I read quite a few business books each year and have developed an ability to tell an academic writer from an entrepreneur in just a couple of pages, even without the help of the author biography.   Built to Sell is the former and a book I feel comfortable recommending as an accurate and realistic guide from a successful entrepreneur who has “been there, done that”.
If you own a business and want to successfully sell your company one day, realize that exit planning is a multi-year process that is financially worth the effort you invest.  If you are not a book reader, the cliff notes are contained in this article and you can keep current with John Warrillow’s blog.

Do you every think about selling your company?  Have you done any exit planning?  Here is a good first step…

Built to Sell – Exit Planning From the Begining is a post from: Business Cash Advance provider Instant Capital Solutions.

I was having breakfast with a CFO of a government contracting firm last week who shared a story that is instructive and insightful if you hope to successfully exit your business one day.

Two years ago, he was finalizing weeks of deal making on a small ($4.5 million) acquisition.  About a week before the deal was to close, the recruiting manager left the company they wanted to purchase, making the acquiring owner just a bit nervous.  After further consideration the acquiring owner decided to proceed, but knocked a half a million dollars from his offer.  Although pricing is under constant negotiation during the closing process, was a bit unusual and it destroyed the deal.  The sale never happened and the seller is still trying to recover from the personal disappointment and get his company back on track.

Important lesson:  There are critical employees in your business who have the ability to impact your sale and the value of your company.  Here are some guidelines to keep in mind while managing your company sale process:

1 – Keep the process confidential.  In fact, you should not market your company for sale, but rather “considering strategic opportunities.”  Use an outside party to help with your company sale.  Remember, it is much less expensive to surprise your employees with news of a sale then having them surprise you.

2 – Design a retention package for key people that is consistent with your earn-out provisions.  You are likely to have some of your sale proceeds paid out months after the closing based on performance metrics.  These should be coordinated with a retention package with key employees that allows them to share in the upside by increasing the back-end payout to you.

3 – If certain employees are key to maximizing the value of your company at sale time. they are key even if you do not sell the company.  Make sure you have golden handcuffs to keep them motivated to continue to build value in your company.  A well designed plan should always benefit ownership.

There are many moving parts to manage during a business sale, and retaining key employees is one of those parts. Since employees a emotional human beings, they can be one of the most challenging and surprising parts.  Remember, surprises are seldom good news when selling your company.

These issues should be addressed well in advance of a company sale, in fact, they are all part of a well designed exit planning process.  This is a growing field of business advisors and a good exit plan would have saved this particular owners retirement life.

Do You Have a Key Employee Worth $500,000 is a post from: Business Cash Advance provider Instant Capital Solutions.

I’ve got to comment because this health care bill will shift the cost of a flawed plan to small business owners.

We are all quick to admit that “fixing heal care” is an enormous challenge facing our country and we will not solve this problem by asking the wrong set of questions.  To date, most of the political rhetoric has been focused on changes required of the medical, business and insurance community.  However, the real problems are the tort laws that impact health care.

Unfortunately for all tax payers,  over one third of Nancy Pelosi’ congress is part of the problem, not part of the solution.  162 members of the 441 (36%) members of the 111^th Congress are lawyers or have a law degree.  They support a tort industry that thrives on the huge contingency fees and damage awards of the tort industry.

It has gotten so bad that 30 states have limited awards on medial law suits.  Texas placed limits on malpractice awards in 2003 and has seen a 50% drop in malpractice premiums, few lawsuits and a surge of new doctors ready to serve those communities.  Alabama has seen hospitals actually close ER services because of a doctor shortage.

Now, back to speaker Pelosi.  Hidden in her 1,990 page health care bill is a provision that provides for incentive payments to states that develops an “alternative medial liability law”.  The state will only qualify for these “incentives” if they “do not limit attorneys’ fees or impose caps on damages.”

The deeper you dig, the sicker you will feel, trust me.

Any healthcare bill that does not resolve the economic issues around healthcare (frivolous lawsuits) will never have any meaningful impact on real reform.  Unfortunately, our leaders are more focused on protecting turf and political favors than improving health care.

There are 162 Reasons Why Healthcare Reform Will Never Happen is a post from: Business Cash Advance provider Instant Capital Solutions.

CIT has been an important participant in the small business loan marketplace for the past 100 years and today, they are in bankruptcy.  A sign of the times but not a reason for panic.

In 2008 CIT was the largest Small Business Administration loan provider.  However, CIT provided just $65 million of business loans in the first half of this year.

I am willing to bet, however, you are not familiar with CIT because they are not a lender to very small business owners like you as they tend to lend to much larger “small businesses”.

So, what will be the impact to American small business owners in need of working capital and small business loans?  Let’s focus on the bullet points today as there will be time to speculate over the next few weeks.

1)      The US Governments $2.3 billion equity position created from its cash infusion a few months ago has been entirely wiped out…Sorry.

2)      90% of creditors have already agreed to CIT’s restructuring plan and they expect to be out of bankruptcy in about 60 days.  They will not disappear but there is no competitor looking to fill the void created by their lack of lending.

3)      Their troubles stems from their SBA lending, so it is fair to assume some changes will be made in their business loan underwriting guidelines.

4)      The “small business loans” CIT is well know for are typically to multi-million dollar businesses with dozens or hundreds of employees.  They are not a significant provider of working capital or small business loans for very small businesses.

The macro economic impact is more concerning.  In the short term as it is very likely businesses both small and large will hoard cash and reduce investment plans in the near term, which will not help our economy.

Have you every had a business loan with CIT?  I’d love to hear what communications they have had regarding their business loans and any changes you can expect.

(Jason Kuffer photo (CC))

CIT Group Files for Bankruptcy – How will this affect small business loans? is a post from: Business Cash Advance provider Instant Capital Solutions.

Often when politicians try to “help” business owners they are just shilling for future votes.  I expect today’s announcement of a “small business bail out” to be no different.

While there are many reasons today’s announcement will have little impact on Main street, here are three off the top of my head.  I expect the political rhetoric from Mark Warner, (D- Virginia),  Christopher Dodd (D-Connecticut) and The White House today will likely have very little impact on small business owners in search of working capital or business loans.

First,  The White House will raise the limits on government-backed small business loans, so what?   While that may sound appealing to the few politicians that understand its impact,  it does not focus on the real problem.  It’s not the lending caps, it is the qualification for loans and tight credit environment.

Also, what about the Treasury’s March announcement of a $15 billion program to purchase pools of SBA loans.  This will really help, but so far has not been implemented.

Secondly, there are plans to “re-emphasize” community bank access to the TARP.  Only in politics does “re-emphasizing” count as policy change or anything substantive.

Community banks do not want to access TARP funds, because they are prohibited from charging any fees on the lending they make.  Other than our government, an enterprise can not survive without charging reasonable fees for the services it provides.

Finally, there is a current requirement that anyone participating in TARP sell warrants to the government giving the U.S. the right to purchase common stock at a set price.  Would you accept government money if you had to give Uncle Sam the option to buy part of your business?

These are my thoughts, do you think this is it rhetoric or real change we can believe in?

White House Small Business Loan Program, Rhetoric or Real change? is a post from: Business Cash Advance provider Instant Capital Solutions.

It happens every single day and often kills small business owners without a great credit score.

This morning’s Wall Street Journal’s did a great story on free credit score reporting.  I know you have multiple issues you manage on a daily basis, but hey, this is about bottom line profits.  There is nothing more important.

Your credit score will ultimately have an impact on profits and sales, so focus.  The impact of your credit score is not noticeable to most owners until it becomes expensive.  As a business owner there are other levels of complexity which I’ll develop in a future post.  Today I’ll just illustrate the financial importance of your credit score.

Your FICO score not only impacts the availability of capital for a small business,(which could save your business one day)  it has direct impact on your profits as well.  Because this is an abstract concept for most, let me give you a specific look at the financial rewards of strong personal and business credit.

Last week I helped a business owner secure an equipment lease for a new machine he wanted so he could expand into a more profitable business segment.  His credit score of 620 (below average) provided a bit of a challenge, but we were successful with his equipment financing.  He elected a 5 year lease with a monthly payment of $1,025.  He was thrilled because his return on investment was significant.

Here’s where I hope to get your attention:

The exact same business owner with a 720 FICO score would have been offered a lease with a monthly payment of $836 per month.  Over the 5 years his equipment lease, he would have saved $11,340, his monthly cash flow would have been improved by $189 and his ROI would have been even more impressive.

I realize there are many issues that demand your attention each day and it is easy to ignore issues that are not burning.  Don’t!  Maintaining your credit score is relatively easy and will have an important impact on the profitability, and maybe even the survival, of your business.

The $11,340 Credit Score Mistake is a post from: Business Cash Advance provider Instant Capital Solutions.

The internet has changed our thinking about a lot of things.  We should be able to search for almost everything, we should be able to access information from anywhere, we should be able to buy exactly what we want any time of day, and we should even be able to find our perfect soul mate. Perhaps most profound of these changes is our expectation of what we should be able to get for free, including tools to run out business.

All this free stuff is a distraction and causes us to ask the wrong question.  Here is a better question: What is better than free?

You see, as a business owner, I have money. I do not need everything for free, particularly if it helps me be better at my core business.  There are things I value more than a $0 price tag. What you may ask?

1) Being Findable. The online world is more crowded than ever, and I want my very best prospects to be able to find me online when they’re ready to buy. That is more valuable than free for most business owners.

2) Having something customized. Again, every business owner I know is busy. If I could have a custom item fit my needs exactly which makes me happier and more effective, that is more valuable then free.

3) ROI. Any return on free is infinite, I get that.  However, I’m happy to pay something to generate a greater return. After all, I get to keep all the profits.

You could probably contribute items that cost relatively little yet add a great deal to your personal and/or professional life. So, we very quickly validate the premise that there are things much better than free. Now how about some specific examples that are much better than free and will improve your life and effectiveness almost instantly?

HiriseHQ is the best, simplest (It is best because it is so simple and easy to use) client data management program I have ever used. If you are a small business and need to track customers, projects, prospects, and your thoughts, this is a great program. Their $24 – $49 program
will serve most of your needs.  It is the best organizational tool used in my business.  They will give you free 30 day trial.

CloudProfile.com is the easiest way to become alive online. If you do not have a web presence, you’ll have one instantly and if you have a web site that is not generating enough business or your are not easily found on Google and local business directories, this $49 per month will likely provide a great ROI in very short order.  You will love the way you look online and you’ll also get a free 30 day trial to fall in love with this program.

EVoice.com allows me to manage all my inbound calls, find me where ever I am, forward messages and give my company a professional feel from the very first call. $29.95 spend here is much better than the free voice mail that comes on your phone system.  30 day free trial here as well.

Google Apps Premier will provide an instant return on your $50 per year. Customers, vendors, prospects will all make an instant judgment based on your company URL. Google will allow you to establish an email account for $50 per year per user with full functionality. Much better than free.

These business tools help me run a very successful and profitable business and are all much better than free.

You must have some tools you really love…?

What are the Best Free Business Tools Online? is a post from: Business Cash Advance provider Instant Capital Solutions.

One of the most popular innovations in small business financing over the past 10 years has been the business cash advance (merchant cash advance) industry.  This industry has provided billions to cash starved small business owners of almost every credit profile over the past decade.

Like most industries, the business loan alternative industry has continued to mature and offer different financing potions that are less expensive and have different requirements for the borrower.  A “non-bank business loan” is one of the most recent innovations in this maturing industry designed to provide loan alternatives to small business owners.

What is a “non-bank loan”?

It is an evolution from a traditional business cash advance.  As the business cash advance industry continues to mature I anticipate additional funding companies will step in and fill gaps in the marketplace.  Initially, business owners who could not get a traditional bank loan for any of a dozen reasons had only business cash advance as an alternative.  Even with great credit and a willingness to sign a personal guarantee, these owners were stuck with higher priced capital and shorter repayment periods.

Over the last year, a couple innovative financial companies have developed programs that have begun to fill this niche.  The first program I call a “non-bank business loan”.  This is an actual loan (unlike a business cash advance) and requires a personal guarantee from the borrower.  However, it is preferred over a cash advance because it is much less costly and does not require any change to your merchant processing company as many (not all) business cash advance companies do.

These programs do not require a change of credit card processor, they simply divide your stated repayment amount by 250 (business days in a calendar year) and take that amount as a fixed daily payment.  Some owners prefer a consistent daily payment which has an even impact on cash flow rather than the variable repayment that cash advance offers.  However, some prefer payments that reduce when revenue slows and increases during strong cash flow periods.  The choice is now yours.

As the economy has worsened over the past year, these companies have continued to provide financing to business owners who qualify, though some have reduced the amount of financing they are willing to offer.  While this funding is very welcomed, the amount of financing is often a source of frustration for business owners with larger financial needs.

What is a “private” non-bank loan?

This business loan alternative is virtually the same but is financed by private investment funds.  They typically offers the same pricing but larger funding amounts, and will typically require more documentation (2 years tax returns) than other funding alternatives, but offer an excellent combination of pricing and lending amount.  Many of these funds will lend up to 6% for your total annual sales (averaged over your last 2 years).  So, if you have averaged $1.5 million over the last two years, you should expect financing up to $90,000 if you qualify.

I expect to see the business loan alternative industry continue to become more creative and innovative as traditional bank loans and SBA loans fail to meet the needs of small business owners in search of working capital, business loans and growth opportunity financing.

Business Loan Alternative: Part II is a post from: Business Cash Advance provider Instant Capital Solutions.

My last post discussed how American Express cut credit limits for business owners when it was needed most and now is advertising how they want to be a part of the economic recovery and a friend of small business.

For the record, they are not alone in their ability to abandon business owners in a time of need.  This Wall Street Journal article on August 12 discusses how wide spread the practice has been and the ability your credit card issuer has to conduct business any way they see fit.

How will you respond?

Amex and others hope business owners forget when times get better, will you?

Business Credit Card Limit Cutting Continues is a post from: Business Cash Advance provider Instant Capital Solutions.

Do you remember how frustrating he was?  He was the cause of problems, putting the Robinson family in danger because of his greed, stupidity or fear.  After the crisis passed, he would deflect blame and grab credit.

That is exactly the feeling I got last night when I saw an American Express ad forecasting a light at the end of the economic recession and the rebirth of a new and better small business economy.  Clearly, their Dr Smith moment.

Reality is that American Express cut credit limits to small business owners in their moment of need.  This not only limited available credit, it cause credit scores for many to drop and their cost of capital jump.  In other words, Amex was part of small business’ problem, not a solution.  When times were tough and the recession was scaring many business owners, Amex cut their risk and ran for cover.  Owners were looking for small business loans and working capital while Amex was taking them away.

Now that things are looking brighter, they want to be a resource and a friend.  Until when…?

I understand weakness and fear, we’ve all experienced that at one time or another.  I understand Amex wanting to protect their balance sheet.  What I do not tolerate well is Amex boldly proclaiming they are part of the solution now that the future looks brighter.  I did not like it when I was a kid watching Lost in Space and I do not like it now when my business is on the line.

I think Zachery Smith is Running Amex Small Business Loan Department is a post from: Business Cash Advance provider Instant Capital Solutions.