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One of the biggest challenges to buyers acquiring and sellers selling a business is obtaining financing. One of the reasons it is so challenging is that there is not a universal set of underwriting guidelines like there is in other types of lending:

For a credit card you simply apply, then based on the credit score from the credit agencies and your income level, a card will be issued w/ a pre-set rate and limit. Read the rest of this entry »

Looking For a Good Deal?

As Commercial Real Estate Brokers, investors often ask us; “Do you have any good deals?” I sometimes feel that I’m supposed to answer with, “Yes, there is; among all the available properties on the market this one, special, undiscovered, diamond in the rough that is an unbelievable ‘good deal.”

Let me state before I go on that yes, there are a lot of ‘good deals’ on the market. The rub come in determining what is a good deal for an individual investor. What’s good for one might be totally inappropriate for another. Let’s look at some questions for consideration. Read the rest of this entry »

Where do I want to enter?

Every business is born from a concept or…a great idea. Each business typically goes through 4 phases during its life cycle. These phases include the: Start-up phase, Growth phase, Maturity phase, and Decline phase. As a business Buyer, you need to consider which phase you are most comfortable entering into. Each has its own risks and rewards. Read the rest of this entry »

When is $12/sf less than $10.50/sf?

When leasing commercial real estate, it is most often offered on a Square Foot Basis ($XX/sq.) Depending where in the country, that can be a monthly or annual rate. In New York City it is apt to be a monthly rate. Here in Maine it usually represents the total annual rent. Read the rest of this entry »

When is the best time to sell?

“Is this a good time to sell my business?” I get asked this question a lot. Those who know me well, know that I have a habit of answering a question with a question. So I ask the business owner, “are you talking about seasonal timing, the economy, the lending environment, the current industry appeal, their business placement on a business cycle, or their specific internal and personal issues unique to their business. Read the rest of this entry »

The quickest way to grow and acquire market share.

It takes years to grow a business. Often it is a laborious step-by-step process. Another approach to growth is through mergers and acquisitions. It is done visibly on Wall Street every day; Exxon and Mobil, AT&T Wireless and Cingular. In small business, it is done every day also but it is not as apparent or public. Read the rest of this entry »

When Buying Real Estate for Investment, There are Four Financial Areas for Consideration. Although each area makes intuitive sense, it is the total interplay amongst the four that is important. In this article we will briefly define and identify these areas as cash flow, tax considerations, equity build up and appreciation. Future articles will delve deeper into each. Read the rest of this entry »

One often overlooked aspect of Real Estate investing is equity build up. It is that initially insignificant amount of the monthly mortgage payment that goes to reducing the principal balance of a loan. Come on, who can get excited over a $395 reduction on the first payment of a $250,000 8.5% 25 yr. loan? Read the rest of this entry »

A destination retail business (such as a car dealership, a karate studio, pharmacy, or a movie theater) requires high visibility on a daily basis (traffic count), proximity to a large demographic and lots of free parking near the front door. A good sign on a well-traveled road can repeatedly advertise to 25,000 customers a day. The absence of a right turn lane can make or break an otherwise good business. Notice how coffee shops are located on inbound commuter routes. Fast food dining options are positioned on outbound commuter lanes. Office properties are often clustered around a central downtown that provides proximity to restaurants, copy centers, office supply stores, and other office tenants.In Portland, lawyers want to be near the courthouses or the law school. Doctors cluster near Maine Medical Center of Mercy Hospital. Financial planners and accountants like to work near bankers.  Proximity counts. Industrial properties need quick access to centralized transportation corridors, which explains the current industrial property boom in and around Manchester, NH. A town located on the intersection of three highways.

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Among other things, the purpose of a business is to provide the owner with a living while building equity. What I find all too often is that equity isn’t maximized. Sellers let their business slip before they decide to sell. On more than one occasion, I’ve said “I wish you had called me two years earlier.”

It is only natural; people put blood, sweat, tears, and money into their businesses. They get caught up in the day to day. Next, they become complacent or perhaps burnt out. They start to lose focus. They start thinking of an exit plan. Read the rest of this entry »