The Tycoon Playbook

What Are the Best Small Business Growth Strategies?

Small Business Growth Strategies:  What are the best ones?

If you are interested in ways to grow a small business more aggresively, look no more. Now there's a free series on how on sophisticated entrepreneurs and managers do it.

Small business growth strategies.

 

How to Buy a Business: Get Mom & Dad to Do it For You

How to Buy a Business

The WSJ reports on the latest fad in buying a business. Parents who are exasperated with their kid's inability to secure employment after graduation are turning to buying them businesses. This maybe the most perfect recipe for disaster ever devised.

Watching fellow college students working for $7.50 an hour after graduation, Tana Walther, a fashion-design major at Kent State University in Ohio, snapped up an alternative offered by her father—to run a Pita Pit restaurant franchise he would buy.

"I guess I bought her a job," says her father, Jan Walther, of North Canton, Ohio. Prospects of a career in fashion seemed remote, and Tana, a college athlete, loved eating at Pita Pit restaurants while traveling with her track team. Her first new restaurant opened last year near campus in Kent, and the 25-year-old hopes to open several more.

Read the entire WSJ article on parents buying businesses for their kids here.

If you are serious about buying a business or businesses, stick around here.

How to Buy a Business: Should a Business Own Its Real Estate?

Should a Business Own Its Real Estate?

The answer is "no." Your goal should be to personally own the real estate under your business.

Here's why you should turn lease payments into mortgage payments that you make personally.

How Did Carlos Slim Become the Richest Man in the World?

How Did Billionaire Carlos Slim Become the Richest Man in the World?

The answer is that Carlos Slim did it the tried and true old-school way: deal-making. Deal-making is defined as the acquisition of many assets over a prolonged period of time. The intention is to increase the value of the assets so that they can at some point be sold off at a profit. Some are kept long-term because they are "cash cows," to reference the famous Boston Consulting Group portfolio matrix.

Rather than relying on any single idea to make them wealthy, most self-made billionaires develop cookie-cutter systems for doing lots of deals. The great news is that any business person can learn from them and develop their own system for accelerated growth.

It just requires the guts to take the first step. Surprisingly, most people don't even have enough to do that.

Here's your chance to find out how Carlos Slim became not only a billionaire but the richest man in the world. Take the free 10-day mini-course on the systems and strategies self-made billionaires use by clicking the above link.

Are You Thinking About Buying a Business?

Are you presently thinking about buying a business? Please take a moment to reply to these questions. The interesting thing about this polling system is that you can add in your own questions and then return later to see how others voted.

How to buy a business?

The Tycoon Playbook: How Billionaires Build Their Empires.

The Tycoon Playbook: How Billionaires Build Their Empires

It's tough trying to grow your business in this economy with the same palette of tired old strategies everyone else is relying on. Maybe it's time to learn some advanced strategies for growth from the best of the best? While not everyone can become a billionaire that doesn't mean that we can't learn valuable lessons from them that can be applied in our businesses. That's what this blog and the course are about. Both were created for serious entrepreneurs interested in aggressive growth. It's about learning from the best and entering a lucrative game the existing players don't want you to know about.

Have You Got What It Takes to Apply These Strategies?Do you even know what they are? Probably not.

This is about playing Full Contact Capitalism. Most people waste their lives playing at the Pop Warner League level.

Learn About the Strategies of Self-Made Billionaires 

To find out their secrets simply fill in this form  and the free mini-course will start immediately. Find out if you have what it takes to follow in their footsteps. If you don't, what if you could do just 1% or 5% of what they can? Would your business and life improve? The answer is yes.

Here's a Little Known Secret

Most people have no idea how billionaires build up their empires. They just assume erroneously that you need to be in the right place at the right time to do it like Bill Gates, Jeff  Bezos, or the Google Guys did. Wrong. Most tycoons and billionaires actually do it in another way that's simple yet brilliant.

If you are an entrepreneur interested in learning how to grow your existing company more aggressively, this free mini-course is for you. This is the strategy followed by billionaires like Carlos Slim, Warren Buffett, and Ted Turner and many others. Indeed it's the most proven route to success.

The Tycoon Playbook: Your Booster Rocket

The Tycoon Playbook is for serious business people interested in learning how to grow aggresively. Think of it as the booster rocket that launches you into the game. It doesn't promise to make you a billionaire, but it does promise to get you started and show you how to win at it.

The rest is up to you. Do you have the guts to even try?

Life is too short to be small. - Benjamin Disraeli

"The longest journey begins with but a simple step." - Chinese Proverb

"Hell is watching an endless film loop of how your life might have been if only you had taken the actions necessary to make it happen." - Peter Ireland

No guts, no glory. - Anon

If you're serious about learning how to use the strategies and tactics of tycoons, you can access additional detailed information instantly. Just fill in the form for instant access. If you're not a serious business-person, then please don't. You know who you are.

How I Built It: Barry Sternlicht on Buying Hotels

How I Built It: Barry Sternlicht on Buying Hotels 

Barry Sternlicht, the founder of Starwood Capital, talks to the WSJ about investing in real estate and founding a successful hotel company.

Find out how tycoons like Barry Sternlicht build their empires.

How to Buy a Business: There Has Never Been a Better Time

Job losses are Probably Permanent

High jobless rates could be the new normal

Industries that previously jump started employment aren’t able to this time.

Source

Robert Reich Confirms PERMANENT Destruction of Jobs in America

Source

This is going to increase the number of people trying to buy a business and drive prices up.

For many people, having a steady reliable income will require ownership in a business. And by this I mean a "real business," not some mlm type "opportunity."

How to Buy a Business: Creative Financing Using an Earnout

On So-called Creative Financing

There's two basic types of creative financing. The type that works and that type that doesn't. If you keep your eyes and ears open, you will continue to be astonished by new discoveries. I recently completed a 140 page lesson on creative financing that works in contrast to the kind that doesn't. The lesson consists of the proven financing techniques, I have seen used over 20 years.

Then last night I come across something quite audacious. There was a conversation about how earn-outs work. Several people tried to explain the tactic. Then one gentleman, Mark Makuta, stepped in and gave two personal examples of how he used earn-outs to buy two businesses.

Here is his account in full:

Ron: I structured a few "earn outs" in my prior business and all is subject to negotiation. All of my earn outs were 100%, meaning there was no cash down payment. I was taking over retiring peoples list of clients and business, which was just to risky to warrant any amount of cash upfront. Two examples:

Earn Out "A": Existing business was valued at $300,000.00. Earn out structured as 10% of GROSS paid monthly on a "Net 30", no caps and a 10 year term. So, if after 10 years, I only paid out $250,000.00 that was the end of the deal. Result: After 4 years, all of the persons clients whose business I took over ended up moving to other firms and were restricted as to who they can give business to. Therefore, all revenues dried up and I only ended up paying out I think around $75,000.00. Glad I did not put any cash up front.

Earn out "B" : Existing business was valued at $900,000.00 and I really wanted this business. I knew of the clients and their business I was going to possibly be assuming and I cut a deal with the seller where the base value was to be $1,000,000.00 ( So he was to receive another $100,000 as an incentive to do this deal with me ). Unlike "A", earn out was structured as 20% of NET Income paid monthly on a Net 30 basis with a yearly cap of $200,000.00. So if by October, we reached $200,000.00, no further payment was due until January of the following year. Bottom line: The gentleman received his million in a little over 7 years and I also thru in paying his health benefit premiums for the 1st five years of the deal which had a value of approximately $45,000.00 for him. This was a sweet heart deal. It worked very well for the retiree and it worked extremely well for me because my firm ended up continuing relationships with this guys clients list for quite a few years after the deal ended.

Again, everything is negotiable from monthly caps to yearly caps to final terms, etc.

Hope this helps,

Mark

~end

Earn-outs are typically used to postpone, possibly forever, 5 to maybe 30% of the selling price. Seeing them used to pushback 100% is something new even to myself.

Hats off to Mr. Makuta. 

Find out more ways to buy businesses using creative tactics.

How to Buy a Business: Business Acquisition Financing - SBA Policy Changes Effective Oct 1, 2009

By way of KeyBank.

SBA Business Acquisition Financing - SBA Policy Changes
Effective Oct 1, 2009

Intangibles Policy: - Change of ownership loans that include purchase of intangible assets are allowed.

Intangible Asset Definition: - SBA Now defines “Intangible Assets” as including, but not limited to, goodwill, client/customer lists, patents, copyrights, trademarks and agreements not to compete.

Purchase Price of Intangibles over $500,000: - If purchase price includes intangible assets in excess of $500,000 then, Borrower and/or seller must provide an equity injection of at least 25% of the purchase price of the business.

Purchase Price of Intangible less than $500,000: - If purchase price of business includes less than $500,000 for intangibles, the 25% equity requirement does not apply.

Seller Equity: - Seller Equity = Seller-take back financing that is on full stand-by (no payments of principal or interest) for at least 2 years. Borrower and seller will agree how much equity each will provide Ex: borrower may provide 10%; seller may provide 15% total must equal at least 25%.

Buyer’s Down Payment: - Cash that is borrowed; SBA considers funds borrowed through the use of personal credit for injection (Ex: Home Equity Loans) into the business as additional debt, not equity, with one exception. If the Small Business Applicant can demonstrate repayment of this personal loan from sources other than the cash flow of the business, the cash injection may be considered equity.

Business Valuations: - If the amount being financed (including any 7(a), 504, seller, or other financing minus the appraised value of real estate and/or equipment being financed is $250,000 or less, the lender may perform its own valuation of the business being sold. If the amount being financed minus the appraised value of real estate and/or equipment is greater than $250,000 or if there is a close relationship between the buyer and seller, the lender must obtain an independent business valuation from a qualified source.

Loan Terms: Business acquisitions with no real estate remain at a 10 year term. Real estate acquisitions remain at a 25 year term. Historically, loans that included both business and real estate were blended. Lender’s now have the option of providing a blended maturity or a maturity based on the maximum maturity allowed for the asset comprising the largest portion of the use of loan proceeds. For example, if the majority of loan proceeds are financing real estate, a maximum term of 25 years is allowed. Verify with the lender what method will be used to determine the maturity.

Collateral: SBA no longer allows lenders to provide a value to accounts receivable and inventory when determining collateral coverage, even if those assets are required as collateral on term loans.