Financing Your Business

Now that you have decided on what sort of business that you want, it is time for one of the most painful parts of buying into a business - yes, the financial side.

Money is the root of all evil is a phrase that's been bandied around quite a bit, and with the economic climate still in a rather delicate position, buying a business is not as simple as it sounds.

The ideal scenario is that you already have sufficient funds at your disposal. For instance, you may have been made redundant from your old job and you may have received a hefty redundancy package - or at least one that's enough to help you buy a business. The other alternative is that you have enough funds in the bank anyway. Whether you were working in a high-paid job and chose to form your own business; whether you received inheritance money; or whether, in a vast miracle, you won the lottery, you may have enough money to buy your chosen business outright.

The more likely scenario is that you will have to borrow money, and again, the economic climate means that banks or businesses aren't quite as willing to pay out as before. That means that you have to put your case to them, and also make that case as convincing as possible.

The two alternatives are both vendor financing and bank loans. Vendor financing takes place when a person or persons selling their business are wiling to lend the buyer part of the money needed. If you do not have the right amount of money, it may be possible to ask the vendor if they are willing to take whatever money you can afford, and then pay the rest back in installments.

It's a good idea in principle, but be aware of a few things. For one thing, the vendor may wish to charge you interest, and may also want to use whatever assets you have as security, for example your home or any other property that you may own. If for whatever reason you cannot pay back the outstanding sum or if the business goes bust, be aware that you may have to pay the forfeit with your property - so make sure that vendor financing is a suitable option and that you know the risks.

But then the same could be said of a bank loan, which normally involves a bigger sum of money to be borrowed. And the vendor will certainly be happy when the sale goes through, since it will take a shorter period of time.

If you do choose a loan, one element that may be on your side is that your chosen business may be well-known. It's also possible that you may have decided to buy into a franchise. Banks regard franchising as a safer bet, since the majority of franchises actually work out, and also most franchises tend to be high profile names. But equally, buying your own business may impress the banks if there is proof that that business has a solid track record and a history of making good money.

One of the best methods to prove your case is of course, producing a business plan. Providing that potential candidates come up with a good, well worked out plan, the chances are that they'll succeed in paying back the money.

The advantages of producing a good plan will allow you to have a clearer understanding of what is required (a benefit in itself), and will prove to the bank or the vendor that you have a clear vision in your head of where the business will be heading. The plan needs to demonstrate that you have a solid grasp of the business opportunity and its projected financial forecasts. Of course, a bank or vendor is only going to respond to the people that can actually pay the money back.

Unfortunately, it's rare that banks lend you all of the money, and with escalating costs, you are going to need to stump up some of that money yourself - call it the equivalent of a mortgage deposit. You will also need to bear in mind that you need liquid capital to support yourself during the first few days of your business. So work out the costs, calculate a worst-case scenario, and that way, you won't be unpleasantly surprised.

When looking for potential businesses though, don't just settle on the cheapest option. While there are plenty of affordable businesses out there at good value prices, you still need to make sure that you are compatible with the business and that the business is compatible with you in terms of interests, knowledge and skill. Don't just settle on the first cheap business that comes along - make sure it's the one for you.

If you want to choose a bank loan, a good idea is to shop around - talk to different banks to make sure that they know what they're talking about and that they have the right amount of knowledge to support your aims and ideas. The ones who understand your own particular business needs will be worth considering. It's also worth checking out which ones offer the best deals and support. Either pay a visit to your shortlist of banks in person (which will allow you to make that initial contact) or trawl the web for any potential lenders. Understand the different incentives and offers, such as free transactional banking terms, payment holidays as well as the charges that the banks may put on you for security costs and valuation fees. It's also worth familiarising yourself with all the business jargon, legal terms and small print that may prove to be a problem.

Start a Home Business Today, But Avoid These Traps!

There are so may options for those who want to start their own home business. It can be down right frustrating to see all the programs and new ones are coming out virtually every day.

Here are the six traps to avoid when you are looking to start your own home based business.

1. Is it really a home business?
Many companies advertise their business opportunity as a home business or a home based business. Make sure it really is a business which you do at you home. So many business opportunities require you to do presentations or parties, go to another location to visit potential customers, or actually have you delivering products to customers. These are not home businesses. A home business should be able to be run from your home 100% of the time if that is how you wish to run your business. Too many new entrepreneurs get started with a company only to realize what they did was bought a second shift job because now they are doing presentations or parties at night or on the weekend and then on top of that they need to deliver products to their customers which takes more nights and weekends.

2. Make sure you have enough capital to run your business for 6 months before you see a profit.
All over the internet you will see and hear stories of people starting a business and making thousands of dollars their first week. What these people neglect to tell you is they had a huge network or database of people they could put their business in front of immediately, or that this is not their first experience in business, or they pay someone to do areas of their business they are not good at or do not like, or they have a partner, etc. Do not expect to see huge results in any business in the first six months unless you bring a lot of experience and desire to the table. You must know your initial investment costs and your ongoing operating costs to run the business.

3. Understand the compensation plan before you purchase any home business.
The compensation plan is critical to your earnings. If a company will not share the all the details and nuances of the compensation plan then walk away from the company. You must know where the money comes from, how the money flows, what leverage is built into the plan, what qualifications must you meet to maximize the compensation plan, is qualification a one time requirement or monthly,how and how often you get paid, and is there any cap on your income. You should also make sure your sponsor is rewarded on your efforts, that way it instills teamwork instead of you becoming their competition. If team work is rewarded through the compensation plan then ongoing mentorship and training will be in place to help you be successful. If you are unable to clearly see and understand all this information about the compensation plan then walk away.

4. Is the market your business serves a shrinking or growing market?
You must do some independent analysis to ensure the market space you are entering is a growing market, not a saturated and shrinking market. It is also wise to ensure your business is global, that way you are not tied to a local or national economy.

5. In business today you must use a computer.
There are many people who will tell you computer knowledge is not needed. This is not true. If you are computer illiterate take the steps to learn at lease the basic skills so you can use tools to market your business ad keep in contact with prospects and customers. If anyone tells you a computer is not needed or you do not need computer skills walk away. You do not need to be a computer whiz, but you must be able to use tools and be comfortable with the computer if you want to make a significant or comfortable income.

6. Get into analysis paralysis and do not take action.
With so many business opportunities available it is easy to go into a deep analysis phase and never take action. This can kill any chance you have of being an entrepreneur. Before you set out to be a home business owner write down what you expect from a business, what characteristics you want your business to have, and why you want your own business (this is a big one). Once you understand all this it will narrow your search and speed your analysis. Remember you must take action to change your current circumstances.

Business Owners Insurance Protects Businesses From Unexpected Risks

Various businesses during their course of daily operations may face unexpected risks that affect efficient functioning and profitability of businesses. Business owners insurance indemnifies the owner of businesses from various risks to which the business are exposed and from business related liability exposures. It is in best interest of owners of companies to have this insurance as any damage or compensation claim can have a significant impact on the business.

It Protects:
The business owners insurance provides necessary protection against workplace theft, damage, accidents, and injury and third party compensation litigations.

Damage or Destruction of Business Material
Business owners insurance provides protection to owners of businesses in case of damage or destruction of business material, office equipments, inventory, vehicles etc during the course of operations. Even the loss of material, furniture, machinery and other structure due to fire is covered under this insurance. This insurance entitles the owners of business to receive an amount to compensate the cost of damage. This insurance also provides coverage to damage or destruction of cargo during transit or storage. Also, it provides coverage to loss or damage to business property or material due to employee theft, fraud, dishonesty, or any criminal act done by employee.

Loss of Income
Uneventful problems, damage, or fire may occur that can ruin the businesses and leaves them incapable to operate efficiently. The businesses as a result suffer from loss of profit and inability to make payments for expenses like taxes or debt payments that needs to be made even when the business is not operating. The business owners insurance provides protection against loss of income incurred due to closure of businesses due to fire, explosion, or similar incident that leaves business premises and vital business equipments unusable.

It enables the owners to cover the losses due to stoppage of business operations. Coverage is also provided for losses incurred by owners due to mechanical breakdowns or other machinery crucial for efficient running of businesses. This insurance helps owners to take care of expenses that the business would have earned in normal working conditions.

Theft or Loss of Tools or Equipment
A lot of machines, equipments, and tools are used and required for efficient running of business operations. These machines, equipments, and tools are sophisticated, expensive, and needs to be handled with care. Any damage or theft of these equipments or tools can significantly harm the productivity, efficiency, and profitability of businesses. Business owners insurance provides coverage to any form of damage or loss to tools or equipments due to theft, burglary, or robbery during the course of operations.

Crime Coverage
Business owners insurance provides coverage against loss or damage to business property, tools, equipments, and machinery due to crimes such as theft and damage due to employee dishonesty, embezzlement, and frauds. Web-based businesses are provided coverage for losses due to cyber crimes done by computer hackers and viruses.

Business owners insurance also provides for liability coverage arising due to bodily injury to workers, employees during the course of employment. Third party compensation litigations due to property damage, advertising injury, and personal injury due to slander, libel, invasion of privacy, and copyright infringement are also covered. This insurance covers all the legal costs that are incurred to defend the cases and the compensation amount, in case the business is sued.

I'm Looking to Buy a Business

As a business broker based here in Florida this is a statement that I hear often. Within the industry various statistics are stated regarding business buyers. I have heard that 9 out of 10 of those that say they want to buy a business actually don't buy. Based on my experiences that statistic may hold true. There are so many currently employed that during their 40- hour work week aspire to "be their own boss" by starting their own or buying their own business. There are many unemployed out there that also think they may want to buy or start a business. So while there are probably as many as millions of those both currently employed or unemployed that aspire to buy a business or start a business, there is a much much smaller subset of those that even attempt to act on those aspirations. Of that small percent that actually act on their dreams and or goals a small percent may contact a business broker such as myself, and a small percentage of that group may find themselves at a closing table signing documents and actually buying a business. Many business acquisitions are done with out the assistance of a business broker. The numbers of how many entrepreneur types set off to buy a business and successful find a business without the professional assistance of a business broker are unknown to me. I personally had bought several businesses on my own without the assistance of a business broker. These were strategic acquisitions within a certain industry. I personally feel these types of acquisitions have a higher success rate. Existing relationships, industry knowledge, focus, and synergies provide for a higher success rate. My views on this are based upon a fair amount of first hand experiences of myself and peers. This discussion is based primarily on non- strategic type acquisitions as referred to above. Just one of the many steps in the process of buying a business that I assist in is how to apply some focus and some parameters to the basic statement of "I want to buy a Business". Being my company website is called Sell a Business Florida dot com, and I assume the person contacting me through my website is looking to buy a business in Florida, but very often many of the other parameters have not been carefully considered. When one is looking to buy a business criteria can range from looking at a certain specific company, to a certain "type" of business, to "I want to buy A business in the state of Florida". If you (or someone that you know) are currently employed and want to act on aspirations to buy their own business and gain the feeling of control of ones destiny, or are currently unemployed and view buying a business to be the best means to a gainful career please consider the following. Below are a few parameters to consider when searching to buy a business. The list can be long and extensive but the below is a starting point that allows the search to buy a business to maintain some focus.

Location- For business purposes and family purposes does the company need to be in a certain State, County, City, or a certain side of town? Or are you looking to buy a home based business that you can operate from most anywhere in the world?
Type of Business- Are you looking to buy a certain type of Company like a Landscape Company For Sale or Towing Business For Sale, or are you looking to buy a business that has maintained certain performance levels such as "I want to buy a business that has at least 3 consecutive years of Net Income of $100,000+".
Are you looking to buy a Hands on or Hands off business.
How much Available Capital to do you have? - This will set a range of businesses that you may consider. Keep in mind that both Available capital for buying a business and Working Capital for running the Company should both be considered.
Are you looking for a Company that includes real estate
Are you looking for a Company that provides Seller Financing?

Prospective Business Buyer- " Hi Scott I am looking to Buy a Business in Florida" Scott- " Great, What type of business are you looking to buy" Prospective Business Buyer - "I really don't know"

Top 10 Techniques to Optimise A Business for Sale Advert

When submitting your business for sale to the many directories and advertising boards on the internet, there are a number of techniques you can use to help optimise viewings, attract the right buyers and ultimately get inquiries coming in thick and fast. By following these top 10 tips, you will ensure your advert gets seen more on search engines and directories than competing businesses for sale and get that sale done and dusted faster.

1) Detailed, Accurate Titles

The first thing any visitor to one of the many business for sale marketplaces is going to see are the titles of countless listings. I have lost count how many times I've seen nondescript, anonymous titles used in business for sale adverts and in the most part, these businesses spend months floating around these directories with very little interest. If you are selling a cafe in Washington, don't simply submit a title such as "Cafe for Sale" - add some meat to the bones!

If you have a specialism or something that stands you out from the crowd, then make some more noise! A title with more definition will attract far more interest. Examples could include "Successful & Profitable Cafe for sale in Washington". If you sell fresh baked goods or health food, try to include these details such as "Health Food Cafe in Washington For Sale" or "Specialist Fresh Bakes Goods Cafe for Sale in Washington". Make the search for your business as easy as possible.

2) Use The Right Categories

Many business for sale listings are fed out to countless other external websites, directories and portals using RSS and XML feeds. Without going into the overly technical details of how this works, for the most part they feed all of the listings using the categories in the database. Poorly categorised business listings will simply get lost in the mire so take the necessary time needed to find the ideal category that directly reflects 'exactly' what your business does. Don't just use the first one that comes along and think 'that'll do' - it won't do. You're wasting your time and your money.

Even if it takes a few minutes to find, those few minutes are totally worthwhile to ensure your business for sale listing is placed in the most suitable category. Some websites even allow you to list your business in multiple categories. If this option is available to you, use it! Don't overlook a perfectly good opportunity to increase your reach and your exposure. If you can add your listing to three categories, use all three. Even if you can't find any exact matches for your additional categories, find one that is as close as possible. Any extra exposure is good exposure.

3) Location, Location, Location

It's common knowledge these days that most internet users are getting wise as to how to find search results that are far more accurate and appropriate to their needs. 'Localised' searching is now the norm and anyone looking to buy a business online will use the country, location and/or general region as part of the searches. If you advertise without adding the general location or at least some form of reasonably accurate regionalised placement, you could miss out of a huge amount of interest.

If confidentiality is key, it's understandable that you don't want to declare your exact location but it's safe to assume that you can at least declare which country and state you are in. If you can add the town, do so as this will optimise your listing down to the town or city name on searches and will attract the right people in the right locations.

4) Be Descriptive, Not Lazy!

So many business for sale listings are let down by laziness when it comes to the description of the business. It amazes me how many businesses go onto the marketplace with very little information about them. What does that say about the business owner? Not a great deal I tell you! If your stats are telling you that your business for sale listing has had lots and lots of views, yet you have very few enquiries come through about the business, what does that tell you? It says your business for sale listing frankly sucks!

Don't start blaming the website owners, the economy or just plain bad luck. Review your listing and see where it can be improved. No doubt the description will probably need to be improved and rewritten. If you aren't that great at writing then get some help, but make sure you describe the business you are selling in full as buyers will without question, want to know this information. Describe everything from the product or service you offer, to your premises, your successes, accolades and achievements. Make your business as desirable as possible. Your advert is the first stages of the 'big sale' so don't let yourself down with poor writing. Take the time to get it right and you WILL get enquiries coming in.

5) Pictures, Pictures, Pictures!

Pictures tell a thousand words and it applies just as much here as it does anywhere else on the internet. Take eBay for example. How many items have you bid on that didn't contain a picture in the listing? Very few if none I suspect. Do you honestly think someone will buy a business for several thousand dollars that has no pictures to speak of? No chance. Even if confidentiality is key, try to find a good picture that will help enhance your listing and describe the product or service you provide. Pictures help buyers to visualise the business and add a huge amount of confidence and legitimacy into the business that is for sale. Pictures really help and stats prove that users click far more on search results that contain pictures over those that don't. Try it out and you'll see a massive difference.

6) Honesty In Your Facts

Any discerning business buyer will scrutinise over every little detail. No matter how desperate you are to sell, always be honest in your details, especially financial figures. If you are unsure as to how to prepare up any figures for a business for sale advert, then seek the assistance of a professional such as a business broker or an accountant. They will know who to draft up accurate figures for submission such as your turnover (sales), profit and loss.

7) Realistic Asking Price

Another common stumbling block and mistake that sellers make is their asking price. Go too high and you could put people off. Go too low and you could sell a prized asset for pittance. Calculating a reasonably accurate asking price for a business is a specialist skill and unless you are familiar with the workings of these kinds of calculations then you would be wise to seek the assistance of your accountant or a professional broker. Either way, you don't want to be short changed or priced out of the market. As the golden rule states, your price can always comes down but going back up is never an option.

Users tend to search for businesses within a certain price range so consider this point when pricing up your business. You ideally want to fit within these boundaries so that potential buyers find your listing based on asking price alone.

8) Contact Details

If there is the opportunity to submit your contact details such as telephone or cell number and your email address, publish them and ensure you make yourself as readily available as possible. You'll find that you will get quite a few enquires via telephone however email is an ever popular way to contact sellers as it leaves a certain level of anonymity. If you are asked to submit your email address to any directories or business for sale market places, ensure their systems strictly use forms instead of publishing your email address as text. You don't want to encourage spam being sent to your inbox and by having your email address published, this is the quickest and fastest way to getting your email address adding to spam lists which is a nuisance and waste of your time - no doubt you'll start to get countless emails trying to sell you Viagra! Having to trawl though messages to find ones that are actually useful to you is time consuming and annoying.

9) Preparation

Before diving in head first and going off to the numerous websites and directories to submit your business for sale advert, get all of your material ready in the first place. That includes all of your figures, images and most importantly your business description. By preparing your material first, you can have it checked and read by friends to get the opinion first, allowing you time to perfect your work. Then once your text is all written and spell checked, all you have to do is copy and paste it into the forms at the websites you decide to use for advertising your business for sale.

Most of the mistakes highlighted here in this list are made by those who don't prepare their work beforehand. By simply heading off to the websites to get started, they feel rushed and so end up submitting a short and nondescript listing which is poor in quality and lacking in any real quality. There's no prize for getting your listing online fast so take your time and get it right beforehand.

10) Link Building

Inbound links and link building is the key to how the internet works. Without them, search engines wouldn't be half as effective as they are today. If possible, add links to and from your various listings and if you can why not try to place links back to your business for sale listing on places such as the social networks, forums and bulletin boards? Using tools such as these will help to spread the word faster. Sites like Twitter, Facebook and YouTube are extremely powerful tools so if you have the means to use them, start submitting links on them. They're free after all!

Are You Prepared For Your Business

While you can never have 100% of the details and permutations worked out ahead of time you can have a framework available for dealing with crisis events, a plan for the essential business functions, and contractual arrangements in place for critical requirements for your business, at the very least.

When most people think of Business Continuity Planning1, they consider that if their Information Technology Department has a plan for disaster recovery then they have addressed business continuity. While for many businesses these days IT plays an essential role in supporting the business, your business' actual requirements for continuity are usually much more than just IT.

The recent events in April and May 2010 in Bangkok meant that many businesses, their staff, their customers and the general public experienced disruptions which many had not experienced before.

In reality, only certain physical locations of Bangkok were directly affected, while the vast majority of people in the rest of Bangkok and the country tried to continue with their lives and businesses. However, many found that as Silom and Sathorn were directly affected some businesses in those areas virtually shut down for a 2-3 week period, with some for longer than this. As the business district, the affects of the disruption on these businesses were felt much wider.

For example, one of the smaller retail bank's head office is in the one of the areas most affected by the events of April/May and for security reasons the physical access to the building was very restricted. This meant that their staff could not get access to their office and documents. While the bank's branch IT systems were operating, some business functions such as loans were adversely affected. I am aware of a couple who had to put their house sale on hold for 2 weeks as the loan officer of this retail bank could not get access to the loan documentation he needed in the head office. The purchaser and the purchaser's bank were not affected and were ready to go ahead with the sale and purchase. The delay ended up costing the couple 2 weeks extra in interest because the bank could not complete the transaction on time. The couple is bitter about this bank's lack of business continuity planning regarding access to the head office and the bank's total disregard of the couple's position by charging them interest on the loan for that period, while clearly it was the bank at fault.

So in this example, the bank's IT systems were not affected but the inability to gain physical access to the office and a hard copy of documents meant that certain business functions could not continue. When you undertake a business continuity planning project, the business needs to identify the essential business functions and the period of time before a disruption has a detrimental affect on the business. Usually this high level discussion takes place with the stakeholders and senior executives, who are more aware of the impact of certain consequences, such bad publicity, public embarrassment, lack of communication or no clear communication, legal or regulatory compliance default, etc. Generally these consequences are sometimes hard to quantify into monetary terms but can have a greater effect on the business and its reputation.

In my experience, businesses do not clearly identify their essential business functions, then walkthrough these functions to determine what the requirements to support them are. This is mainly because this takes time and requires very busy senior executives to be involved in the discussions and decision making process. Many businesses are looking for a quick fix to their business continuity issues. The more diverse your business or complex your functions interactions with other parties (i.e. internal and external to the organisation), the more time the business should spent contemplating the business impact analysis2 (BIA) before putting a plan in place.

A number of people have suggested a business continuity plan is like insurance. If you have it, it gives you peace of mind. But you do not really need to use it until you have a crisis and by then it is too late. And if you need to use the plan, it better be up to date and achieve what you want, otherwise it will give you false hope.

I have seen businesses copy another business continuity plan and basically only change the cover, or buy a software application tool which takes a couple hours to produce a business continuity plan. In both of these cases, the plan did not bear close scrutiny from an experienced business continuity professional but were superficial in appearance to get a "tick" from the auditors. However, generally the auditors these days will also ask, "when was the last time you properly tested your business continuity plan?" But the key point is the plan would not have achieved what the business required in a crisis and the impact to the business would not have been minimised.

So a few of my suggestions are:

- to make sure you have a business continuity plan which has been based on a recent business impact analysis

- to check when the last time your business continuity plan was updated. Most plans need some revision each year and should take into account any significant changes in the business, organisational structure, systems, customer services, etc

- to ensure that you have a copy of the business continuity plan in an offsite location should you be unable to enter your primary office location

- to ask when was the last time the business continuity plan or parts of it, such as the disaster recovery plan (DRP3), tested. There should be testing performed at least each year as this helps

familiarise your staff with what is needed to be done and what to expect, and generally also identifies changes that need to be made to the plan which tend to go otherwise unnoticed

- to check whether your plan is comprehensive enough. Most business continuity plans are made up of several plans or sections. For example, you will usually have a plan for crisis management, and health and safety, i.e. dealing with an event, how to assess the crisis, who should be involved, and how to make sure everyone is accounted for and safe. Out of a crisis assessment, it may be decided to invoke the business continuity plan, such as moving to an alterative business location. - An example of this, was that one of my clients had a call centre in a building. An office two floors above had a fire and everyone was evacuated from the building. An immediate crisis assessment determined that it was going to take most of the day for the fire department to extinguish the fire and declare the building safe to reoccupy. Also given the location of the fire, the fire department mentioned potential water damage to the offices of floors directly below. So they determined very quickly to invoke their business continuity plan which included rerouting incoming customer calls to the alternative switch board and sending essential staff to the alternative office location. All other staff were asked to go home and work from home, if required. All key performance indicators (KPIs) for the business were still met. Fortunately the water damage was not that extensive and they were back in the primary location by the end of the following day.

- if you really want peace of mind, then you should ask an experienced business continuity professional to review your business and business continuity plan. It generally takes a third party who is experienced enough to ask the key questions and identify the shortfalls in your plan.

Are you feeling confident that you are prepared? Or should you take some action to prepare before a crisis event?

Legend

1. Business continuity plan or BCP is usually a set of plans which as a minimum address the business requirements for essential business functions in a crisis or disaster situation and the recovery of the functions back to business as usual. The objective being that if the business continues to operate its essential business functions for a definite period under a BCP the impact on the business is minimised and any effects will be tolerable.

2. Business impact analysis (BIA) or sometimes referred to as a business impact assessment, is the exercise of determining how much "pain" or adverse impact can the business sustain and for what period of time; what are the essential business functions; what are the requirements of the essential business functions to keep operating; and when does the business need to be back to operating as business as usual.

3. Disaster recovery plan or DRP is usually a term used for the plan for dealing with a disaster and recovery of IT systems and services. The plan is usually very comprehensive, such as addressing the method of backup and the offsite storage of backup electronic files; storage of key hard copy documents; the recovery of operating systems and supporting software, application software, and data; and covering contractual arrangements, hardware, network and communications, people, support services and secondary operating site (if applicable).

Down Markets and Business Growth Walls

It's tough to build a business in a down market, and to grow past certain business size 'walls,'

How can business owners best operate in a down market?

Business owners looking to sell their business need to pay attention to the markets. That seems to be a pretty obvious thing and maybe even a trite statement.

We're working with one business which is down 20 percent, who had an offer on the table in December, and would have closed then based on trailing 12 months and forgetting the 20 percent down.

She thinks the business internally is just worth more than that and she's decided to hold out.

The fact is her trailing 12 months is going to continue to trail down. She's in an industry where it's affected by the economy; a good part of it is discretionary. She probably turned down the highest price she's going to see on that business at least in the next several years.

Regarding operating a business, it's easy to say plan ahead, that's obviously the advice in a nutshell, but what does that mean? It means conservative financing of the business.

The bankruptcy numbers are disproportionately high now due to those businesses that use leverage to buy a business or manage to borrow more money in the course of operating the business.

When the margins squeeze, when the business revenue cuts down 30 or 40 percent, all of a sudden you can't service the debt.

So it's conservative business standards, and for most business owners we don't have to tell them that. Small and middle market business owners don't like that trip to the bank. They only go there when they have to. They're guarding against the excessive capitalization of the business, excessive debt in the business.

The debt in most businesses exceeds the equity. There's nothing wrong with that, that's normal, but it depends on how much it exceeds the equity.

Let me translate that to the equity in the private business. In small and middle market private business, family and friends was the traditional thing.

In the last up cycle, private equity groups became a dominant player. I'm pretty confident that private equity groups this year own about 48 percent of the capitalization of the mid market. And by mid market, I'm not talking about the public mid market, that's a sliver of companies.

I've studied businesses with revenue greater than $5 million but less than $500 million. If you were to capitalize that whole market, private equity groups rather than individuals will now own about 48 percent of that market. It's a very different market than it was six or eight years ago.

Speaking of market walls or business growth walls. Does this to mean that there are barriers to companies reaching certain sizes.

In the mid market, businesses with revenue $5 million to $500 million, there are only about 350,000 of those in this country, 350,000 out of 27 million businesses.

Let me rephrase that in another way. There are 27 million businesses in the United States currently. Only 350,000 of those have revenue more than $5 million. That's a huge wall, getting over the $5 million dollar mark.

So 97 percent of the businesses in the United States have less than $5 million in revenue. I think that's prima facie evidence that walls to growth exist.

I also break the middle market into lower middle, mid middle and upper middle. If I broke it, for example, at $10 million rather than $5 million, 125,000 of those businesses would be all that remains.

So we look at revenue greater than $10 million, 125,000 businesses in this country. That wall between lower middle and mid middle is very steep. And, again, the wall from mid middle up to the upper, and the upper middle market, there's only about 12,000 companies.

Some of us overcome these walls but the odds are very much against us.

For twenty-five years, Marian Cook [http://www.businesstransitionexperts.com/education-at-your-desktop-premium] has been a trusted advisor to the hundreds of owners and executives worldwide whom she has helped to improve business performance and value. She has worked globally with firms ranging in size from start-ups to Fortune 500 companies. She has helped them develop and execute their strategies, realize their goals, and maximize their businesses' valuations and their transitions to new ownership.