Just Elementary, Inc. » Archive
Making Multiple Units & Locations Work
The Los Angeles Times Small Business section recently profiled a local small business that is facing a typical dilemma for Southern California business owners. The dilemna of financial struggles amid biting off more than you can chew. The mantra in business is to multiply and use scale of economy to wring out greater profits, which is how a great deal of fortunes have been made, of which IN-N-Out Burger is a great example. People forget though, … Read entire article »
Filed under: Selling A Business
Small Business Exit Strategy Planning
When you are ready to retire and run off into the sunset, your business will have three possible outcomes: Going out of business, transferring to heirs/employees, or being merged/sold to a buyer. Going out of business at best yields liquidation value for the business, which is usually pennies on the dollar. The upside to going out of business, is that you won’t incur any future liabilities in warranties, employer obligations etc. Though it isn’t much of … Read entire article »
Filed under: Selling A Business
Fixed versus Variable Costs
When it comes to analyzing the business model of a operating business, one of the important items to focus on is the expenses. One way that people often quote the expenses of their business is as two types: Fixed and Variable. Fixed expenses are those recurring expenses that do not vary on a frequent basis, or are indexed and have predictable amounts. Lease is a primary fixed expense, and is commonly indexed with periodic increases such … Read entire article »
Filed under: Business Tips
What is Dual Agency?
A common refrain from prospective buyers involves confusion on the Dual Agency Relationship between a broker, seller and the prospective buyer. One of the natural questions a buyer has is: ‘Who is the broker going to be representing?’ Legally speaking in California, the matter is simple, if there is only one broker involved, the broker is going to be interpreted as acting as a Dual Agent. This puts the onus on the broker to get … Read entire article »
Filed under: Business Tips, Negotiation
Why is it so Hard to Find a Good Business?
Frequently we are asked why it is so difficult to find an existing business to buy. There are many reasons for this. Lack of a Central Database of businesses for sale Difficulty to Properly Investigate the viability of a business for sale Lack of properly advertised information Not being able to rely on one Commercial Business Broker? Not having the proper criteria in place before beginning your search Let’s look at these a little more in depth, starting with the Lack … Read entire article »
Filed under: Business Tips
4 Reasons to Buy A Laundromat.
Without further ado, here are the commonly bandied around reasons why laundromats seem like great investments. 1. Passive Income 2. The Business Offers a Valuable Service for the Neighborhood that you can take pride in providing 3. Flexible Hours 4. Simple Cash Business You just got back from that Robert Kiyosaki, Donald Trump, T. Harv Eker seminar and you are pumped to get some passive income. Yes, and Laundromats may have come up as a source of passive income. So … Read entire article »
Filed under: Business Tips
Tips to Make a Business Easier to Sell
Let’s face it, business buyers and commercial property investors have a lot of opportunities to choose from when they searching online. They easily sort results and inquire on numerous different opportunities available. Because of this, getting and keeping their attention is hard. Given that you have put in an amazing amount of blood sweat and tears setting up and operating your business, when it comes time to secure a buyer, how well positioned is your business … Read entire article »
Filed under: Business Tips, Selling A Business
Definitions of Business, Leasing & Commercial Real Estate Terms
When reading online you may come across a plethora of acronyms and real estate terms that sound familiar, but you don’t know what they mean. Here are some Common Commercial Real Estate Terms: Commercial Leasing Related Terms: NNN: This is referred to as ‘Triple Net.’ This is a commercial leasing term that refers to leases in which the Lessee (tenant) pays the operating expenses of the property. In a full Triple Net lease, all of the operating expenses … Read entire article »
Filed under: Business Tips
Occupancy Costs, Should you Move your B2B Business?
For a B2B business, such as a manufacturing, distribution or service business, Occupancy Cost is the total periodic expense incurred for the right to occupy the physical real estate it occupies. Occupancy Cost is commonly referred to as ‘Rent.’ Rent is more than just the base rent, it also includes all of the NNN/CAM charges that go along with it. See our post on NNN/CAM charges for a greater explanation of these additional expenses. However, there … Read entire article »
Filed under: Business Tips, Commercial Leasing
Fatburger Troubles lead to an Opportunity for QSR Experienced Operators
Following along on our recent series of posts regarding franchises and bankruptcy, we share some news about Fatburger. Fatburger is a chain QSRs that serves up juicy burgers and fries with a fun vibe. Corporate locations in California and Nevada have been struggling since at least 2009, when two of Fatburger’s subsidiaries filed for bankruptcy protection. Just recently, as part of the restructuring efforts, 26 of the California and Nevada locations are up for sale through National Franchise Sales. What does this mean if you are interested. Well, number one, are you an experienced QSR operator? Number two, can you close quickly and come up with sufficient capital? If, you answer yes to both questions, then you have a good shot at picking up one or more locations. The likely … Read entire article »
Filed under: Franchises
Ramifications of Round Table Pizza’s filed Bankruptcy, What to expect based on lessons learned from past franchisors who filed for Bankruptcy
You may have heard that Round Table Pizza, the Franchisor, has recently filed for bankruptcy. What does this mean for the brand, franchisees and it’s customers? In looking back at past situations that share similaraties, it is not all dire news. Two such examples are Schlotzsky’s in 2004 and Togo’s from around the same time. Schlotzsky’s was a publicly listed company when it filed for bankruptcy in August of 2004. After changing hands a couple of … Read entire article »
Filed under: Business Tips, Franchises
Pros and Cons of Using an Inventory Service During Escrow
Should you use an Inventory Service when you are buying a business? We’ll give you a breakdown of when it will be handy and when you might no get enough benefit for the cost. Reasons Not to Use an Inventory Service: #1. When the amount and quantity of the inventory is small enough that the buyer and seller can count it all in a relatively small amount of time. #2. When you need to get to know the … Read entire article »
Filed under: Business Tips
Purchase Price Asset Allocation
In buying or selling any business, franchise or not, both the buyer and seller have to agree upon an Purchase Price Asset Allocation. What exactly is a Purchase Price Allocation? When buying a business as an Asset Sale transaction, the purchase price needs to be divvied up and allocated to all of the assets being transferred from the seller and buyer. Examples of Assets that need to be allocated: Franchise Agreement (intangible) Goodwill (intangible) Customer List (intangible) Covenant Not to Compete (intangible) Trade … Read entire article »
Filed under: Franchises
Pitfalls of Buying an Existing Franchise Business
There are a lot of benefits to buying an existing franchise business. However, in this post we will cover some drawbacks that pertain to acquiring an existing franchise business. Having an extra party in the process, that being the seller of the existing location. Never underestimate how much extra work it is to negotiate, and by adding the existing owner as another party to … Read entire article »
Filed under: Business Tips, Due Diligence, Franchises
Tale of a Closed Round Table Pizza
Franchises aren’t all fun and games and wild beyond imagination riches. The road to financial freedom and family happiness is littered with former franchisees who have lost everything, or at the very least lost something, like the following tale of the owner of a North Orange County Round Table Pizza. This particular Round Table unit was open many years and was a popular fixture in the community. The longtime owner had decided to sell after many … Read entire article »
Filed under: Business Tips, Franchises
Discounting Inventory & Deferring Payments During Escrow
In the middle of a transaction of selling your business, the topic comes up of counting the Inventory. You say, of course, to ‘do it’ so an accurate sales price can be determined for the business plus the inventory at your cost. You also let the buyer know that the inventory amount is ($500,000 for example), and it is all in good saleable condition. The buyer asks you how often you turn the inventory and … Read entire article »
Filed under: Business Valuation, Due Diligence, Negotiation
Who Pays Sales Tax on FF&E for a Bulk Sale Escrow
When buying and selling a business in California, there is the not so little matter of paying sales tax. Yes, sales tax when buying a business, just like you would pay sales tax on a pair jeans at the department store. The theory is that when you are buying a business, you are not just buying the Goodwill, but you are also buying tangible equipment critical in the operation of the business. That tangible property … Read entire article »
Filed under: Business Tips, Due Diligence
Buying a Business, Do I really need an Escrow?
A common misconception is that escrows are only for buying a house or commercial property. Often times a novice business buyer will buy a business and simply hand a check to a seller. Yikes! Using a bulk sale escrow is an important legal step in buying a business in California. What is a bulk sale escrow? Glad you asked! … Read entire article »
Filed under: Business Tips, Due Diligence
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