Manage a Small Business SME Management

Victor wants to know about any magic pills that might exist for business success.
I’ve got three for you…
1. Have lots of ______________
2. Be part of an entrepreneurial _________________
3. Build a _______________ of people who actually know and __________ you.
Watch this week’s video and see if you can fill in the blanks. https://youtu.be/bJfu2PhL0g4 
Learn how to buy an already-successful and profitable business even in the covid-recession of 2020 https://www.BusinessBuyerAdvantage.com   
Book a call with me at https://www.clarity.fm/davidbarnett  
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Want to look dangerous like David? Jeff Alpaugh Customs has a special offer for you: https://www.JeffAlpaugh.com/DCB10

 business broker business brokers mergers and acquisitions business advantage smb

Buy a Business

3 Magic Pills for Business Success

I tackle the question, "should my business own the building its located in?"  the answer is surprising to many small business owners and wantrepreneurs.

Visit my Blog: www.InvestLocalBook.com

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[OLDIE] Should Businesses Own Real Estate? Or Is It Better To Lease?

I tell a story of how a young woman is growing her business to death by letting receivables grow faster than payables.  Cautionary tale for any small business owner.

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[OLDIE] Growing A Business To DEATH! Successfully Managing Cash Flow In A Small Business

I discuss the difference between loans and leases when getting equipment in a small business.  The pros and cons of each and why I prefer leases.  Not a discussion about taxes.

Visit my Blog: www.InvestLocalBook.com

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Why would a business want to lease a piece of equipment instead of borrowing money to buy it?
For me the answer is quite simple, cash (capital) is scarce.
When you lease instead of borrowing, you can usually get the equipment with a far lower or no down payment.
Why? In a leasing arrangement the lease company retains title to the goods and can more easily repossess it if you default on your payments.  Because they’re more ‘secure’ they are usually willing to extend more credit.
A bank may have to go through a more difficult process to seize its collateral in a similar situation.
Leasing companies may also have better expertise in the specific equipment that they finance. This means they are better able to manage losses.  Again, another reason to extend more credit than a lender might.
Another great reason why leasing makes sense is because it forces a business to recognize the cost of using the equipment as they are ‘using it up’ to generate cash flow.
I’ve seen too many situations where people have bought equipment outright with no debt.  Or, they made a big down payment and amortized the loan over a period greater than the useful life of the equipment.
They end up using and retiring the equipment before they have finished paying for it!
In the case where there is no debt, companies use their better cash flow position to undercut competitors and trick themselves into believing they are making a lot of money.   
What they’re actually doing is converting their invested capital in the equipment into cash without setting aside the money to replace the equipment!  When it wears out they end up in trouble!
I’ve seen this particularly in trucking businesses where people with no payment make lots of profit and live a great lifestyle but end up in trouble when that truck finally needs to be replaced.
Leasing forces you to recognize the true capital cost of the equipment as you’re using it to make money.
Sometimes you can even finance soft costs such as installation with leasing.
Sometimes leases are only in the company name and don’t require a personal guarantee.  This doesn’t happen with loans from the bank.
With lots of advantages, leases sometimes do cost more than traditional loans but sometimes the terms are more important than the price.  
I’ve never heard of a lease getting ‘called,’ but it happens all the time with business loans and lines of credit.


[OLDIE] Leases Vs. Loans When Getting Equipment In A Business

Robert asks: How do you form and manage a mastermind group?

Watch the video: https://youtu.be/Zj0Yn5YGD0A

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The Invest Local Book blog is all about small business, local investing, home economics, franchises, small business systems and borrowing money for your business. It's full of great content and I look forward to seeing your feedback.

[OLDIE]  How To Form And Manage A Mastermind Group

Watch the video here: https://youtu.be/hjJUly_MLBQ
Learn more about buying, selling and managing small businesses at my blog site. http://www.DavidCBarnett.com 
Learn to buy a business: http://www.BusinessBuyerAdvantage.com
Learn to sell a business: http://www.HowToSellMyOwnBusiness.com

Here they are:
1. Know your gross margin and make sure it’s right.  Too often small business people don’t know what their margin should be.  This leads to a failure to increase prices when costs go up and a failure to build in all the costs of doing business.  
2. Have a good record keeping system and reconcile quickly each month.  Even if you know what your margins should be, if you’re waiting for your accountant to prepare financial statements months after your year-end, you’re too late.  You need to be able to know for certain if you’re hitting your margins each month.  If your business has a lot of inventory, this can mean counting inventory EVERY MONTH.  Otherwise, you won’t know your cost of goods sold and you won’t know your margin.
3. Understanding the difference between debt and equity on your INCOME STATEMENT.  Debt and equity are usually found on your balance sheet but they can also be hiding on your income statement.  Hire a new worker and you need to pay them each and every hour whether or not they’re productive.  It’s like borrowing from a bank, you need to pay them back.  Commissioned salespeople only get paid when they produce.  That’s like having a partner in the business without actually making them a partner.
4. Getting the most return with the least investment. It always amazes me how small business people will get themselves into debt to purchase vehicles, machinery, buildings, etc.  Big businesses know that you deploy your capital where it gets the biggest rate of return and use leverage as much as possible.  Leverage doesn’t have to be debt!  When you lease property, you’re leveraging the landlord’s capital.  When you rent a truck, you’re leveraging the rental company’s capital.  If you can’t make money serving clients with leased and rented gear, what makes you think you can deliver those things yourself to your own business at a lower cost?  
5. Understand your customer journey. Many small business people fail to appreciate the ‘journey’ their customers go through from the time they decide they need a product or service until the time they’re finished shopping.  When I was a corporate employee, I didn’t eat at restaurants who wouldn’t accept AMEX.  Why? Because my employer had given me an AMEX to pay expenses.  If a fantastic restauranteur didn’t accept the card, it meant that I had to pay with my own money, submit an expense claim with receipts, mail it in, wait for weeks for a cheque to come in the mail, then stop by an ATM to deposit the cheque.  Alternatively, a restaurant who took my AMEX didn’t cause me any grief.  Too many chefs are worried about the food and forget that they may actually be selling relief from hunger and paperwork.

My biggest tip for success though in small business is not to start one. Get a profitable business with customers and staff on your first day by buying an already successful company.
Learn how to buy a business at www.BusinessBuyerAdvantage.com where you can access tons of information and enroll in my online course.
In fact, it’s such a great value I may increase the price again shortly.  (The course works out to about $20/hr. and comes with a 30-day money-back guarantee!)  You can see how my whole buyer system works in this video from four weeks ago: https://youtu.be/ooixMSaFf6Y

Go to www.DavidCBarnett.com and sign up for my weekly e-mail to receive my videos three days before they go public as well as other exclusive offers. Easy unsubscribe at any time as I use MailChimp.
Find all my live events here: http://davidbarnett.eventbrite.ca 
Thanks and I’ll see you next time.

5 Tips For Small Business Success - How To Manage A Small Business

Watch the video here: https://youtu.be/1EjKjSAd1F8
Learn to buy a business: http://www.BusinessBuyerAdvantage.com
Learn to sell your business: http://www.HowToSellMyOwnBusiness.com

Join my email list/ see my blog: http://www.InvestLocalBook.com

Related article:
Should my Small Business have 100 or 1,000,000 Shares? How do Shares work?
Over the last two weeks I’ve had two different clients who were somewhat confused about how shares work in a corporation.  Both were small business owners.
One owner was trying to pass the family business on to their children.  They asked me how to ‘transfer their shares’ from the established corporation to the new corporations of their children. Hmmmm…
The other client was a pair of entrepreneurs who wanted to bring on a third partner and have his investment go into the company.  They weren’t sure how to accomplish this.  
I taught them how they could achieve their goals by splitting their existing shares and have the corporation issue new shares to the new partner.
Not sure what I’m talking about?  Learn how to use a corporation’s shares to make your deals in this video: https://youtu.be/1EjKjSAd1F8 
Please remember to like and share this article, it’s the only way the people who run the internet have of knowing if the content is any good or not. The more you share, the more likely someone who needs this information will be able to find it.
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I’m coming to Charlottetown, Prince Edward Island in January 2017.  Seats are already filling up.  Find all my live events here: http://davidbarnett.eventbrite.ca 
Thanks and I’ll see you next time.

Should Your Business Have 100 Or 1000000 Shares- How To Buy A Small Business

you're the worst kind of coward
run when you want me most
push me away afraid that I won't come close
act like everything that hurts is all my fault
you're the worst kind of coward
run when you want me most

do you know what you're holding
when I'm in your arms
do you know what you're hearing
when I whisper these words
do you know what you have
when you have my heart
if the answer is no
I'm just gonna go

you're the worst kind of liar
saying you're not in love
you're feeling something trying to shut it off
pretend you're cold inside when really you're warming up
you're the worst kind of liar 
saying you're not in love

I think you know I think you know
I think you know

I discuss buying, selling, financing and managing small and medium sized businesses either alone or with guests.  
I've started, bought, sold and closed businesses. 
Author of three best-selling business books; 'Invest Local: a guide to superior investment returns in your own community,' 'Franchise Warnings: What you really need to know before you buy' and 'How To Sell My Own Business: A guide to selling your own business without paying a broker's commission.' all available as well as 5 other books on Amazon or from www.DavidCBarnett.com

5 Tips For Small Business Success - How To Manage A Small Business

DBarnettMoncton

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