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   
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 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.

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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.

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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/1EjKjSAd1F8
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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.
If you would like to hear from me weekly before anyone else, you can sign yourself up at www.DavidCBarnett.com  
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

Watch the video here: https://youtu.be/qZ_16gRcO00
Sign up for my e-mail list and learn more, get FREE resources at www.InvestLocalBook.com

Related Article:
When does it make sense for a one-person company to hire its first employee?
Being a one-man business can be tough.  There is never enough time to do everything.  When is the right time to make that first hire?  One of my viewers wants to know.  Watch my answer in this video: https://youtu.be/qZ_16gRcO00 
I love this question because it’s all about perspective.  Here’s my two step process for determining if it is the right time to hire that first employee:
1. Track every task you do all day long.  Every 15 minute block must be accounted for.
2. Once you’ve got a week of data, go back and decide if each block was spent doing a $10, $100, $1000 or $10,000/hr task.  Use colours.
$10/hr task are the menial, simple tasks that don’t add much value.  Photocopying, running errands, etc.
$100/hr tasks are things like sales and  customer service, maybe difficult technical work.
$1000/hr tasks are sales of big ticket items or project management of big ticket jobs.  Think of a $25,000 renovation.
$10,000/hr tasks involve long term planning and strategic decision making.  For example, ‘Should we add this new product?’  This decision could mean hundreds of thousands of dollars in sales per year.  It is definitely worth the time of an owner.
Now that you’ve colour-coded our time audit we can see how much time is being spent on each category of task.  
Let’s take a moment and re-phrase the question.  How can an entrepreneur afford to spend 25, 30, 40 or 50% of his time doing $10/hr tasks?  
Once you hire that first person, usually an assistant or some type, you can unload those tasks and make room for more of the higher-value tasks.  Probably sales or customer service, asking for referrals, etc.  The things that bring in more revenue.
Leveraging the efforts of others is the single biggest advantage of being in business.  It’s what allows businesses to grow and create wealth for their owners.  
If you’re not going to get others to help take the low-value items off your schedule you don’t actually own a business, you own a job!
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.
If you would like to hear from me weekly before anyone else, you can sign yourself up at www.DavidCBarnett.com
Do you live in Halifax or Toronto?  I’ve got two workshops coming up at the end of June in Halifax and three coming up for Toronto in September.  Book now to get early ticket pricing.  http://davidbarnett.eventbrite.ca 
Thanks and I’ll see you next time.

Run Your Biz Better

When Should A One - Person Business Add Its First Employee- Viewer Question - David C Barnett

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

When Should A One - Person Business Add Its First Employee- Viewer Question - David C Barnett

DBarnettMoncton

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