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.

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.

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.

Earlier this week I read a very interesting, front page article in the Wall Street Journal that discuss how consumers are scrambling to raise cash now with the economy slowing. It is obvious to me that some of these decisions will very likely have a negative, long term impact on their financial health.

As business owners deal with this economic slow down, it is helpful to have simple criteria to help with your financial decision making. One helpful question: “Will this strategy harm my company by reducing its long term value”?

It is certainly more fun to manage your business in a time of economic growth. However, decision making during slow periods often have a more important impact on how well your business performs in the long run. Small business owners understand that during slow times there is less profit. It is the long term enterprise value of the company that you want to protect.

Here are some of the non-conventional alternatives that business owners could consider as they look for working capital to survive this slow economic period. I hope it helps you with your decision making and ask you to reply with other options you have considered for financing your company.

Negative Loss of Loss of Permanent Negative

Credit Asset Company Economic Tax

Option Impact Control Equity Loss Impact

This economy is providing a wonderful opportunity for the business cash advance industry to prove its value to the business community. So far they have met that challenge as several companies have raised new capital to lend and are setting records for advances they are providing to business owners managing this recession.

While the cost of capital is more than traditional financing, it is available now and, when used properly, helps a business owner maintain or even enhancing the long term value of your company.

Long Term Planning for Short Term Cash Needs is a post from: Business Cash Advance provider Instant Capital Solutions.

Lets understand a couple important things about Dunn and Bradstreet.

First of all D&B it not THE credit rating agency, they are one of three, and are relied on by vendors and credit card companies for your business credit profile. For a full business credit profile, you’ll need to also deal with Experian and Equifax.

You will have a “file” with D&B once you have a “Dunn’s number”which is nothing more than a number your company will be identified by, similar to your social security number. This is free and takes about 2 weeks. However, D&B has an expedited service with a charge of $499 . We have had many clients tell us that the phone sales rep has told them they must pay this fee to get “set up” will D&B, which is not true.

Do not be surprised by extremely aggressive sales tactics by D&B.

The first time a potential creditor asks for a credit profile on your company, D&B will need to compile a credit profile on your company or they will have nothing to sell their customer. At that time they will contact you to build your credit profile.

As you can see, there is no need to pay for the expedited services, should a creditor need a profile about your company, D&B will pull on together at that time. Use the $499 more effectively in your business.

While a strong credit profile is very important, it is important to have one at all 3 agencies and it is unnecessary to pay for this expedited service with D&B.

A $499 Gift from D&B…Sort of. is a post from: Business Cash Advance provider Instant Capital Solutions.

What Ancient Rome can Teach You About Funding Your Company is a post from: Business Cash Advance provider Instant Capital Solutions.