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Targeting a Small Business for Sale

As they say, it’s better to target an existing business rather than start something from scratch. You can already earn profit from it right after the acquisition has been made. There are a lot of businesses that are put on sale, that’s whyit’s important to scrutinize the business that you are targeting.

  • Know the real reason for selling


Sure the seller would usually say it’s because retirement or health concerns. But there must be something unsaid that will greatly affect the operations of the business. Find out the true reason for the sale by talking to some people who are familiar with the business that you are targeting, such as the suppliers, other business people and the like. If the business is situated in a mall, you may seek the word of someone from the mall management or that person in charge of the tenant lease.


  • Identify the inclusions of the asking price


Ask the seller, which of the assets are actually included in the sale and what type of valuation was used to come up with the price. The seller should have a list of all the assets with their corresponding value estimate. Ask if all of the assets are free of debts or liens.


Look into the value set for the intangible assets. Sellers usually bloat the rate for this, with the subjective perspective when it comes to the reputation of the business, its strong customer base etc.


  • Do due diligence


It’s highly important to take some time to go over the important data of the business before jumping to the final processes of the acquisition.


  • Demographic and political issues

If for instance, the business you’re targeting is located in Edmonton, you must also take a look if there are a lot of other businesses in the said area that are being put on sale. There might changes in the zoning law that will affect the usage of the business location. Are there also changes when it comes to the population in the area? Is it increasing or decreasing? Are majority of the population becoming older or gearing toward the younger age range?


  • Owner’s Discretionary Income (ODI)

This is the declared profit net of the payments to suppliers, wages of the employees, rent, and other overhead expenses. If the ODI is on a decreasing trend, this should serve as a warning to you. This seems that the business is not already growing. But if the ODI seems to be enough to still make the operations run, let the seller put it into writing but still give yourself a few months before giving an offer. You should take this time to confirm if the ODI declared by the seller is precise.


  • Business’s Biggest Competitor


Don’t hesitate to do a little investigation if a competitor is planning to put up their own store near yours. If for example, you’re planning to buy a local hardware store in Edmonton, you may want to know if Home Depot or Lowe’s are planning to have their local branch in the said area.


  • Sales Taxes


Make sure that the current owner of the business is duly paying the right amount of sales taxes. If not, you might be the one facing the authorities for the amount that the previous owner owed them, once they find out about it.


  • Image of the business


Ask the locals about the business. Is the business a known one in the area? Are they themselves customers of the company? What can they say about their services and/or products? You may also seek the help of the local police station and ask if there are any complaints filed by or against the owner of the business. Go to the local library and do a little research. Look into newspapers dated five years back. Take a look if the business an active one in the community. Are there are a lot of write-up’s about the company? Or was there any written negative publicity about it?


  • Know its real worth


There are several business valuation computations used to arrive at the asking price. In setting the value of the assets, the seller might have used any of the ff:

  • Book Value – found on the balance sheet provided
  • Modified Book Value – adjusted book value based on the current market value of the assets
  • Replacement Value – how much it will cost in case you replace the asset
  • Liquidation Value – amount if in case the business was liquidated


Bear in mind that the real worth of the business is based on its income. Going through the financials of the company should have given you a tighter grasp on the revenues, expenses, and the profit it generates. You should be purchasing a business based on the return on investment and not on the declared price. A business appraiser or an accountant may help you better in knowing how much does the business is really worth.

  • Explore your financial alternatives


If in case the business is worth more than the amount you have on hand, you may want to seek different financial sources that may help you in the acquisition. Usual financial sources for small businesses are family members, friends, and trustworthy banks and credit unions. These lending institutions might be more lenient when it comes to lending money since funding an existing business is much less risky as compared to financing a start-up business.


  • Give the offer

Make the offer and expect a counter-offer from the seller. The two of you must meet into an agreed price after going through the negotiation process.

The seller might ask for a non-refundable deposit. This is to ensure that you are a serious buyer. But the rules agreed should still apply. Don’t be afraid to withdraw from the transaction if it’s getting past the price that you are initially prepared to shell out for.

  • Make a Sale/Purchase Agreement


Once you and the buyer already have agreed terms, put it into writing through this contract. This written agreement must specifically mention all the aspects of the sale and must be prepared by a lawyer.


You may want to explore businesses on sale online. Check out online websites and find out which businesses are available in your chosen industry or location (e.g. business that are sale in Edmonton). The site will also provide you with a lot of information you may want to know about buying or selling an existing business.



What to Do When a Financial Crisis Hits

    It can happen to anyone. Things are great and then without warning you’re laid off, get sick, or find yourself facing a steep repair bill. Suddenly you’re wondering how you’re going to pay all your bills. With the economy still shaky and Congress’s bickering causing serious budget cuts, believe me you’re not alone. Here’s some advice on how to cope.

Stay calm. It’s natural to feel panic and even anger, but neither of those things will help. Try to stay calm and proactive, and think positive.

Check your savings account. If you’re fortunate enough to have one, calculate how long it will keep you a float. If you don’t have one, don’t feel bad. These days it’s difficult if not downright impossible for many people to save because once the bills are paid, there’s nothing left over.

Step away from the credit cards. It’s tempting and may even seem logical-you’ve got healthy credit limits on your cards, why not use them to keep you afloat until the crisis is over? The answer? Because you’ll only be adding to your debt, and if your situation is that bad, how will you make your monthly payments? Don’t get yourself into an even deeper hole.

HUF.  When you’re facing financial difficulties, put HUF first. That is, Home (rent or mortgage), Utilities (Electric, Heating, etc) and Food. Those are the three things what money you have should go to first. What’s left over should go toward necessary things like renter’s insurance and gas for your car. Paying your credit cards should be your lowest priority in a crisis. If you’ve been a good customer up until now, but find you can’t pay, call the company and explain. Most have programs in place that can help you, either by lowering your monthly minimum payment or suspending interest.

Look into a loan. The first place you should try is family and friends. If they are unable to help, see if your bank offers unsecured loans. Avoid payday loans; they will end up costing you far more than what you borrowed. If you have a car, look at online title loans.

Budget. Take a good hard look at what you spend each month and see if there are things that can be eliminated.

Stay positive. It’s easy to get depressed when facing financial problems or feel ashamed, but remember, you’re not alone and chances are your situation was caused by things completely out of your control. This too shall pass!


The Top Life Financial Mistakes Made During a Startup


    Any sort of financial mistake can be very costly but when you are starting a business and relying on it to give you an income, you really do not want to make mistakes. Below are the top common mistakes made by start-up businesses, so that you can avoid them.


It is so easy to overspend when you start a business. There will be things that you need to buy, but these do not have to be hugely expensive. Negotiate on prices for everything and try to do everything that you can yourself. There is a lot of information on line about free marketing and bookkeeping, so you can do these things yourself and save a lot of money. Do not be tempted to buy things that you do not need.

Not saving

It is so important to put some money by. If you get expenses that you cannot manage, then you have some money to fall back on. It can make such a difference, not only to your business if you do get a bill in, but also to your peace of mind. Put the money in a business savings account so that you are not tempted to spend it on personal things.

Personal loans

Many new business holders are tempted to use personal loans such as payday loans to help the business grow. They will borrow money and then use it to pay their personal expenses while the business is not doing well or use it to pay for things for the business. This can often lead to problems in making repayments and can cause the business to have to fold. So avoid these as much as you can.

Not having personal savings

Having personal savings is very important when starting a business. It is unlikely that you will be able to pay yourself very much for a while and so you will need some money to use to cover your bills and other living expenses. Be sure to have at least enough to cover a few months of expenses so that you can do this.

Drawing too much out

It can be tempting to draw money out of the business to pay yourself right from the start. Although this is the point of running a business; to generate an income, you need to be prepared to invest money back in. You will need to pay for things for the business and you will not be able to get the business moving if there is not money available to do this.


4 Keys to Surviving a Tax Audit


You’ve just received the dreaded letter from the IRS, which says that either your personal income taxes or your business taxes are about to be audited. The IRS will perform one of three types of audits: a correspondence audit, an IRS office audit or a field audit.

  1. A correspondence audit is conducted through the mail. The IRS is probably asking for specific documentation of a certain item on your tax return.
  2. An IRS office audit usually checks up on people who are either self-employed or own a small business. You may be asked to bring a list of items to a local IRS office, or you may be asked to stop by the IRS and explain your entire return.
  3. A field audit is the most comprehensive type of audit. In these cases, an IRS agent will come to your home or place of business to physically examine items deducted on your tax return.

In many cases, you should seek the assistance of someone who has completed either a traditional or online graduate tax program. Also, while you go through the process, keep these four keys to surviving an audit in mind.

Educate Yourself

The National Small Business Association suggests you prepare for your audit by reading IRS Publication 1, entitled “Your Rights as a Taxpayer.” Additionally, obtain a copy of Publication 556, “Examination of Returns, Appeal Rights and Claims for Refund.” Read any additional IRS publications that explain the specific tax issue that the agent wants to discuss.

You may know that the IRS wants to audit you because you’ve failed to pay the taxes that you owe. Navigate to the IRS website and click on the “Payments” tab at the top of the page. You’ll see information about how to pay and what to do if you if you can’t pay. Use the information to come up with a payment proposal, and bring your payment proposal to your audit.

Bring Only Necessary Documents

Avoid providing information that the agent hasn’t specifically requested. For example, don’t bring documents related to prior years’ returns. If documents or receipts related to your audit are missing, then you have the right to reconstruct that information by talking to others. For example, if you made a donation to charity but lost the receipt, you can ask the charity for a copy.

When you correspond with the IRS, keep every document that you receive from the agency. Take notes during all of your meetings, and use those notes to formulate a letter to the IRS. Explain what was said during the meeting and any agreements that were made in the letter, and mail it to the IRS so that the letter is in your file.

Milk the Schedule

As a taxpayer, you have the right to schedule your audit at the time and place of your convenience. If you need additional time to prepare documents, request a delay. You can request a recess at any time during the meeting if you need to consult a tax professional.

Although you can stretch certain aspects of the schedule, do not fail to meet IRS deadlines. If the IRS requests a response from you within 30 days, then you need to respond. The smartest thing you can do is either to respond immediately or give the correspondence to your tax professional. Avoid setting the correspondence in a drawer and forgetting about it.

Say Only What Is Required

Giving away too much information during an audit is not in your self-interest, but withholding information from the IRS will make matters worse. If you’ve made a mistake on your tax return for a certain year, then admit the mistake, but don’t volunteer information if you’ve made the same mistake during other years.

You have the right to limit the discussion and the scope of your audit to the issue brought forth by the IRS. However, remember to treat the agent with respect. Avoid speaking disrespectfully, and control your emotions. If the auditor mentions fraud at any time, then talk to a tax professional.

An IRS audit can seem both scary and highly inconvenient. Since noncompliance is unwise, you should cooperate with the agency. Remember your rights, and be honest without volunteering non-essential information. If you have any questions at all, consult a tax professional.

About the Author: Steven Harris is a tax professional who has published a number of articles and blogs related to income tax. He’s also an audit survivor.

Structured Settlement Brokers

    Structured settlement can also be utilized in several different cases like for example, during the repayment of a trade credit, or the repayment of some negotiable instrument. In such circumstances, the authority to receive such structured payments can be handed over (or sold) to someone else. This selling of the authority or rights is usually called structured settlement selling. The transaction transfers the periodic installment payments to the buyer of the authority. The party responsible for the settlement installments would also be informed of this selling of the structured settlement. The whole transaction is made with the assistance of an expert structured settlement broker.

The idea behind structured settlement brokering is pretty much the same with share brokering. The structured settlement broker’s fundamental function is to look for rights of structured settlements that are being sold and then speak to individuals who wish to buy such settlements. These brokers, in return, will ask for a small portion from the whole transaction as commission to both parties. Aside from that, such brokers also serve as an advisor to the involved parties. Listed below are a handful of the typical functions served by structured settlement brokers;

– One of the main functions of the structured settlement brokers is to provide updates and other relevant news to their clients with regards to the availability as well as demand for structured settlements in the market.

– Another duty of a structured settlement broker is to make sure that the entire transaction is not only legit, but ethical as well, and that the transaction does not breach any of the regulations and the laws of money as well as securities market.

– Obtaining the cost of a particular structured agreement with the aid of the amount of money being received by the payee per installment, supply and demand forces, the use of a structured settlement calculator, as well as a reasonable revenue margin for the structured settlement seller, is yet another function of a structured settlement broker.

– A lot of structured settlement brokers also serve to oversee their client’s legal paperwork. Such paperwork is extremely important since it transfers the installment payments from one individual to another.

– Although not all structured settlement brokers perform this, but there are actually some brokers who also makes sure that the person paying the structured settlement, always pays the installments completely as well as on time, without any delay.

The Advantages and Disadvantages of Bankruptcy


Going bankrupt is not something than anyone wants in their lives, but unfortunately it is a reality for many people throughout the country, particularly after the problems caused by the recession in 2008. Of course, going bankrupt is the absolute worst case scenario. There are other types of debt relief you can try first, especially if your debts could be somewhat manageable. These are DMPs (Debt Management Plans) and IVAs (Individual Voluntary Agreements). Both of these work to lower the debt payments you have to make, but if your debts are very high and you can’t make the repayments, then bankruptcy may be your only solution.

Bankruptcy can be applied for by yourself or by someone you owe money to. If you’re applying for bankruptcy yourself, then you may have to give evidence to a judge that it’s been recommended to you by a debt help charity. If you’re having serious money problems then charities like this should be your first port of call, as they can help you sort out a plan of action.

The advantages

If you’re in a huge amount of debt and it’s affecting your life, then going bankrupt can take the pressure off as you will not have to deal with the people you owe money to any more. This will all be done by a person called an Official Receiver, who will process your bankruptcy. Most of the court cases held against you (if any) will be stopped but bailiffs employed by the companies you owe may still be able to take your belongings from you.

Although you will lose many things that you own, there are things which you’ll be allowed to keep. This will include a small but reasonable amount of income to live on and some essential household items.

One of the biggest advantages of bankruptcy is that your debts will be largely written off, giving you the chance to begin again once you’re out of the bankruptcy process. This could take as little as one year, but may be longer. You can start again with a clean slate once it’s all been processed, although you may find that being bankrupt could hinder you in certain areas.

The disadvantages

There are many obvious disadvantages to becoming bankrupt, such as the stigma attached to it and the effect it can have on your mental health. Although it’s a way to get rid of debts, going bankrupt will cost you money – around £700 – and will mean that you lose a lot of your possessions, including your home in many cases.

You won’t be able to keep your bankruptcy private, as your name will appear on the Insolvency Register, which is widely available on the internet. Your local paper may also publish the details if you are well known in your community or if there are exceptional circumstances.

You won’t be able to apply for any credit at all whilst you are in the bankruptcy process, and you will find it very hard to borrow money afterwards too, due to the bankruptcy being part of your credit score. You may also lose your job, as it is policy within some professions to stop employing those who have gone bankrupt.

The Biggest Financial Hurdles Young People Face


 For quite a long period of time, most young people would have been relying on their parents financially, and once they graduate from college, they need to start living on their own. They need to manage their finance, which is the most difficult one. The first thing would be to repay your educational loan. To face your financial hurdles, you must be ready to face challenges. One of the biggest hurdle suffered by all is the pressure from society, peer pressure is also there.

In such situations one must always be optimistic towards life. Young people also suffer from dilemma, without understanding where and how to invest; many risk factors are involved in investing money. To overcome these challenges, young people need to educate themselves about personal finance, manage the student loan they’ve already incurred, avoid additional debts and unnecessary expenditure and learn basic investment skills.


5 Lessons from the Recession

The recession has given us all a moment to sit back and think and understand the true meaning of life. We should never argue about the government and finance. The way out is not more borrowing and spending but preserving the resources what you have. Spending and consuming are two different ends.  For the least spending should result in long lasting productive assets. Nowadays passing wealth on to children and future generation is not always free.

People have to accept this fact, storage is not free. The root causes of all the problems are poor skills and surplus borrowing. Borrowing can be there, but should be kept to a minimum level, with respect to the need. The production and consumption habit must be changed. Investment has to be made where there is long sustainable growth. Spending beyond one’s means will lead to debt and to recession which must be avoided.

Combating Your Most Pressing Financial and Time Management Problems


   Most people have more to do in a day than the day allows. When 24 hours isn’t enough time to get everything done, how do you make a dent in your list? The problem may not be the length of your checklist; it may be your time management skills. Whether you want to scale your business with help from Innovia CMC or simply be more productive at work, here’s how to beat your biggest time management issues.

Problem: Sabotaging Your Schedule

Have you ever missed a doctor’s appointment, a phone meeting with your lawyer, or a hair salon appointment? Probably not. The truth is, most people value other people’s time more than they value their own time. To be a high-achiever, you have to have a healthy dose of integrity. Your time matters too! To stop standing in your own way, think about the tasks that are truly important to you. Don’t do anything else until those tasks are complete. This may mean putting other people second, but it also means putting yourself first.

Problem: Treating Your Body Poorly

Do you treat your body like the temple it is? If you treat it more like a waste disposal, you’re probably not fueling it well enough to keep up with the lifestyle you want. When you get too little sleep, skip your workout, and eat junk all day, you’re practically forcing it to be sluggish. How can you expect to be efficient when your body’s lagging behind? Maintaining a health lifestyle will give you the energy to get through your tasks quickly, which will free up more time in your day.

Problem: Failing to Set Boundaries

You love the people in your life, from your loyal clients to your family members. However, that doesn’t mean they should unrestricted access to you. With social media, not to mention a phone that has e-mail, texting, and phone calls all in one, it’s practically required to always be accessible. This can be a drain on your well-being, though. Plus, it becomes a distraction when you really try to buckle down on your own projects. Set limits. If you’re reading, working on a creative project, working out, or doing whatever it is on me-only time, your e-mailing, texting, and calling friends can wait. When it comes to clients, set realistic availability timeframes.

By simply recognizing your time management weaknesses, you can come up with strategies to defeat them!


Why Companies Should Hire a Legal or Financial Consultant


Running any business, whether it’s international or not, is no easy task. It requires a lot of hard work and research for a company to reach its goals. Thankfully, this isn’t something that companies have to do alone. In fact, it’s businesses can get help from outside resources in turning vague hopes into actual business goals. Here are some reasons why hiring a legal or financial consultant is good for companies.

Avoiding Financial Clutter

Companies, especially those that are involved with international investment, often have portfolios with no rhyme or reason. In the business world, this is often referred to as financial clutter. The problem typically arises when companies lack any kind of cohesive financial plan. International legal consultants, such as Dr. Shahram Shirkhani, specialize in helping companies come up with proper investment strategies by sorting through all of their finances.

Help Handling the Finances

Most people who run businesses are perfectly capable of handling their company’s finances. That being said, these same people often find it hard to make time to handle the finances. This isn’t because they lack the skills to do so but because other things get in the way. Sometimes it’s family, and other times certain aspects of the business require more of their attention. This is where a financial consultant comes into play. Not only can they help business owners sort out their finances, but they can also provide an independent view on the situation. The financial future of a company is too important to be ignored, and a financial consultant can give this prospect the dedication that it deserves.

Insider’s Look at the Industry

Unlike other people who are hired by a company, financial and legal consultants are able to provide a rare look into the rest of the industry. This is because they have the privilege of working with many different supply chains and organizations. This gives the consultants not only expert knowledge on how to deal with certain situations, but it allows them to provide detailed information about the rest of an industry to help companies keep up with industry changes. It also allows them to provide an in-depth look about problems that a company’s industry may be facing in a different sector. This gives the company plenty of time to look for a solution to the problem or to be armed with the right information prior to an investment in that sector.

Whether or not a company chooses to hire a financial or legal consultant is determined by that company’s individual needs. Just like any other service that a company may use, determining if a consultant is needed is based on the company’s perceived value of the service. In the end, however, it’s important for the leaders of a company to be brutally honest with themselves on whether such a service is needed or not. Using such a service doesn’t take away from a person’s ability to run a company, nor does it make them look weak. In fact, it proves that they care enough about their company to do what is right.