of 2009. More will be bought, not a return to 16 million, but a gain. Normally, well over a million new homes, apartments and condos are needed each year, but new construction is a third of that. More houses will be built. This will be the start of the private sector rescue of the economy. Some fiscal stimulus will start to filter in, but it will, as always, be late to the party. The “stimulus package” and the political urgency surrounding it was a smoke screen for other agendas.”

So there you have it from the NFIB Small Business Economic Trends report for April 2009 (PDF): not a pretty picture now, but once things start to recover — things could go up up up.

I agree with the assessment about a sharp recovery. We’ve been affected by the non-stop media coverage about the economy and crises and bailouts — beating into our heads how bad things are — making a bad situation seem much worse. Naturally people stopped spending, out of fear. When you don’t spend in a consumer economy like ours, it becomes a self-fulfilling prophecy as demand drops. Then sales drop, then employment drops, and everything slows or declines like dominoes falling.

It’s time to shake off this climate of fear and get on with the economic recovery.