Short Answer…
Yes.

The Concept of Business Valuation
Whether you own a business and want to sell it, or else you’re an entrepreneur who desires to buy an existing small business, somehow or other you need to know what the company is worth.  On the selling side, the plan is to make the price low enough to attract a bevy of buyers, while making sure you’re not giving away potential profits.  From the buyer’s standpoint, you want to assess the value of a business in comparison to its posted cost.  The price you pay for a small business can seriously affect months or years of down-the-road profits, so this factor is not to be taken lightly.  In many cases, a seller will engage the services of an expert to determine a reasonable market value.  Buyers oftentimes hire their own experts to assess the price of a business they wish to acquire.  These dueling experts may arrive at vastly different figures.  Their ability to compromise can result in a mutually satisfactory transaction for both buyer and seller, but much of that process may be based upon what method each side uses to arrive at a price.

Determining the Value of a Business
There are three reasons why an owner of a small business will hire someone to determine its value—a pending sale, some sort of lawsuit, or else tax and estate-planning issues.  For the purposes of this article we are concerned only with the first, but the process is the same no matter why a valuation is required.  There are three basic methods experts use to value a business:

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Creative Business Financing
There are a number of interesting ways to finance a business purchase.  The most traditional method involves securing a loan from a bank or a credit union.  You could also pool funds from friends and relatives or ask the seller to carry a note for a portion of the purchase price, or even all of it.  But one of the secrets for small business finance may be sitting closer than you might expect—your retirement fund.

What is a 401(k) Plan?
While the pension plan has pretty much gone the way of the dodo bird, companies have found other ways to allow their employees to set aside money for their retirement.  The 401(k) plan allows a salaried worker to deposit a small portion of his or her wages every pay period into a tax-exempt account.  Employers offer to match these funds up to a certain percentage or dollar amount; this figure may also vary depending upon the fiscal health of the corporation—where a year with greater profits will mean a higher matching deposit.  Oftentimes there are “vesting” issues, where the employer’s contribution does not completely accrue to the employee until he or she has been there a predetermined number of years.  No matter how these issues are structured, the money contributed by the worker is sacrosanct.  Surprisingly, you can use this money for financing a business.

Penalties Versus No Penalties
Once funds are deposited into your 401(k), whether they are yours directly or else matching contributions from your employer, the I.R.S.

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Creating the Franchise Concept
The wily entrepreneur will always express a desire to start a business and make lots of money.  While there are no guarantees, it is difficult to succeed if you don’t even try.  One of the ways to leave a lasting impression on the world of business is to start a company, watch it grow and profit over the years, and then take the next step—turn it into a franchise operation that allows others to benefit from your proven system.  You will multiply your earnings many times over thanks to the upfront fees you receive from new franchisees, plus from ongoing royalty payments.  You will also see your brand spread out across the countryside, perhaps even becoming a household word.  After all, there was no McDonald’s chain prior to Ray Kroc, nor a Dunkin’ Donuts until Bill Rosenberg dipped his first lump of dough into a vat of fry oil.

Good Legal Advice Is a Top Priority
When turning an existing business into a franchise opportunity, the best place to start is to engage a competent attorney—one who knows the franchise industry and is familiar with various state and federal requirements regarding disclosure and other touchy issues.  Before you ever solicit your first franchisee, you will need a comprehensive package of material that conforms to specific government regulations.  The Uniform Franchise Offering Circular (UFOC) is a legal requirement as mandated by the U.S.

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Choices – Lots of Choices
The decision to buy a franchise as your entry into the world of business ownership should not be taken lightly.  Franchising is one of the most popular ways for people to run their own business, but even that field can be divided into subsidiary choices.  Once you have determined that a franchise purchase is the right path to take, your next move is to decide what sort of franchise to buy.  There are five distinct types:

1. New Single-Unit Franchise
This is the most common form of franchise operation.  Whether retail or wholesale, mobile or work-from-home, a single-unit franchise involves direct, day-to-day oversight by the owner.  In most cases, a small group of employees assist the owner in all aspects of the business, except for management.  In others, especially those that operate longer hours or even around the clock – a convenience store, for example – one or two assistant managers supervise the business whenever the owner is away.  For smaller single-unit franchises, the owner may actually be the only employee.  This could include mobile-type operations like a carpet cleaning service or home decorating consultancy.

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What is ROI?
There are a number of technical definitions to describe the business term ROI, or “return on investment”.  For example, InvestorWords.com says, “A measure of a corporation’s profitability, equal to a fiscal year’s income divided by common stock and preferred stock equity, plus long-term debt.  But what does that mean to a prospective franchisee?  Not very much!

A Definition of Franchise ROI
In the simplest of terms, your return-on-investment is an analysis of the amount of money you pay to acquire a business compared to your expected or actual profit.  If you buy a business for $100 and show a net profit at the end of the first year of $20, then your annual ROI for that period is 20 percent.  In this scenario, and assuming a similar rate of return each subsequent year, it would take you five years to recoup your initial investment.

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Franchising: A Two-Way Street
After choosing to purchase a franchise, you rightfully expect the parent company to come through with a great deal of support.  After all, you are forking over tens of thousands of hard-earned dollars in the form of a franchise fee, not to mention additional sums of cash for equipment, supplies, inventory, and so on.  But you have responsibilities as well – to yourself and your employees, and to the corporation whose brand you represent.

Be an Investor
When a corporation adds a new franchisee to its roster, the people at the home office have already done a great deal of due diligence.  Notably, they examined your financial situation and decided you had sufficient capital to move the business forward as well as supply the start-up cash.  Most new businesses need time to find their market and attract enough customers to pay the bills and provide a profit.  One of your first responsibilities as a franchisee is to keep things running smoothly.  Pay your suppliers on time, pay your employees a fair wage, and address all your financial obligations in a consummately professional manner.  If you can afford it, take your early profits and plow them back into the business.  This will benefit you in the long run, especially if you have plans to open additional locations at some point down the road.

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Retirement Is Not a Dead End
Americans today are living longer than ever and enjoying an active lifestyle at a more advanced age than their parents ever did.  A famous saying from a decade or two ago was, “Forty is the new thirty.”  When it comes to business owners, though, you might say, “Seventy is the new fifty.”  Even though the traditional retirement age is 65, many people work well beyond that, correctly believing that remaining physically and mentally sharp in their golden years will greatly improve their overall quality of life.  Others choose to work longer due to economic concerns, as retirement funds and pensions have taken a financial hit in recent years.  Embarking on a second career can be a very rewarding experience, and many retirees choose the route of buying a franchise.

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Why Business Valuation Is Important
The process of arriving at an accurate assessment when valuing a business is perhaps the most challenging aspect of any prospective small business purchase.  A seller has arrived at a specific price he or she wants for the company, and one must determine if that business value is accurate.  Pay too much, and you will struggle to make a profit.  Pay too little—well, there’s hardly a down side there, but the scenario is unlikely at best.  There are several ways to value a business; choosing the most appropriate one for your situation—and ensuring that it’s accurate—can make the difference between success and failure.

Three Basic Approaches
Small business valuation generally falls into one of three categories:

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Taking the Entrepreneurial Leap
Making the transition from worker bee to small business owner involves a great deal of time, effort, money, and personal commitment.  It is not a decision to be made hastily nor taken lightly.  There are certain questions you need to ask and certain elements to consider, with every step along the way a potential pitfall.  How successful you become—both personally and financially—will depend in great part on how prepared you are at the beginning of the journey.  Here are some of the most vital questions to consider.

What Type of Business Should I Own?
Your knowledge, business experience, temperament, personal interests, and comfort level in a particular field all contribute deciding on which industry you should consider.  If you don’t like hanging around other people’s children, don’t start a daycare center.  If you hate sitting in front of the computer all day long, perhaps a career as an IT consultant is not for you.  If you have the same problems with the sun as does comedian Woody Allen—“I don’t tan, I stroke”—a landscaping business may not be your best option.  Matching your abilities and interests to the industry you want to join is the first positive step to take.

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Investing in the United States from Overseas
Depending upon the state of the U.S. dollar and its relative value against various foreign currencies, overseas investors may find that putting their money into U.S. investments will grant them a very favorable rate of return.  For foreign nationals who wish to take this path, the U.S. government asks that they apply for an E-2 visa.  This is a special document that allows someone from outside the United States to make a domestic investment and also relocate there for a period of time.  For non-U.S. citizens with money to spend, this can be one of the easiest ways to end up living and working in the United States.

E-2 Visa Requirements
An applicant for an E-2 visa must be a legal resident of one of the countries with which the United States enjoys a treaty of commerce.  It is called a “non-immigrant” visa because it does not guarantee the holder a direct path to U.S.

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Protection for Franchise Buyers
Once you have decided that buying a franchise is the right business move, and after you have done proper due diligence to choose a field or industry to enter, it comes time to wade through the vast amounts of paperwork supplied by the prospective franchisors.  Few people are able to do this on their own.  Don’t forget, you are making a huge investment in both time and money to buy a franchise.  Even if your only concern is in understanding the franchise agreement and other material that will legally bind you together with the parent company, spending a few thousand dollars at the beginning of the relationship could save you many times more than that during the time you spend as a franchise owner.

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Let the Buyer Beware
The old adage, “A fool and his money are soon parted,” is never more appropriate than for people who are looking to buy a franchise.  There are literally thousands of business opportunities out there for an entrepreneur who wants to own a business.  But as with any situation that involves spending money, there are always a few bad apples waiting to separate you from your cash.  By doing plenty of research ahead of time—and by keeping an eye out for some telltale warning signs—you will protect yourself, your investors (if you have some), and your financial future.

A String of Bad Players
Every day your e-mail inbox is chock-full of fake business deals—with work-at-home schemes and financial processing dodges just a few examples among many.  You’re unlikely to send money via Western Union to someone in the Ivory Coast based on the expectation of sharing a US$20 million windfall.  If that’s the case, why not approach a potential franchise purchase with the same level of healthy skepticism?  Even companies that appear to be a well-known brand name could be less than legitimate.  The benign-sounding Pizza One out of Canada—the fraudster also used the name “Anthony’s Kitchen” in the States—notoriously took as much as $50,000 from a number of prospective franchisees without delivering so much as a double-pepperoni with cheese.  Do a Web search on the phrase “franchise scam” to find more than 6,000 entries in a wide variety of industries.

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Shaky Financial Times
Some news pundits have described our current dire economic circumstances – not literally, perhaps, but in similar tone – as if the Great Depression of the 1930s was paired with Europe’s suffering at the hands of the bubonic plague, plus an invasion of the Mongol Horde thrown in for good measure.  While few of us are riding high these days, nothing is ever as bleak the Wall Street Journal, Financial Times, or U.S. News & World Report makes it out to be.  Despite the seemingly never-ending stories of job layoffs, personal bankruptcies and home foreclosures, these can be exceptionally rewarding times for small business owners.

Darwin Was Right – About One Thing, Anyway
Although the theory Charles Darwin put forth regarding the extinction of species – he claimed it happened slowly over millennia – has been pretty much debunked by scientists identifying at least five Great Extinctions, each taking place quite suddenly, the scholarly evolutionist was correct about the survival of the fittest, at least as it concerns business.  In difficult financial times, money is tight at the consumer level.  People are especially tight-fisted when it comes to deciding where to spend their cash.  A company that trims unnecessary spending, provides superior customer service, refuses to cut back on product quality, and finds more efficient ways to operate, will stand to capture a solid share of the market.  Establishments that give off the stench of despair, alienate their employees, or continue to spend too much money on non-essentials, will probably fail to survive.  Make smart decisions and you will avoid becoming the modern-day equivalent of the dodo bird or the passenger pigeon.

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No matter what field of medicine you work, the majority of offices and practices need some sort of lab work done for patients.  Many places have on-site medical and dental labs while other practices send their lab work out to specific medical and dental labs.  Prior to buying a medical or dental lab it is important to consider the legal aspects of the transition.  There are many different considerations to keep in mind for buying a medical lab or dental lab.

Location of the Facility
Check the location of the facility when you find a medical lab for sale or a dental lab for sale.  Healthcare providers want to be able to send lab work out that can be returned in a timely manner.  If the medical lab for sale is located a long distance from the hospitals and other medical facilities a great deal of time is spent for transportation of lab samples to the facility.  This is precious time that could be used for obtaining lab results that doctors and patients are waiting for.  It is important that the medical lab for sale or a dental lab for sale is located near major medical facilities to decrease the transportation time and increase the speed of getting lab results to physicians.

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Personal Liability
We all have responsibilities when it comes to living in a society.  If you own a home, you must maintain it properly to avoid affecting the value of other properties in your neighborhood.  If you drive a car, you must operate it in a reasonable manner to make sure you are putting no one at risk of injury.  If you own a company, you must conduct business in a fair and safe manner.  Failing to abide by these societal expectations can cost you, both personally and professionally. The purpose of insurance is to protect the person or the business entity from financial harm.

Business Insurance Plan
Owners of a business should have a plan to protect the assets of the company as well as those of the individual owners.  While there are many types of insurance for small business, here are the primary categories:

• Property insurance
• Liability insurance
• Health insurance

Business Property Insurance
Property insurance offers protection against loss or damage, whether by theft, natural disaster, or accident.  A policy will protect both the physical building and its contents, and most insurers will cover items that are lost or stolen even after they have been removed from the premises—a laptop computer that accompanies you on a business trip, for example.

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“Have no fear! Doc Savage is here!” – Monk, Doc Savage: The Man of Bronze (1975)

Admit it. You missed Steve opening WWDC (Apple’s Worldwide Developers Conference). You missed him walking out at the end of Phil Schiller’s keynote where Steve walks from behind the curtain and says , “One more thing!”

No Show - Despite all of the wild speculation, Steve Jobs didn’t show up at WWDC and according to his earlier statements plans to be back at 1 Infinity Circle late this month. Oh yes, the team put on a very good event focusing on business, not personalities. There was no colored water to dazzle folks. No one sat down on the chair, whipped off the shoes and socks, held them in the air and said “today we’re unveiling iSox.” And five million people ran to the Apple store scooping up pairs at $50 per. There was no rush to roll-out matching laces, iSox cases, a dizzying array of toenail colors mixed. My gawd you had to focus on the announcements rather than the man. Maybe – just maybe – the PC/CE/communications industry has passed thru another stage of growth, dare we say maturation?

The business world goes through phases and the technologies industry has gone from techie gee whiz stuff to fashion statements. The business and consumer industry today changes fast. It changes more frequently than skirt length. In the ‘90s Jack Welch said the wind was at business’ back and he admits it was pretty easy to run GE.  Jeff Immelt is having a tougher time.

Team Behind the Man

While Jobs aura overshadows the fact, he has built an executive team other firms want to use as a recruiting pool … ok so Palm did but they need every little edge they can get. What the industry needs is to dip into the talent pool to find some new crusaders, some new standard bearers.

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The Crux of an Idea
There is an old saying that goes, “The world will beat a pathway to your door to buy a better mousetrap.”  The opportunity to cash in on an invention is one of the top dreams an entrepreneur can have.  All it takes is thinking up something useful that no one else has built.  But having an idea is a far cry from earning big bucks from its sale.  There are a number of steps one must follow to reach that goal.

What is a Patent?
A patent is defined as the exclusive right to control an invention.  Once a patent has been issued, the owner can prevent anyone else from using it, manufacturing it, or copying it without permission.  There are three basic patent types – utility patent, design patent, and plant patent – with each covering different methods and lasting for different lengths of time.  A utility patent is usually good for 20 years and covers machinery and processes.  A design patent is usually good for 14 years and covers a particular design that does not fall under the previous description.  A plant patent is usually good for 17 years and refers specifically to an inventor who has developed a new type of vegetation.  Generally speaking, once the period of a patent has expired, the item becomes public property.

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In the Beginning…
The franchise business we know today is a far cry from its historical beginnings.  Taken from the French, the term refers to the ability to hold a particular right or privilege.  During the Middle Ages, with the feudal system at its height, most of the population consisted of lords and vassals.  The lords were the property owners, and the vassals worked the land.  Eventually there arose a tradesmen’s class that helped move goods from one market to another.  Whatever goods the lord’s estate did not consume were offered for sale at local fairs.  Rather than operate these markets themselves, the local rulers licensed the rights in return for a share of the proceeds.  Eventually other elements vital to commerce came under this umbrella, such as the operation of ferries across bodies of water, the building of toll roads and bridges, and even the brewing of beer.  Other scholars place the franchise concept even further back in time, with one claiming the Romans instituted the practice among food sellers, while another insists a Chinese businessman sold retail goods in this manner as far back as 200 B.C.E.  Well, you know those historians – they never seem to agree on anything!

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The 411 on Trade Associations
Trade associations are generally formed by businesses that operate within a single industry, or one aspect of an industry. By some estimates there are more than 7,500 national trade associations in the United States, encompassing every imaginable industry – from booksellers to chiropractors, and from travel agents to casino owners. Some trade groups come together to help influence public policy toward their product or service, while others exist to further continuing education for its members. They will often sponsor yearly conferences and publish a newsletter on a monthly or quarterly basis. In addition to national trade associations, there are also those with an international reach.

About the International Franchise Association
Back in 1960, an entrepreneur waist-deep in the world of franchising – Bill Rosenberg, the founder of Dunkin’ Donuts – believed it was time for like-minded business owners to form a group that would adequately represent all franchise operations. Looking well beyond U.S. borders, he felt strongly enough about his conviction to name it the International Franchise Association. Today this non-profit group counts among its members more than 1,300 franchise systems as well as more than 10,000 franchisees. The mission statement of the IFA is very simple: “The International Franchise Association protects, enhances, and promotes franchising.” At its foundation is a code of ethics that all members are duty bound to follow.

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