Your Exit Strategy

September 20, 2009

noreply@blogger.com (Unknown) — Tue, 29 Sep 2009 12:47:00 +0000

Things to ask before you redo your website

From Seth Godin

I don't do any consulting, but that doesn't stop people from asking me questions. The most common question people ask me when they want a new website is, "If you were in charge of this, who are the 2 or 3 people you'd want to be sure to talk to - to help think through the issues, help us figure out who should do the work, etc.?"

The second most common question people ask me, "In addition to Apple's site, are there 2 or 3 that you think are really appealing and work well for their business?"

I think these are perhaps the tenth and eleventh questions you should ask, not the first two. Here's my list of difficult and important questions you have to answer before you spend a nickel:

Read the rest of the article on the Seth Godin's Blog here

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Need A Good Laugh?

The News from Saturday Night Live - Did they really say that?

Check out the video:

http://www.dailymotion.com/video/xaikx4_saturday-night-live-update-bloopers_fun?from=feedblitz_562756_2525117

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What do you do if you discover that you are an identity theft victim?

We're all at risk:
Do you hand your credit card to restaurant servers?
Do you receive mail at your home?
Do you shop on the Internet?
Do you shred all discarded personal mail?

What if it happens to you:
How many phone calls must you make?
What agencies do you call?
How many hours will it take?
How much money will be lost?

I strongly recommend identity theft protection through Identity Theft Shield because it combines monitoring with actual identity restoration unlike most, if not all, of those you see advertised.

Don't leave yourself unprotected, find out about Identity Theft Shield here

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HOW TO:

Make Facebook Your Company Newsroom
by Josh Peters

Josh Peters is a freelance social media consultant who has been deeply involved in the research and application of social media for several years and is the co-author of TwittFaced. He blogs at Shuaism and would love to connect with you on Facebook, LinkedIn, and/or Twitter

. . .

Having an online newsroom for your company is a very important way to provide information about your business for customers, bloggers, and journalists. Through a well put together newsroom, you can control the story in order to make sure news about your company reflects what you want out in the public. Unfortunately, most corporate newsrooms are boring, static, and sometimes days late getting info up. Facebook can help you change that.

Read the full article

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5,000 Children Die Every DAY from Unclean Water

World Best Water Purifier

Dean Kamen (Insulin pump, portable dialysis machine, Segway) invented a great water purifier to solve the problem of fresh water in all over the world. As we know the fresh and pure water is not unlimited. Actually it's decreasing in quantity and quality day by day. Dean Kamen invented such a great water purifier which converts any kind of bad water into distilled water, in very low cost.

Watch this video

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James Montgomery

Of Counsel

ELMS ♦ HARMON ♦ MACCHIA, LLC
7800 IH 10 West, Suite 600
San Antonio, Texas 78230

Phone is the same: 210-690-3700

Fax is the same: 210-568-4550

The Network Drive office closed September 15, 2009.

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Welcome to my new subscribers, and thank you to those who are forwarding this email to your friends and business associates. The subscriber list is growing substantially. Please feel free to forward to a friend.

If you are reading and wish to subscribe on your own, please go to www.jamesmontgomerylaw.com and just subscribe at the top right of the page.

Thank you for sharing this newsletter!

______________________________________________________________________

The market for buying and selling businesses is good.

There is money looking for deals. Looking at options never hurts and we are offering a free 30 minute consultation to discuss how to maximize your sale or purchase.

Call me to do some planning: 690-3700

_______________________________________________________________________

Have a great Sunday!

James Montgomery

www.jamesmontgomerylaw.com

yourexitstrategy.blogspot.com

Of Counsel:

Elms Harmon Macchia, LLC

7800 IH 10 West, Suite 600

San Antonio, Texas 78230

210-690-3700

210-568-4550

Newsletter - September 13, 2009

noreply@blogger.com (Unknown) — Mon, 21 Sep 2009 14:33:00 +0000

To Sell or Not To Sell

After the decision to start a business of your own, perhaps the most challenging decision you can make is whether to sell that business. You conceived it, built it, poured your lifeblood into it, and now find yourself with a viable, profitable enterprise you can call your own. You have built an asset! Now... what to do with it?

For many business owners, the prospect of selling their business is both daunting and alluring. For others, it is something of a dilemma - how do you decide whether selling is the best strategy?

Read the rest of the article on the E-Myth Blog here

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Top 10 Tactics For Protecting Your Stuff

Laptops, wallets, old hard drives, identity theft, etc.

Find out more:

http://lifehacker.com/5357929/top-10-tactics-for-protecting-your-stuff

I strongly recommend identity theft protection through Identity Theft Shield because it combines monitoring with actual identity restoration unlike most, if not all, of those you see advertised.

Don't leave yourself unprotected, find out about Identity Theft Shield here

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As axis of power shifts, Wall Street goes to D.C.
Finance firms increasingly look south in wake of federal foray into economy

By David Cho, Steven Mufson and Tomoeh Murakami Tse WashingtonPost.com

. . .

Washington has become a dominant player. Over the past year, the Federal Reserve and the Treasury have injected trillions of dollars into frozen financial markets, snapping up unwanted bonds, extending guarantees to banks and slashing interest rates.

Three times as much U.S. taxpayer money has gone into propping up a single firm, insurance giant American International Group, as the world spent a decade ago during the financial rescue of South Korea, then the world's 11th-largest economy. And the emergency bailout of financial firms that Congress approved last year has cost nearly as much as the first five years of the war in Iraq.

Now the Treasury and the Federal Reserve are embroiled in everything from credit cards and home loans to auto manufacturing, from overseeing executive pay to shaping boards of directors.

. . .

Enjoying the new Administration in Washington? Are you ready to turn Wall Streeters loose on Washington? You must read this entire article.

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Best (and Worst) Performing S&P 500 Stocks Since March Bottom

Bespoke blog shows us the top performing stocks in the S&P 500 since March 9th. Note - while the intraday low of 666 was reached March 6th, the S&P 500 closed at 683 that Friday. The true "closing" low was actually that following Monday the 9th when the S&P 500 closed at 676 (lower than the Friday close). However it is much more spooky and cool to say, the market bottomed on the 6th at 666.

Whatever the case, it seems impossible to believe that that bottoming event happened earlier this year; it now feels like it was a few eons ago.
. . .

Check out the chart which shows the top twenty-five stocks!

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Announcing My New Address:

James Montgomery

Of Counsel

ELMS ♦ HARMON ♦ MACCHIA, LLC
7800 IH 10 West, Suite 600
San Antonio, Texas 78230

Phone is the same: 210-690-3700

Fax is the same: 210-568-4550

The Network Drive office will close September 15, 2009. I will miss it (and being able to office with Dennis Templeton) but I am excited about my new business model and the opportunities that it will bring.

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If you are reading and wish to subscribe on your own, please go to www.jamesmontgomerylaw.com and just subscribe at the top right of the page.

Thank you for sharing this newsletter!

______________________________________________________________________

The market for buying and selling businesses is good.

There is money looking for deals. Looking at options never hurts and we are offering a free 30 minute consultation to discuss how to maximize your sale or purchase.

Call me to do some planning: 690-3700

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Newsletter - September 7, 2009

noreply@blogger.com (Unknown) — Mon, 07 Sep 2009 13:50:00 +0000

Announcing My New Address:

James Montgomery

Of Counsel

ELMS ♦ HARMON ♦ MACCHIA, LLC
7800 IH 10 West, Suite 600
San Antonio, Texas 78230

Phone is the same: 210-690-3700

Fax is the same: 210-568-4550

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Welcome to my new subscribers, and thank you to those who are forwarding this email to your friends and business associates. My email was opened two times more than the number on my mailing list in the last two weeks which means that it is being forwarded a lot. The subscriber list has also grown substantially. If you are reading and wish to subscribe on your own, please go to www.jamesmontgomerylaw.com and just subscribe at the top right of the page.

Thank you for sharing this newsletter!

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How Low Can It Get?

See for yourself! http://digg.com/odd_stuff/Man_That_s_Low

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In The New York Times . . .

In the New York times of July 26, 2009 David Streitfeld wrote an article that is entitled "When Debtors Decide to Default". The premise of the article is that we are reaching a point in the economy when debtors are intentionally deciding to default on credit card bills.

The scenario is something like this: a consumer who is financially strapped, borrows money either for personal or business needs, through offers received in the mail from credit card companies at very low interest rates. The consumer is able to make payments at the low rate but really does not reduce the principal of the indebtedness.

Something happens and the consumer either misses or fails to timely pay a payment. For example, many of the card companies require that a payment reach them by 10:00 AM when the mail was not even delivered until the afternoon. The payment is then not credited until the following day. (The bill which has recently been passed in the Senate and will probably pass the House this week provides that payments received prior to 5 PM must receive credit).

The credit card company, based on the late payment, then charges a monster late fee and probably jacks up the interest rate over 20%. The consumer now has a debt that will compound to the point that it simply cannot be paid. The credit card company, in its infinite wisdom, creates a situation that is guaranteed to cause a failure in the interest of its quest for profits.

The New York Times article makes the point that consumers, faced with this situation, become what the industry calls "ruthless defaulters." Another term would be just as apt "intentional defaulters."

Credit card debt settlement negotiation has become commonplace. The debtor intentionally stops making payments as the only route to get the attention of the credit card company. After six months, the credit card company must by federal regulation write off the debt. At that point, the credit card company has little alternative but to sell the debt to a third-party collector for mere pennies on the dollar.

A window of opportunity opens for the consumer to purchase the debt for about $.30 on the dollar with a notation on the credit report that the debt was "paid as agreed." This situation gets the credit card company more than it would receive otherwise and helps the consumer to clear the decks without having filed bankruptcy, which would be the other alternative.

The author in the New York Times article recognizes that with the current state in the economy, the defaults for credit card companies may become a major problem in the next year.

You can read the entire New York Times article in the week in review section of the Sunday Times. www.nytimes.com

For more information on how someone can take advantage of credit card settlement, go to www.JimMontgomery.WordPress.com or call me at 690-3700.

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The market for buying and selling businesses is good.

There is money looking for deals. Looking at options never hurts and we are offering a free 30 minute consultation to discuss how to maximize your sale or purchase.

Call me to do some planning: 690-3700

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Top 10 Sites For Online Coupons & Promotional Codes

Check out the resources on this website:

http://www.makeuseof.com/tag/top-10-sites-for-online-coupons-promotional-codes/

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Bizarre Animal Behavior: Alcoholic Vervets, Shark Eating Baboons, Mushroom Tripping Reindeer And More!

You have got to take a look at these.

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Are You Happy?

Check out these five recommendations for true happiness

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For the politically interested out there

Like the economy under the new administration? Can't you just wait for the new national healthcare program? Will the Republicans rebound?

Continue reading this story here . . .

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Thinking about traveling to China?

Find out about the Forbidden Palace (awesome pictures)

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Have a great Sunday and a fantastic Labor Day tomorrow!

James Montgomery

www.jamesmontgomerylaw.com

yourexitstrategy.blogspot.com

Of Counsel:

Elms Harmon Macchia, LLC

7800 IH 10 West, Suite 600

San Antonio, Texas 78230

210-690-3700

210-568-4550

The Rules Have Changed . . .

noreply@blogger.com (Unknown) — Tue, 12 May 2009 00:09:00 +0000

The Rules Have Changed . . .

“‘Would you tell me, please, which way I ought to go from here”

“That depends a good deal on where you want to get to,” said the Cat.

“I don’t much care where...” said Alice.”

“Then it doesn’t matter which way you go”’ said the Cat.

—Lewis Carroll, Alice in Wonderland

The rules have changed. Our work lives for several generations were based on the premise, or promise, that we would work hard for forty years and build a nest egg that would carry us through the rest of our lives without working. Reading the local "newspaper" and the letters from retirees illustrates that premise dramatically. They have worked their forty years and there is not enough in the nest egg because of the recent investment losses.

Business owners have likewise had the dream of building a business and then selling it for big bucks that would likewise serve as the nest egg. Build up equity in the business to sell. Build up a business that can be sold to the public through an initial public offering. We have seen examples of that happening here locally. Clear Channel Communications is a prime example.

Lately, though, the conversation has been different. Preceding our recent financial collapse was a long period of decline in interest rates to levels not seen in our lifetimes. A money market account that returns less than 1%! Home mortgages for 30 years at less than 5%.

Certainly retirees who had a nest egg (even if it was untouched through the Wall Street debacle) no longer have the cash flow that the nest egg was designed to provide. $1,000,000 invested at 10% will return $100,000 per year. The same $1,000,000 invested at 3% only returns $30,000. That drop represents quite a change in lifestyle!

Now think about the effect of also losing about half of the $1,000,000. . .

Along those same lines goes the conversation with the seller of a business. After years of building equity, the owner is ready to sell. In this market, it takes a while to educate them that the business can be sold and for just about the same price, even in this down market. There are a lot of people with severance packages, retirement money, etc. who are looking for good businesses to buy.

And then comes the realization that okay, I can sell the business and invest the money and ride into the sunset like Roy Rogers and Dale Evans. After using a calculator for a few minutes, some business owners look up and go, wait a minute, I can't live on that much income. My lump sum after taxes invested at 3% will not support my lifestyle.

Business owners who have used their corporate structure properly are able to expense many items that cannot be expensed as an individual. They make more operating their business than they will get by investing the proceeds.

Now that we have shot down the assumptions that have based our earning lives, the question is: How do I retire?

Drum roll, please. The answer is . . .

Cash flow.

We work to generate cash flow. We use cash flow to pay our bills and buy things. Then we go back to work to generate more cash flow.

So how do you get cash flow that does not require your time?

Fire yourself.

If you have not done so, go buy "The 4-Hour Workweek" by Timothy Ferriss. It does not answer the question totally, but it is excellent food for thought.

I will be reviewing some of his points in future issues.

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Every day we run into someone who because of job loss, the economy or otherwise is not making ends meet and have built up credit card debt they cannot manage, send them a copy of "Three Ways To Stop Creditors In Their Tracks" at http://3ways.get-free-reports.com

Have a great week!

Jim

Jim Montgomery

210-690-3700

http://yourexitstrategy.blogspot.com

http://www.jamesmontgomerylaw.com

"I have learned, that if one advances confidently in the direction of his dreams, and endeavors to live the life he has imagined, he will meet with a success unexpected in common hours."

Henry David Thoreau

Have The Rules Changed?

noreply@blogger.com (Unknown) — Tue, 05 May 2009 00:11:00 +0000

Have The Rules Changed?

Investment loss through the financial meltdown has literally reduced 401K and IRA accounts by almost 40%. This investment loss has caused tremendous suffering and stress for baby boomers who are retiring or getting ready to retire. If you missed my last article, check the archive on my blog, http://yourexitstrategy.blogspot.com.

For most of their lives (and as they have taught their children), they were following a business plan for retirement. That business plan was simple: build up a large cash reserve that could be invested to earn interest. The interest would be withdrawn monthly at retirement to replace the income that a job would have paid monthly. At some point, the principal of that fund would have to be invaded to maintain the same level of lifestyle.

To build up that cash reserve, most people saved money from their current earnings over the years to invest and grow. The government gave tax incentives to encourage those savings to be put in vehicles that could grow tax free over the years. However, the money would be taxed when withdrawn from the investment vehicle. The incentive was the small tax deduction when the money was put into the investment. The kicker, that was not discussed, was that the income would be fully taxed when withdrawn.

Due to government regulation, most of the investment funds were invested in mutual funds. Mutual funds took a tremendous beating in the financial meltdown. Of course, individual stocks likewise lost huge value and most investors were totally unprotected with some of the measures that protect against losing principal.

Now the question is, how does one recover? The business plan to build up a large cash reserve requires a lot of time or huge chunks of income. Most baby boomers have little time left until retirement and little likelihood of huge windfalls.

As a result, most baby boomers must continue to work and get the paycheck for the foreseeable future. The monthly paycheck provides a monthly cashflow to pay expenses for everyday living.

The prospect of that monthly cashflow to be replaced by the cash investment business plan is no longer viable. The business plan that has been employed in the past, will not work for this future. The goal is the same: a monthly income that comes in month after month in order to have the money to pay the bills. Getting out of debt certainly reduces the amount required but everyone wants the ability to have money to have the lifestyle they want.

Another business plan may be in order . . .

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Have a great week!

Jim

Jim Montgomery

210-690-3700

http://yourexitstrategy.blogspot.com

http://www.jamesmontgomerylaw.com

"If a little dreaming is dangerous, the cure for it is not to dream less but to dream more, to dream all the time."

MARCEL PROUST

High Credit Card Debt? Eliminate It Entirely?

noreply@blogger.com (Unknown) — Tue, 31 Mar 2009 01:37:00 +0000

These days there are many people who have used credit cards to finance businesses or their living expenses and are now paying the minimum payments every month. As we discussed last week, it is not possible to get out of that debt just paying the minimums.

In their attempt to prevent people from being able to discharge credit card debt in bankruptcy, the credit card pushed for bankruptcy reforms. In 2000, the regulators adopted policies that require banks to take certain actions with regards to credit card receivables (open end credit loans). 65 FR 36903 Uniform Retail Credit Classification and Account Management Policy. June 12, 2000.

The Uniform Retail Credit Classification and Account Management Policy establishes standards for the classification and treatment of retail credit in financial institutions. Retail credit consists of open- and closed-end credit extended to individuals for household, family, and other personal expenditures, and includes consumer loans and credit cards.

Closed-end retail loans that become past due 120 cumulative days and open-end
retail loans that become past due 180 cumulative days from the contractual due
date should be classified Loss and charged off.

The effect is that a credit card not paid must be charged off in full 180 days after the last payment was due or the last charge was made, whichever is later. No interest may be charged after that date.

The consequence for the bank is that the loan must be fully charged off. The expense of collection is rarely justified and the likelihood of recovery is slim because the assets of the individual are either exempt or subject to a payment plan under Chapter 13 of the Bankruptcy Code.

Banks normally sell the credit card loans for literally pennies on the dollar (less than a dime). The collection companies then make a lot of noise, threaten to sue, etc. but the result is similar in that the individual may eventually file a Chapter 13 or the statute of limitations will run. Suing on the debt is usually a last resort and results in a bankruptcy filing and a waste of the creditor's money.

Banks are therefore open to another resolution, a negotiated settlement. Rather than accepting pennies from a debt collector, the bank is open to an offer from the borrower to settle the debt at a higher percentage. The carrot from the bank is the negotiated settlement with a lump sum or monthly payment at no interest in exchange for a report to the credit agency that the debt was settled instead of the standard "charged off".

Thus, the bank gets more money and the borrower does not have the "charge off" report on a credit file. "Settled" is not as good as "paid as agreed" but still does not have the same effect on the credit score.

We are actively negotiating settlements for borrowers on credit cards. If you hear someone complain about credit cards, please do them a favor and give them our phone number, 210-690-3700.

What Is A Power Of Attorney For?

noreply@blogger.com (Unknown) — Mon, 16 Mar 2009 12:57:00 +0000

Following up on my thoughts on "The Circle", I had twelve replies to my piece below that was in last week's Newsletter. You may have been thinking about it. Great. Think about it all you need to. But would you do me a favor? The next time you look at your investment account or your bank statement and look at what you are earning on your money (or losing), think about whether your money is really working hard enough for you.

We have a potential deal working to finance an established retail establishment in the Huebner/Bitters area. We don't have the financials put together but the initial thought is that the shares will be $10,000 each with a potential 7% return monthly plus the prorata share of the profits at the end of the year. There is room for more owners.

If you would be interested in getting information, call me.

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What is a Financial Power of Attorney For?

Most of us are familiar with giving the spouse a financial power of attorney.

Jack on the way home has a serious accident with a head injury that prevents him from being able to handle his financial affairs. Rather than having to open a guardianship to manage his affairs, with constant oversight from the court, the financial power of attorney allows his wife to do just about anything he would do if perfectly healthy.

Annabelle is travelling in Europe with a couple of girlfriends. She needs to access money in a separate property investment account for a special purchase she has dreamed about. She calls the bank only to find out that they require a witnessed signature on a bank form to withdraw the funds. In order to get it done in time, she would have to fly home and then fly back to make the purchase. Her husband, with her power of attorney, is able to go to the bank that day and make the fund transfer on her behalf.

Here is one you may not have thought of. You are the owner of your business. You sign all the checks in order to keep controls on the money. On the way back from lunch, that bad accident occurs, maybe you are not permanently incapacitated but will not be able to sign checks for several weeks. Who is going to pay the bills at the office? Will the wife be the only one who can sign checks? Should your business partner have a power of attorney?

Have a great week!
Jim

Jim Montgomery
210-690-3700
http://yourexitstrategy.blogspot.com
http://www.jamesmontgomerylaw.com

"Happy are those who dream dreams and are ready to pay the price to make them come true"

- Leon Joseph Cardinal Suenens
(Archbiship of Malines-Brussels 1904-1996)

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Check out the archived articles on my blog, http://yourexitstrategy.blogspot.com

www.jamesmontgomerylaw.com

210-690-3700

Businesses For Sale

noreply@blogger.com (Unknown) — Sat, 28 Feb 2009 03:13:00 +0000

Contrary to common belief at the moment, it is an excellent time to sell a business. Unlike real estate where one for the most part puts out a sign and advertises, businesses are valued based upon their cash flow. Dips in income, even big ones, if not due to actual weakness in the business, are not a huge factor since most evaluations are done on a three year running average.

Even more importantly, money is looking for somewhere to invest right now.

The stock market is horrible. Many people need higher returns than certificates of deposit or T-Bills. Good businesses are the answer.

businesses for sale

I'm Back!

noreply@blogger.com (Unknown) — Mon, 23 Feb 2009 01:58:00 +0000

Sunday, February 22, 2009

I'm Back!

Linda and I have completed the last of our scheduled visits in my year serving as District Governor for Rotary in 44 counties in South Texas. This very rewarding assignment has taken me away from the office for quite a bit of time.

Despite the perception that only retired people are the Rotary District Governor, I am not retired and will be ready and able to help you with legal issues.

I have established relationships with three young lawyers, Paul Huckabay, Caroline Luna, and Margot Gallegos, as well as being of counsel to the Elms
Harmon
Macchia Law Firm. Our firm handles buying and selling businesses, business disputes, confidentiality agreements and violations, general corporate advice, partner disputes, buy sell agreements, ownership transfers, real estate issues, development problems, etc. In short, anything your business needs as well as making sure your family is protected by making sure that the family (and your wealth) is protected with wills, powers of attorney, child protection instructions, etc.

Over 95% of our business comes from referrals so please keep us in mind when someone says "Do you know someone who . . ."

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Following up on my thoughts on "The Circle", I have had a number of meetings with potential investors over the last two weeks.

We have a potential deal working to finance an established retail establishment in the Huebner/Bitters area. We don't have the financials put together but the initial thought is that the shares will be $10,000 each with a potential 7% return monthly plus the prorata share of the profits at the end of the year.

If you would be interested in getting information, click here.

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A number of business owners have commented to me lately that they were surprised that I was talking to them about potentially selling their business. Their assumption was that with everything that was going on in the marketplace today that it was a horrible time to sell their business and that they could not get a good price for the business.

Right now there is money looking for good investment deals. People are looking for some place to put their money rather than money market accounts at less than 2% or the stock market that is uncertain.

Prices are not measured like houses. We deal in cash flow and purchasers look not only at the short term but use three year averages in calculating price. If you have systems in place to "fire yourself", your business is worth even more.

If you know a business owner that would like to sell (even if the business is in trouble), please introduce them to me. We can help them sell and help them get out of trouble.

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While getting on an airplane the other day, I was struck by the instructions given by the flight attendants. We fly so much these days that many times one does not really listen to the instructions.

You know the drill, the attendants show you how to buckle yourself in -- something everyone born since 1960 who rides in a car should have down pretty well by now.

Then they proceed to show you how the oxygen masks work. I love the comment when they tell you to put the mask over your nose and breathe normally. I strongly suspect that breathing normally might not be in the cards if those masks suddenly pop down in front of my face!

Then there is the one that you should really pay attention to. They point out every exit on the plane plus tell you that there are lighted lines on the floor to guide you to an exit if there is smoke in the plane. They even caution you that the nearest exit may be in back of you, not in front of you. I found myself counting the rows to the nearest exit out of old habits.

The point here is that if something bad should happen, you need to know where the exits are. You need to have a plan to escape.

In business, we call that your "exit strategy". Do you have one in place? If you don't, pick up the phone right now and call me so we can get one in place. Like on the airplane, when you need to have a strategy, it is too late to dream one up. You have to have a plan in place. Powers of attorney, success planning, buy sell agreements, contingency plans for disaster, financial controls, and a number of very important business tools.

Have a great week!

Jim Montgomery
210-690-3700
http://yourexitstrategy.blogspot.com
http://www.jamesmontgomerylaw.com

"There is hope in dreams, imagination, and in the courage of those who wish to make those dreams a reality."

- Jonas Salk

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Check out the archived articles on my blog, http://yourexitstrategy.blogspot.com

www.jamesmontgomerylaw.com

210-690-3700
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Last Week's Blog Was Biggest Comment Ever!

noreply@blogger.com (Unknown) — Mon, 02 Feb 2009 22:14:00 +0000

Last week's newsletter attracted the most response of my weekly newsletters in months.

Rather than writing on a new topic, read the blog entry in the archive below and I will give an example and some additional thoughts.

First, the additional thoughts:

I have discussed with a number of you, the thought of a private financing system. If you lived in San Francisco, were Chinese, and wanted to start a new business, you would not walk into Wells Fargo Bank for financing. Instead, you would present your business proposition to what I will call "The Circle". The Circle is a group of local business people who have come together to stimulate the local economy and free the economy from the regulations that plague the banking process.

If the Circle approved your proposition, it would be funded without a loan. The Circle members would contribute an equal amount apiece and completely fund (pay for) the business so that there was no debt to service. The repayment of the investment comes from the new business owner becoming a member of the Circle. Members of the Circle also do business with each other.

Why would anyone do this? First, if the new business does with you, your minimal investment is probably repaid many times over in the business that it and other businesses do with you.

Second, by starting the new business, the local economy is automatically stimulated. Your proposition is evaluated on the number of jobs you create, the amount of money you will spend in the local community, the amount of money it will eventually make available for addition Circle investments, etc.

Many years ago, a group of business people in Houston decided that Houston should be a major city in Texas and the United States. They decided, among a number of projects, to build a canal from the Gulf to Houston to open up shipping where no natural harbor existed. Beaumont had the natural harbor but did not have the foresight to build the truck and rail connections to fully develop the harbor and Houston surpassed it.

San Antonio has the opportunity to do something like that. We do not have to rely on the banking system and be strangled by that banking system when times are not good.

If you have read this far and are intrigued by the idea, please send this email to five of your best business associates. Let's get the discussions started.

Now the example:

Investor has a house that is purchased for $100,000. The investor puts $20,000 into the transaction and needs $80,000 to finance the house. In today's market, this type of loan is difficult. Banks are regulated and the regulators are telling them that commercial real estate loans are bad. Therefore, banks stop making the loans. Therefore, no liquidity. Therefore, homes do not sell either as home sales or rental property. (Home loans are an entirely different discussion).

Our "Circle" comes to the table. 4 individuals lend $20,000 each, either as separate loans or they "participate" in one loan. The terms are interest only at 7% and the whole loan is due in two years.

With interest only payments as opposed to a bank financed interest plus short term principal reduction, this transaction can make good economic sense.

The investor is then able to sell the property to a prospective home owner on a rent to own basis, lease with a separate option to purchase, applying the option fee and a portion of the lease payments to build equity. With two years payment history, and immediate referral to a credit counselor, the tenant should be able to qualify for a loan in two years with everyone cashing out through the new financing.

If the tenant is not able, the transaction is extended or a new buyer is found. The Circle members can either extend or be replaced by other members for the next transaction. Thus, the Circle members have liquidity and security against default through the value of the real estate.

Give me a call at 210-690-3700 if you are interested in participating in transactions like these (we have five waiting). You also could participate in the equity in the transaction should you choose. We will send you an application for membership.

The above example is a variation on the Chinese "Circle".

Think for just a few minutes of the jobs that could be created if we were able to start a true "Circle" to benefit San Antonio. A large "Circle" could mean tremendous growth for the region with very little individual risk.

noreply@blogger.com (Unknown) — Sun, 25 Jan 2009 19:59:00 +0000

How To Earn 7% On Your Money
For Two Years With Real Estate Security

One of the biggest issues right now in real estate is obtaining financing. The bank bailout is actually backwards. Instead of getting the money to borrowers to be able to help their ability to make payments, we gave the money to the banks to help them survive having put US out of business. The reality is that banks are now in the situation of freezing loans and cutting back, further taking liquidity out of the system.

Here is the solution. We have all seen that the stock market is a pretty stupid place to have our money lately. If you have made sense out of it all, give me a call. I would love to hear the secret because frankly, it makes no sense to me whatsoever. Having said that, there is a sale going on on Wall Street, so my financial services friends and clients have some pretty good deals for you.

On the other hand, you might be open to earning a solid return on your money while helping us rebuild our economy.

There is a huge demand for rental real estate, particularly homes in the $85,000 to $130,000 range. Some of them are people who lost their homes due to the lack of liquidity in financing. Rental rates are advantageous versus purchase costs in that range. In short, rents are higher than your payments. (This same scenario works for any income producing property as long as the rents exceed or equal the costs to carry and operate, i.e., it breaks even or cash flows).

Here is the proposition:

1. You lend $25,000 to $50,000 (money that you had in a money market at 1%) as a first lien with several others doing the same (total equal to 85% of house or property). Interest only is paid monthly for two years at which time the loan comes due. All of the loans are first lien and have equal standing but there is no partnership involved. You are able to review the property and transaction before investing.

2. At the end of two years, you either get cashed out or renew for another two years. By having a waiting list for transactions, liquidity is available by either selling your loan or getting paid off through a refinance.

3. Security will be a deed of trust on the property. I suggest not taking an entire deal by yourself to spread any risk over several properties.

4. The interest only situation gives the project the best chance of success by lowering costs.

5. The rental home will have a two year option to purchase so that the renter can get a new loan that will pay off your loan and the owner of the real estate.

6. You win by getting a higher return with minimal risk. The renter owns by earning her way into a property that she will own. The investor owns by structuring a deal and making a profit on the resale.

If you are open to looking further at a transaction like this one, just email me back. I am trying to expand the group so if you know someone that might be interested, either forward this email or email their contact information and I will contact them.

There are many ways to successfully deal with a downturn in the economy. We may be able to expand this program to take in other types of property or to hold investment deals in raw land.

noreply@blogger.com (Unknown) — Sat, 17 Jan 2009 22:17:00 +0000

How to Avoid The Seven Blunders That Devastate Your Family and Business

San Antonio, Texas – James Montgomery, “The Business Owner Lawyer”, named a “Superlawyer” by Texas Monthly magazine, recently identified seven blunders that can devastate your family or business. “After years of trying lawsuits and seeing the mistakes that land one in the courtroom, I now focus on protecting businesses and families in advance from the most devastating blunders in planning that I see regularly. Families and businesses can avoid problems and spending tens of thousands of dollars to fix the problems.” He detailed seven common mistakes.

1. No Financial Power of Attorney. The owner of a business runs an errand one afternoon and is involved in a horrible wreck that leaves her with a permanent brain injury. In the next few days, the husband needs to access her bank account to pay medical expenses. The husband is not a signor on the account. The bank requires a guardianship to be opened to access the funds. After weeks and thousands of dollars, the problem is eventually solved.

The Vice President and Treasurer at the owner’s business are faced with exactly the same situation needing to be able to sign checks to pay company bills and payroll. The owner was also the majority owner of the company and only signature on the checking account for control. Again, the bank will not allow access to the funds and thousands of dollars and weeks are spent to solve the problem.

Solution: Financial Powers of Attorney limited to protect control issues.

2. No Will. The same accident leads to death of the business owner. Without a will, the husband could be facing owning some of the family assets with his minor children. Instead of being able to use Texas’ “15 Minute Probate System”, he is faced with a full estate administration and tens of thousands of dollars in fees, not to mention the emotional turmoil at the worst possible time.

The same turmoil exists with the business ownership crisis. The owner that died owned more than 51% of the business in her name. The other two owners are now faced with the loss of the future of their business and delay while control of the company is involved in a probate court. The other owners had no idea that the deceased owner did not have a will.

Solution: Company Wealth Planning Package

3. No Exit Strategy. Every business will transition ownership. Death, disability, divorce, voluntary separation, involuntary separation, and retirement are facts of life. Without a detailed exit strategy or transition plan, the business is headed for a destination without a roadmap. How does the owner retire? Just shut down the business? Sell it to a third party?

Every business needs six basic systems to become an investment rather than just a job. The systems are: customer attraction, customer engagement, customer service, customer retention, team accountability, and financial reporting.

Solution: Company Wealth Planning Package. “Have You Fired Yourself?”

4. No Protection of Company Information. Your trusted salesperson comes into your office and hands you a letter of resignation. “I’m tired of not being appreciated”, he says and stomps out of the door. Tomorrow you find out that he has gone to work for your biggest competitor and is calling on your customers for the competitor.

Solution: Protection of Your Most Important Asset: Your Customer List.

5. No Buy Sell Agreement. The same salesperson was also a minority owner in your company. The salesperson sells your competitor his ownership interest in your business. Your worst nightmare is reality, your competitor has access to all of your confidential financial and business information.

Solution: Buy Sell Agreement

6. No Regular Consultation with Attorney. In my three decades of practice, the most common gap is a customer comes to a law firm to solve a problem, gets the solution, and feels the problem has been solved for all time.

The company is formed, all the papers are signed, the minute book is prepared and put on the shelf in the office. The to do list is updated and that task is marked complete. Unfortunately, the task is never complete: the business will need future minutes, contracts need to be reviewed, business strategies must be devised to consider the legal considerations, and business information must be protected, etc.

An ounce of prevention really is more valuable than a pound of cure.

Do you meet with your attorney quarterly or monthly?

Solutions: Fixed Price Membership

7. No Child Protection Plan. Mom and Dad go out for a date. They have left their minor children with a baby sitter. Mom and Dad are hit by a drunk driver and seriously injured. When the police arrive at the house to tell about the accident, they find the two minor children. The officers have no alternative but to place the two children with Child Protective Services instead of the loving care of family members.

Solution: Child Security Plan

Take action. Get our free white papers on these issues. Call 210-587-2435 (24 hour recorded line); go to www.jamesmontgomerylaw.com; or call our office to schedule a risk free evaluation by our firm at 210-690-3700.

noreply@blogger.com (Unknown) — Thu, 08 Jan 2009 19:44:00 +0000

Happy New Year!

A New Year

You want to control your time.

You want to control your finances.

Are you open to learning systems that some people are using to control their time and their finances?

Are you totally dependent on your job income to pay your bills every month?

Is it time that you learn how to "fire yourself"?

It is time to learn how to prepare your business to be sold for maximum price.

It is the right time to learn to run your business for maximum cashflow.

The following summarizes the systems that you should employ.
1. Do you have to get new customers? YES

2. Do you need to close the deal when a prospective customer is sitting across the table? YES

3. Do you have to service the customer after you have closed the deal? YES

4. Do you think it would be a good idea to retain that customer to provide additional work or have them buy more frequently? YES

5. Do you utilize other people to provide those services and need to know whether they are actually doing what you want? YES

6. Do you need to have information that tells you whether your business is actually successful and making money? YES

Have a Great and Prosperous New Year!

The Monkey Storey

noreply@blogger.com (Unknown) — Fri, 19 Dec 2008 13:49:00 +0000

Friday, December 20, 2008

The Monkey Story

It seems that there was a research project in which the scientists used four monkeys, a ladder and a banana. They put the four monkeys in a room with the ladder and put the banana on top of the ladder.

As monkeys will, the first monkey smelled the banana and started up the ladder. When he got half way up, the scientists turned on a water cannon filled with ice cold water. The cannon knocked the first monkey off the ladder and then iced down the other three monkeys. The monkeys huddled in the room shivering from the cold bath.

After a while, once the monkeys had warmed up, a second monkey smelled the banana and started up the ladder. Again, the water cannon came on, knocked her off the ladder and iced down the other monkeys for good measure.

When the third monkey started to go up the ladder for the banana, the other three monkeys grabbed him and beat the "you know what" out of the errant monkey. The scientists were quite surprised to see that behavior. They decided to introduce a new element into the experiment.

One of the monkeys was removed from the room and replaced by a new monkey. Before long, the new monkey smelled the banana and headed up the ladder. Sure enough, the other three monkeys grabbed the new monkey pulled her down and beat the tar out of her.

The scientists again replaced one of the first group of monkeys and the scenario repeated itself. They kept replacing monkeys until all of the original monkeys who had been iced down were gone.

They then put in another new monkey and the other three, who had no knowledge of the ice water, again pulled the new monkey down and administered bodily damage.

The moral of this story is when an employee in your business looks and says "Because that's the way we've always done it", you now know how systems unfortunately can get developed in your business without proper planning.

How You Can Double The Value Of Your Business In A Sale

noreply@blogger.com (Unknown) — Sat, 13 Dec 2008 13:41:00 +0000

“In fact, there is ultimately only one reason to create a business of your own, and that is to sell it.” Michael Gerber, The E-Myth Revisited.

Most people create a new business so that they can do what they love to do They think they can make a business out of their talent. The new business owner may not realize that there is much more to creating a business than just doing the technical work.

Financials, marketing, ordering, collecting, etc.

Here’s the question?

Is your business building equity or are you just creating a job that looks like a business?

Here is a small self test on how you are doing?

1. If you take off all of next week and do nothing in your business, what will happen to the income of the business?

2. If you take off all of next week and do nothing in your business, what will happen to the flow of new business?

3. Do you have a written business continuity plan?

4. Do you have videos or audios of your plans for the business over the next three years?

5. When someone calls your office to schedule an appointment, does someone different answer the phone and/or do they have a set script to use to answer the call and close the appointment?

6. Who is your favored buyer for your business?

Do you have a name ready or do you have no clue whom the buyer would be?

7. If you do not come back from your next appointment, ever, who will sign checks at your company?

8. Will your death cause your company's lines of credit to be called due?

9. Do you have a checklist to be followed if you are suddenly disabled and unable to care for the business?

10. And the magic question:

Have you fired yourself yet?

What is an Exit Strategy?

An exit strategy is more than a way to unload your business.
That would just be an exit.
An exit strategy is just that: a well-designed plan that considers and incorporates both the condition of your company now and where you expect it to be in the future, as well as your personal goals now and in the future.
It is your insurance policy that when the time comes, you are in control of when, where, to whom and for how much you can sell your business.

Do you realize that of all the businesses that are put on the market, seventy percent of them never sell?

70% of the businesses that are put on the market for sale, do not sell.

Want to increase the sales price of your business by two or three times? Who wouldn’t? Here is the secret

Put in Systems.

There is an article on the Six Systems in the archive to the right.

If you want to learn more, call me at 210-690-3700. I will show you how systems affect the value of your business. We can discuss your current situation so that you can experience the difference that systems can make in controlling and valuing your business.

How To Earn 26% On Your Money

noreply@blogger.com (Unknown) — Mon, 24 Nov 2008 02:08:00 +0000

3 Ways To Make Money In Real Estate

Just love the stock market roller coaster? Maybe you are looking for a more stable way to earn a return on your money? Explore these ways and see if one might be a fit for you.

The first scenario would be to purchase a property to use as a rental property. The purchase is made with a 20% cash down payment and borrowing the balance of the price. The rent is at a level that is just enough to break even and retire the debt over a fifteen year period. If the house was purchased for $100,000 and is worth only $100,000 in fifteen years, then we can calculate the return on investment.

Investing $20,000, after a period of fifteen years, you receive a paid off mortgage in the amount of $80,000 . To calculate the return on your investment, divide $80,000 by $20,000 times 100% is 400%. You get back 4 times your cash investment. 400% divided by the 15 year period is an annual return of 26.7%.

$80,000 Paid off mortage
$20,000 Cash Down Payment x 100% = 400 % Return

400%
15 years = 26.7% annual return

You have an annual return of 26.6% without even considering appreciation or depreciation in the return on investment.

A second scenario would be to pay all cash for the property and not borrow any money for a less risky method. Again, assuming that the property was purchased for $100,000, the cash investment would be $100,000. With the same rent that would retire an $80,000 loan, $720 per month, the property will generate an income of $8,640 per year. That income translates into a return on the $100,000 of 8.6% per year. Again this result is before appreciation and depreciation.

$720 x 12 = $8,640 annual income

$8,640
$100,000 x 100% = 8.64% annual return on investment, again without even considering appreciation or depreciation in the return on investment.

Either of these results produces an above average return. Given the recent drop in the stock market, one might even say a stellar rate of return. It is obvious that the leverage from borrowing part of the purchase price increases the return dramatically in scenario one.

But, you say you do not really want to be in the rental business. After all, everything you have heard is that people call you at night, people have to be evicted, etc. While no business is perfect, the rental business can be managed without a lot of headaches, but you have to become a student of the business. Alternatively, you can pay a professional manager but that will cut into your potential return (unless you can command rents that will justify the extra expense).

There is a third alternative scenario. Instead of holding, you can lease the property for a longer term with a written option agreement so the tenant can buy the house in a couple of years. This method combines the benefits of renting with the ability to have shorter-term returns much like buying low and selling at a higher price in a short turnaround.

Again, let’s start with a house but assume that you are able to buy the house at $90,000 and again pay all cash. Instead of straight renting the house, you rent the house on a two year lease agreement with a separate written option agreement so that the tenant at any time during the two year period can buy the house for $120,000. The rental for the two years will be $1,000 per month. The tenant is also going to pay $3,600 (3% of the purchase price) as the payment for the option to buy the house at $120,000. If the tenant purchases the house, you also agree to give the tenant an additional credit against the purchase price of $250 per month. If the tenant does not buy, the tenant loses the credit and the money paid initially for the option fee.

At the end of the two years, the tenant qualifies for financing and purchases the house. You receive:

$3,600 Upfront option fee
$24,000 $1,000 per month for two years
$120,400 $130,000 less $3,600 and $250 per month times 24 months
$148,000 Total Return

$48,000 $148,000 less return of original $100,000
$100,000 x 100% = 48%

48% divided by 2 years = 24% return on investment

If you had borrowed 80%, your return would have been much higher with the leverage!

Real estate investment is a true wealth builder. One sees many top investors take the cash they earn from other ventures to build a true fortune in real estate.

Sell Your Business And Cash Out!

noreply@blogger.com (Unknown) — Fri, 07 Nov 2008 17:10:00 +0000

Sell Your Business And Cash Out!

“In fact, there is ultimately only one reason to create a business of your own, and that is to sell it.” Michael Gerber, The E-Myth Revisited.

Some people create a new business so that they can do what they love to do and/or what they are really good at doing. They think they can make a business out of their talent. The new business owner may not realize that there is much more to creating a business than just doing the technical work. Financials, marketing, ordering, collecting, etc. are all additional tasks to just doing the work. Is this a business that is building equity or are they just creating a job that looks like a business?

The goal according to Mr. Gerber is to build a business that has equity. This equity comes from cash flow, not the kind of equity one gets from buying a building and paying off the note. A business, that has cash flow, can be valued as a cash flow stream. That cash flow stream translates into equity when it is multiplied to figure the value of the business. A business with cash flow sufficient to pay the owner’s salary plus pay additional profits becomes a saleable asset.

How much is business equity worth? A business pays its owner a salary of $150,000 per year plus has net profits at end of year of another $250,000, for that year, is worth $400,000 to the owner. But what will someone pay to buy the business from the owner. At a multiple of 3 to 5 times earnings, assuming continuing income at that level, this business would be worth $1,200,000 to $2,000,000. If the multiple were higher, the business value goes up. The normal range for most business will be within the 3 to 5 range.

The decision to sell is a big one. The business is worth $400,000 in before tax cash flow to the owner. The owner, of course, will have to pay income taxes at ordinary income rates at least of 35%, so the owner could net about $260,000. The real value to the owner, while still working in the business, is $260,000 per year.

Compare to the sale of the business. Assume that the sale was at a five times multiple, then a sales price of $2,000,000. The business has been owned for more than a year so the proceeds will be taxed at long term capital gains rate, which is at this time, 15%. The owner will pay $300,000 in taxes with a net of $1,700,000. This net is about seven times the annual after tax value of $260,000.

The point of selling is to free up the equity. If the net equity of $1,700,000 were invested at 5%, the interest earnings would be $85,000 per year, before taxes. The seller of the business is trading $260,000 per year for less than $85,000 per year.

Most sellers focus on the gross amount of the sale, $2,000,000, in evaluating the transaction. The important issue is not the gross amount but the comparison of the cash flow before and after. There are other factors to consider: need for retirement, desire to use the equity to buy another business, desire to escape the business regimen, etc. The desire to build equity is not the only reason to create a business. If a business is properly created using the six systems for proper planning, the business also is a cash flow machine. The cash flow of the business may very likely exceed the potential reinvestment value (cash flow) of the sales proceeds. The seller needs to look at all aspects of the decision to sell.

Invest in Real Estate

noreply@blogger.com (Unknown) — Sat, 18 Oct 2008 14:54:00 +0000

With the volatile and wild swings of the Dow these past weeks, the real estate market has taken on a whole new viewpoint. The crash of the mortgage market has broadened the opportunity to provide affordable housing to a segment of the market that will be forced to rent for the next five years because the lack of liquidity for loans will dry up the loans for starter homes.

The opportunity is present to invest in single family homes with a very good potential for return on investment.

This investment would not be a buy really low, fix up and flip.

This investment would not be a buy low and hold for a long period by renting the property with the headaches of rentals.

The third alternative is a combination of those with the application of the 10/10/10 rule. Buy 10% below market, sell 10% above market and lock in 10% positive cash flow. The properties are sold on a rent to own program.

What do you have to do? Just choose which homes you would like to invest in.

Realtors will select the homes. They are paid when the house is purchased by the investment group. You put up cash for no more than 1/4 of the home. You are paid interest only at 7% for two years. The renter pays an option fee of 3%. The sales price is 20% more than the purchase price. A professional property manager will handle all calls. The renter is responsible for the first $200 of any repairs each month. A home warranty policy is purchased with the purchase by the investment group for major repairs. The house converts to financing in two years with the repayment of the money and a split of the profit on the sale. If the buyer does not buy, the process is repeated with a new buyer.

To find out more about how you can participate, call 210-587-2436 to leave a message. A subscription list will be formed. The cost to participate will be $29.95 per month. You will get a list each month and will only opt in to buy when the house is ready to be sold on the rent to own program. Each home is a small business for sale.

noreply@blogger.com (Unknown) — Wed, 15 Oct 2008 20:28:00 +0000

Fred and Bert are in the underground construction business. They formed a corporation five years ago when they were just starting out. When the business began, they rented all of their equipment. As they became more established and cash flow became predictable, they made the decision to start buying their equipment to save on rental costs.

Over the years, they have acquired backhoes and trenching machines. In order to save on the earth removal, they decided to buy dump trucks to remove dirt and rock from jobsites. As a natural add-on to the construction business, they made the decision to also add larger trucks to haul dirt and rock for subdivisions and even roads.

As the equipment accumulated, they needed an operations center, so they invested in a tract of land. Fred is running the equipment side of the business and has added a repair facility, fuel storage, and equipment storage on their land. Bert coordinates the construction side of the business, which has maintained a steady growth with the sustained growth in the local economy.

All of the equipment, buildings and land are owned in the FB Construction, Inc. entity. Both Fred and Bert are quite proud of the success of their business and the impressive balance sheet now boasted by the corporation. Their corporation has been recognized by the media for its growth and size.

Fred and Bert are now planning for the future. While they are young, they understand that they need strategy to exit the business at some point and the importance for planning how they will sell or otherwise receive the value for the equity that they have built.

A major concern keeping them both up at night is liability. Cash flow has been good, which has allowed the corporation to significantly reduce the debt that was used to purchase the equipment. They are no longer as concerned about the ability of the company to retire the debt, as they have begun accumulating a cash fund for contingencies. But recently, a good friend of theirs, who is in the same business but in another area of the state, had an issue which awakened them to a potential problem.

One morning, a fully loaded 18-wheeler left the friend’s facility on its way to a jobsite. During heavy morning traffic, the driver, although a long time employee with a perfect safety record, chose to answer a call on his cell phone. The company had a strict policy against the use of phones while driving, but the driver thought it might be from one of his children. The phone was on the passenger seat and he reached over to pick up the phone, taking his eyes off the road momentarily.

During the split second that his eyes were diverted, someone cut in ahead of him and the traffic suddenly stopped. When the driver looked up, he had no time to react and brake the truck. His tractor and load rear-ended a compact car, driving that car and the car in front of it into a third car. The passengers in the compact car were killed instantly. The truck driver was killed in the impact. Occupants of the other two cars were injured severely. Although the friend’s company was well-insured, the damages claimed from the wreck were far more than the insurance coverage.

Fred and Bert realize that they have trucks on the road every day and that a similar situation could occur in their business. Every morning, the financial future of their business drives out the door with their trucks.

Leaving your assets bare to creditors not only will keep you up at night but can make it difficult to sell your business or worse destroy the business you have built to sell.

Learn how to protect yourself, your business, and most importantly, your family. Just ask for information by filling in your name and email above.

Selling A Business With A Website?

noreply@blogger.com (Unknown) — Tue, 14 Oct 2008 20:35:00 +0000

In selling a business, all assets must be considered. Part of the marketing funnel for most businesses today is a website. The website may be your online brochure, lead gathering page, article archive, or other strategy. Potential customers are able to come to your website and find out about your business to make a decision on whether to buy from you.

What happens to a website in the sale? Will it be conveyed to the buyer? The buyer will want the website if the name is conveyed and probably also as a prevention against the seller competing with the buyer. If the sale is financed, how does the seller keep a lien on the website?

Websites do not have titles like cars. Websites are registered and a database is kept of the owner, the technical person and the contact person. In order to change the information, there is a username and password that must be entered. How is this information to be protected?

Jack owns a small business that he is selling. The website was started about four years ago and the person who designed the website handled getting the name registered and the hosting for the website. The website has been updated and Jack now uses a different design person to do the day to day updating. The designer has learned the business is being sold and has refused to turn over the username and password until the new buyer enters into a contract with the designer.

Jack has contacted the registration service to change the user name and password. After all, he is the owner of the website. After emailing and talking with a person at the registration service, he is shocked to find out that the owner of the website was listed as the first designer who is no longer in the state! He cannot change the user name and password because Jack is not on any of the contact information.

What do you do?

These are the problems that we solve for clients all the time. If you need help in this area, just call 210-690-3700 or email us at jemmktg@mac.com. To learn more and receive this information every Thursday, just subscribe to our mailing list above.

Time for Selling A Business?

noreply@blogger.com (Unknown) — Mon, 13 Oct 2008 20:30:00 +0000

Every business will be sold or liquidated in the future. Businesses pass to the next generation (succession), which involves a sale. Businesses are sold to employees (another form of succession). Businesses are sold to third parties. Businesses are sold to their present owners when they decide to hold on to them for cash flow as investments rather than selling to free up the capital gain in the business. Businesses that do not fall into one of these categories are liquidated. They either go bankrupt, go out of business, or the assets are all sold off in liquidation.

Thus you, as a business owner or business manager, must plan for a sale of the business. Not just any sale, but a sale that will maximize the sales price and the return to the owners. To do that successfully, you must have an exit strategy.

What is An Exit Strategy?
How Do You Plan An Exit Strategy?
How Do You Implement An Exit Strategy?

These questions are all ones for which you need to know the answers.

Sell a Business?

noreply@blogger.com (Unknown) — Sun, 12 Oct 2008 17:35:00 +0000

The Three Deadly Weapons Test For Selling Your Business

noreply@blogger.com (Unknown) — Sat, 11 Oct 2008 15:50:00 +0000

One needs to begin preparing to sell a business probably years before the business is sold or even offered for sale. There are six systems that every business must have. Without them, the business is not an investment that buyers drool over.

This test will tell you whether your business has those systems:

1. If you take off all of next week and do nothing in your business, what will happen to the income of the business?

Increase Decrease Unaffected (Circle one)

2. If you take off all of next week and do nothing in your business, what will happen to the flow of new business?

Increase Decrease Unaffected (Circle one)

3. Do you have a written business continuity plan? Yes No

4. Do you have videos or audios of your plans for the business over the next three years? Yes No

5. When someone calls your office to schedule an appointment, does someone different answer the phone and/or do they have a set script to use to answer the call and close the appointment? Yes No

6. Who is your favored buyer for your business?

___________________________________

Do you have a name ready or do you have no clue whom the buyer would be?

7. If you do not come back from your next appointment, ever, who will sign checks at your company?

____________________________________

8. Will your death cause your company's lines of credit to be called due?

Yes No

9. Do you have a checklist to be followed if you are suddenly disabled and unable to care for the business?
Yes No

10. Are you ready to learn how to implement the necessary steps for an effective exit strategy? Yes No

You can get my full article on the THREE DEADLY WEAPONS THAT WILL WRECK THE SALE OF YOUR BUSINESS by calling our 24 hour recorded line and leaving your name, address, and email plus mention Three Deadly Weapons. 210-587-2435.

Want to help your customers by sharing this information with them? Let them know about this blog and recommend that they subscribe here on the blog. Just send them an email.

Dow Jones Crashes - Disaster For Selling A Business

noreply@blogger.com (Unknown) — Sat, 04 Oct 2008 12:58:00 +0000

"Dow suffers worst weekly performance since the week after 9/11 attacks, as investors remain fearful about the economy." www.cnn.com

The Dow lost 7% of its value in one day! It gained some back after that but the losses that are suffered can be permanent.

Thousands and thousands of business owners, part of the baby boomers, will need to sell their businesses in one manner or another over the next ten to fifteen years. Many of them must sell in the next two to three years.

The financial markets have lost confidence from the people. The government has felt it necessary to publicly pass bailout legislation that the public really does not like.

What does all of this bad news mean for the owner trying to sell a business?

There are three things that are actually good news for those selling a business:
1. People are laid off during these times.
2. Banks do not have the cash liquidity to finance transactions
3. Buyers will be looking harder at the fundamentals of a potential business buy.

How are those good things? Well, let's take a look:

In the late eighties and early nineties, the US economy took a tremendous hit. People were laid off from major companies like Compaq computers and others. One of the consequences was a boom of new companies being formed and business being acquired as these laid off executives decided to own their own businesses. They took severance packages and cashed in retirement plans to obtain the liquidity to invest in either a new business or a business that was for sale.

The impact of these entrepreneurs entering the marketplace was a dramatic growth of small business. Small business creates more jobs than all of the major companies in the United States. The economic boom that followed was fueled in a major manner by the growth and success of these small businesses, not the major companies.

The effect is buyers in the market place, exactly what the business sellers need to make the transition in their business. Yes, the buyers will be driving a hard bargain and looking for value but business that have adopted the six systems of successful businesses will be investments that will sell based on their fundamental cash flow.

The fact that banks do not have liquidity will dry up a source of unsecured debt for the purchase of businesses. But many of the new buyers have severance money or retirement money that they will invest that will more than make up for the absence of banks.

Banks, for the most part, are actually not a source for funding to buy a business unless the business has assets, like buildings and land or significant hard inventory, that fits the banks' need for asset based lending. Federal regulations prevent banks from investing in the stock of companies, so lending to buy businesses must be either unsecured or based on assets being purchased. As a result, loans to finance the sale of a business usually do not come from banks.

The combination of the newly unemployed entrepreneurs with severance and retirement funding plus owner financing gives the liquidity needed to sale of many businesses.

Buyers will look hard at fundamentals of the businesses on the market. Businesses that are investments with solid cash flow are always good targets. When a business owner has created an investment by having the six necessary systems in place, the business is an investment and not a job for sale. The customer attraction system, the customer engagement system, the customer service system, the customer retention system, the team accountability system and the financial reporting system, when implemented, make this goal a reality.

The current financial difficulties disguise a good market for the sale of a small business. To take advantage of that market, a company must implement the necessary systems to have fundamentals that will attract the new entrepreneur buyers that arise from these troubled times.

THE THREE DEADLY WEAPONS THAT WILL WRECK THE SALE OF YOUR BUSINESS

noreply@blogger.com (Unknown) — Thu, 25 Sep 2008 12:41:00 +0000

Here are what I consider to be the Three Deadly Weapons that can wreck the sale of your business. These weapons are based upon my experience, discussions with many business owners, and many years of representing businesses in and out of the courtroom.

You can learn how to avoid the three mistakes that will literally cut the sales price of your business in half. Think about having a business that should be worth $750,000 but only being able to sell it for $375,000.

1. Not Understanding the True Value of Your Business.

Albert wants to sell his business that has a ten-year track record. The business provides Albert an income of $150,000 per year in the retail area. Albert has done his own valuation of what he thinks the business should sell for and wants a price of $1,500,000 for the business. That price is a factor of 10 times the net income. Unfortunately, in the retail sector of Albert's business, the going rate is a multiple of three times the net income or $450,000.

Because of his unrealistic price, Albert will not be able to sell his business.

2. Not Understanding How The Sales Proceeds Will Be Taxed When Received.

Janet owns a business in a corporation. The sale is proposed to her as a sale of assets and no assumption of liabilities. Although the sale of assets will be treated as a long-term capital gain at the corporate level, she has not considered how she will get the money out of the corporation and into her hands personally. Unfortunately, she has also signed the Purchase and Sale Agreement without consulting her attorney or her accountant. How much tax will she have to pay?

3. Business Owners Selling Must Follow The Boy Scout Motto – “Be Prepared”

After working for twenty-five years, two owners decide that they want to sell their business and retire. They begin working less and have not trained anyone to do the technical things that they do so well. Of course by working less, less technical tasks get fulfilled and less income rolls in. The best preparation would be to sell before income goes down and better yet have installed the six systems that literally double the value of your business.

You can get my full article on this topic by calling our 24 hour recorded line and leaving your name, address, and email plus mention Three Deadly Weapons. 210-587-2436