Sunday, December 25, 2016

12 Days of Small Business Mis-Management. Don't make these small business mistakes




I met Heer Pasha on LinkedIn and we had a fun exchange about why small businesses often fail.  It soon developed into a list and so we’re happy to present:

12 Days of Christmas Small Business MIS-Management

  1. Managing by cash and not seeing accruing liabilities
  2. Not understanding cash flow
  3. Not charting the workflow of their business function
  4. Lack of attention to administrative tasks
  5. Acting like a Princess or Prince… workers are not subjects
  6. No job descriptions. Who is accountable for what?


….and 6 more that will make you shake your head, but you’ll have to watch the video here: https://youtu.be/A9KhBUfBhx4



The video is a little longer than my usual, but hey, what were you going to do after you open all your gifts anyways?
Happy Holidays

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.

Forward this e-mail to someone you know who's 'into business stuff' so they can sign themselves up.

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.


Sunday, December 18, 2016

Should my 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.  Can one do this?

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. 

Sunday, December 11, 2016

Stoopid Rules of Thumb. The Story of the 5X Accountant. How To Sell a Business



Yes, I know how to spell ‘stupid,’ please don’t e-mail me.

I’m cranky and sore and upset.  I’ve got a cold and an ear infection. 

What makes me more cranky and upset is when I hear the same poor advice about rules of thumb for pricing small businesses being passed around again and again and again.

This week I tell the story of the old accountant who told me once in a workshop, ‘Businesses sell for 5 times their cash flow.  Those with real estate sell, those without don’t.’

Simplistic rules of thumb like this one guarantee only one thing… mistakes are being made and it’s costing someone dearly.

I explain why those with real estate sell, those without don’t in this video and the answer will make you sick to your stomach if you happen to be a business owner who could have fallen victim to this kind of advice.  Watch it here: https://youtu.be/ck_AmnOIzDE



If you own a business and will want to sell one day, you need to educate yourself about how this process works and give yourself time to get ready.

Learn what’s involved in selling your small business.  Take my 3 hour online course at www.HowToGetOutOfMyBusiness.com or buy my Amazon best-selling book; How To Sell My Own Business.  Available from Amazon.com or Amazon.ca  



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.  My live events always fill up fast.  Find all my live events here: http://davidbarnett.eventbrite.ca


Thanks and I’ll see you next time. 

Sunday, December 4, 2016

Why don’t business owners just hire a manager when they want to retire? How to Buy a Business



The other night I was in Halifax, NS doing one of my Business Buyer workshops.

One gentleman was interested in buying a business that he could run with a manager and not be involved in full-time.

He was concerned that most small businesses had to be owner-run and wondered why owners just didn’t hire managers when they wanted to step back into retirement.

The reason… most small business owners aren’t capable.  I made this video to explain.  Watch it here: https://youtu.be/f3NPWgkYnLc  



I also explain how one of my very remarkable business buyers was able to manage several businesses while keeping a full-time job!

If you think you would benefit from my help and guidance over the coming year to meet your business goals, you may wish to consider my 2017 mastermind.  It’s for small business owners who want to improve their business or people who want to find and buy one. E-mail me for details.

For help on buying a business, visit www.BusinessBuyerAdvantage.com

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 

My live events always fill up fast.  Find all my live events here: http://davidbarnett.eventbrite.ca


Thanks and I’ll see you next time. 

Sunday, November 27, 2016

Pay off your Small Business Debt to build wealth? Think Again... How to Sell a Business



A few weeks go I made a video and blog post about whether it made sense to pay off all your small business debts in order to prepare a business for sale.  Watch the video here: https://youtu.be/pOJ3B1_K9L8



I promised to make another video discussing how paying off small business debt would affect the personal wealth of the owner.

You see, most small business owners are debt-averse.   They believe that debt is bad and that it makes sense to pay off debt to increase one’s net-worth.

The reality though is that debt gives you leverage and small businesses are risky.

Watch this week’s video to see how paying off small business debt actually reduces your rate of return and increases your risk!




If you think you would benefit from my help and guidance over the coming year to meet your business goals, you may wish to consider my 2017 mastermind.  It’s for small business owners who want to improve their business or people who want to find and buy one.

If you’re thinking of selling your small business and want a whole bunch of FREE information and advice, visit www.HowToSellMyOwnBusiness.com there are free videos, reports and access to my modestly priced books and online course on the process of selling a business.

For help on buying a business, visit www.BusinessBuyerAdvantage.com

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 

My live events always fill up fast.  Find all my live events here: http://davidbarnett.eventbrite.ca

My November 30, 2016 Halifax workshop is being sponsored by CEED. You can register at www.CEED.ca


Thanks and I’ll see you next time. 

Sunday, November 20, 2016

Should you sell your small business with a real estate agent? How to Sell a Business?



I recently had an exchange with a fellow on the West Coast who had some questions about selling his small business.

The conversation ended with, ‘well my friend is a commercial Realtor so if I have any more questions I’ll speak to him.’ Huh?!?

What on earth does selling real estate have to do with selling businesses?

It’s not the first time I’ve run into this in my career as a business broker and as a private sale transaction advisor.  There seems to be some idea out there that links businesses to real estate.

Let’s examine the characteristics of each and see where the overlap is:

Real Estate: doors, windows, roofs, foundations, walls, insulation…
Businesses: receivables, payables, employees, inventory…

I’m stumped.  Well, not totally.  There is a big reason why I think that many small business owners somehow end up trying to sell their business using a real estate agent and it has to do with silly outdated laws.  I made this video to explain: https://youtu.be/s9HkiHiiEB0



What’s really amazing though, is that while I was a business broker, I noticed that many real estate agents who normally sold houses were willing to take on businesses to sell.

AT THE VERY SAME TIME, my biggest source of referrals were COMMERCIAL REALTORS. Funny right? Watch the video and I’ll explain to you why.

If you’re thinking of selling your small business and want a whole bunch of FREE information and advice, visit www.HowToSellMyOwnBusiness.com there are free videos, reports and access to my modestly priced books and online course on the process of selling a business.

For help on buying a business, visit www.BusinessBuyerAdvantage.com

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 

My live events always fill up fast.  Find all my live events here: http://davidbarnett.eventbrite.ca


Thanks and I’ll see you next time. 

Sunday, November 6, 2016

Pay off debts when getting ready to sell your small business?? How to Sell a Business

A debt-free business is easier to sell; Right?



I had an online exchange the other day with a guy on the west coast who believed that paying off his business debt was a key ingredient in preparing it for sale.

WRONG.

There are all kinds of problems with this thinking but this week I simply want to discuss it from the buyer’s point of view.

(There will be another video in two weeks about how this thinking affects the seller’s wealth.)

Does small business debt have an impact on the value of the company?

Nope, just like your mortgage doesn’t have an impact on the value of your house. The value of a business is derived from its cash flow.

Do you think they care if your business owes money? 

Well, this is a little more complicated.   A buyer may actually care quite a lot and it may not be for the reasons that a seller thinks.  I made this video to explain why some kinds of debt within a business may be very interesting for a potential buyer.  Watch it here: https://youtu.be/pOJ3B1_K9L8



This business owner would certainly benefit from working with me to get his business ready for sale.  I’ve got another mastermind group starting up for 2017.  E-mail me if you’re interested in learning more.  It’s for those who plan to buy, sell, or improve their business in 2017; dbarnett@alpatlantic.com

Learn how I help people sell their business at www.HowtoSellMyOwnBusiness.com

Learn how to buy a business. Visit www.BusinessBuyerAdvantage.com

HALIFAX, NS: I’m coming on November 30, 2016.  Find out more and register at https://ceed.ca/calendar/

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 


Thanks and I’ll see you next time. 

Sunday, October 30, 2016

Expanding a Small Business via Acquisition? Watch out for this HR cash flow landmine



Expanding through acquisition?  Watch out! Make this mistake and you could be in for an unexpected cash-flow cut! - How to Buy a Business.

How can buying a business make its’ value go down?

I had a chat with Sarah Mullins from UpTree HR in Halifax.

Sarah and I discussed some of the issues relating to HR when you buy a business or merge two companies in a strategic acquisition.

She’s been through dozens of them.

She even explains how buying another company can reduce its’ profitability.  If you haven’t done the right due-diligence, you could end up with less cash flow that you had forecast.

Watch the interview here: https://youtu.be/Bstm-Pm8hbs



For a full education and help on buying a business, visit www.BusinessBuyerAdvantage.com

Learn how I help people sell their business at www.HowtoSellMyOwnBusiness.com

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 just to the left of this post.


Thanks and I’ll see you next time. 

Sunday, October 23, 2016

Buy a Business with No Money?!? Part II. How to Buy a Business


I made this video a few weeks ago to explain the different scenarios that someone might conceivably buy a business with no money and the dangers for the buyers and sellers in each. Watch: https://youtu.be/NVTgDT7Cc2g



Cody, one of my viewers, sent in this thoughtful question in reply to the video:

Hello David, thanks for all the videos. Have a question: I have heard of people buying businesses through 100% financing, but not technically no money down.

So they first go to a lender and borrow against the assets of the business to raise cash, which they then give some or all that cash to the seller, as a down payment.

Then they get the Vendor(Seller) to carry some kind of financing on the rest, the seller is in a junior position to the lender in case the business fails.

In theory this should work great, the seller will get about as much cash at closing as they would if the seller liquidated.

Have you heard of this?
Does it work?
If it does work, is it easy to put together?
If it does not work, why not?

Great questions Cody! 

The problem with this scenario lies in two places… are we actually talking about buying a business or just a collection of assets?  The reason I ask is that if a seller is happy receiving an amount which approximates a liquidation then we’re not receiving operating capital or paying for goodwill.

If there is no goodwill value, is the business a profitable money maker?

Also, if you’re buying this as your first business then what would your opening balance sheet look like?  The banker will want to see.

I must admit though, this strategy would work for a different kind of buyer.  See my video response to learn who could pull this off. Watch: https://youtu.be/xZqJTa_YZj4



For a full education and help on buying a business, visit www.BusinessBuyerAdvantage.com

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 just to the left of this post.

My fall season live events are filling up fast.  Find all my live events here: http://davidbarnett.eventbrite.ca


Thanks and I’ll see you next time.


Sunday, October 16, 2016

The problem with 16 Hour Workdays - How to Sell a Business



I had the pleasure of speaking to a business owner in Toronto while I was away on vacation. It was just a brief consult done from a park bench in Brussels.

He and the other owners had become aware of a competing firm that had been acquired by a larger company and wanted to try to do the same thing.

The conversation centered around the best strategy… hiring an intermediary, hiring someone in-house to try to find a suitor, etc.

During this time, my client made a little comment about how he and the other founders of the company were working almost 16 hours a day and how they found it impossible to hire people to help them out.

I made this recording telling the story and how you can go about fixing it.  Listen here (audio only on YouTube): https://youtu.be/9n68EuvNXfw



Needless to say, it is quite difficult to convince someone to pay money to buy a business that needs this kind of management engagement.

Proper businesses have structure, organization and everyone knows what they’re responsible for and what duties they need to get done.  Without this, it’s impossible to grow and it sure does look scary for anyone looking at buying.

The topic was very apropos as I’m in the middle of creating my latest workshop; Building a Business that Someone Will Want to Buy.  It’s going to be presented on October 18 in Moncton, NB and will likely become an online course.

To learn how I can help you sell your business yourself, visit www.HowToSellMyOwnBusiness.com

For a full education and help on buying a business, visit www.BusinessBuyerAdvantage.com

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 just to the left of this post.  If you need my help with your project, give me a call at (506) 381-8416.

Do you live in the Maritimes?  I’ve got workshops coming up on buying and selling businesses in the fall.  Book now http://davidbarnett.eventbrite.ca


Thanks and I’ll see you next time. 

Sunday, October 9, 2016

How to we evaluate buying PART of a business? How to Buy a Business



I received a question from one of my viewers in South Carolina.  Ben has an opportunity to buy part of a business and wants to know what he needs to do to figure out what it’s worth.

Splitting up businesses is a funny thing.  Usually businesses want to combine to realize synergies. 

Think of two companies merging and eliminating some of the administrative staff.  The result of the merger should be lower overheads as a percentage of sales.

I made this video to discuss what happens when you start splitting things up: https://youtu.be/zrKQWzxN58w



So if you buy part of a business and this leads to dis-synergies how do you figure out what a part of the business is worth?  Well, all you can rely on is the sales figure.

Start by taking the sales of the existing company for the department or product lines that you’re going to be acquiring, then build yourself a new income statement.

Be prepared for a tough negotiation though, the parts may often be worth less than the whole and the sellers expectations may be very different from yours.

For a full education and help on buying a business, visit www.BusinessBuyerAdvantage.com

To learn how I can help you sell your business yourself, visit www.HowToSellMyOwnBusiness.com

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  If you need my help with your project, give me a call at (506) 381-8416.

Do you live in the Maritimes?  I’ve got workshops coming up on buying and selling businesses in the fall.  Book now http://davidbarnett.eventbrite.ca


Thanks and I’ll see you next time. 

Sunday, September 25, 2016

'Just put in more money' - The truth about increasing equity when buying a business - David C Barnett



The seller's accountant Says, ‘You just need to put more money in.’ 

I have a client who is negotiating for a business which is overpriced. 

He’s demonstrated that the business will not cash flow for him after servicing debt and taking a reasonable salary for the value of his work.

The seller’s accountant has said, ‘the buyer just needs to put in more of his own money.’

I made this video to show how that doesn’t make sense at all: https://youtu.be/vTsIwe_If88



It’s got a little math, but it’s not too difficult.

The point of the matter is that equity (a business owner or buyer’s cash) actually demands a higher rate of return than debt.

This is because it’s riskier.  Lenders get paid first in the event of a liquidation.

If you put in more of your own money, you actually need an EVEN HIGHER rate of return.
Watch the video.

For a full education and help on buying a business, visit www.BusinessBuyerAdvantage.com

To learn how I can help you sell your business yourself, visit www.HowToSellMyOwnBusiness.com

If you’d like to learn how to create high returns by making local private lending and lease deals, check out http://www.LocalInvestingCourse.com The Local Investing Academy enrollment is from September 26 to October 10 only. 

For a quick introduction, read Invest Local.  It’s available from Amazon stores worldwide or as a .pdf here: https://gum.co/quoB

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  If you need my help with your project, give me a call at (506) 381-8416.

Do you live in the Maritimes?  I’ve got workshops coming up on buying and selling businesses in the fall.  Book now http://davidbarnett.eventbrite.ca


Thanks and I’ll see you next time. 

Sunday, September 18, 2016

What I see in the Market for Small Businesses - Buy a Business - Sell a Business



Well, spoiler alert, there is no market for small businesses.

I made this video to explain why. https://youtu.be/aOFhyYjFoYc



You see for a ‘market’ to exist, you need many buyers, sellers and a product or commodity.  For example, there is a market for 4-door used cars and a market for 3-bedroom homes in each town and city, but small businesses are very individual.  They’re unique.

Therefore, they each have their own market!

In the video I give an example of the process engineer who will never buy the highly profitable flower shop.  I used to see it all the time when I owned my business brokerage.

As far as pricing goes, it doesn’t change much over time except if certain industries are perceived to be more or less risky.  Business are valued on their cash flow and what the buyer is willing to pay is based on their perception of the risk that the cash will continue to flow into the future.

There is one exception though.  It’s an old story about market manipulation.

I’ve seen first-hand that government programs meant to encourage immigrant investors are causing price bubbles in certain categories.  Convenience stores, franchise food locations, Laundromats, gas stations.

Anywhere someone with limited English can run a simple business and quickly learn enough words to make change and serve customers.

I recently worked on a case where a newcomer was willing to overpay by 40%... because he was up against a time-limit and if he didn’t buy a business he would lose a $75,000 deposit that he had made to get into the country.

Welcome to Canada, let us into your wallet.  I bet he feels all warm and fuzzy about igloos, beavers and maple syrup.

Just like in any market where politicians and civil servants decide to meddle, an artificial urgency has been created and business sellers are taking full advantage of these victims created by government policy.

For a full education and help on buying a business, visit www.BusinessBuyerAdvantage.com

To learn how I can help you sell your business yourself, visit www.HowToSellMyOwnBusiness.com

If you’d like to learn how to create high returns by making local private lending and lease deals, check out http://www.LocalInvestingCourse.com The Local Investing Academy starts in September.  For a quick introduction, read Invest Local.  It’s available from Amazon stores worldwide or as a .pdf here: https://gum.co/quoB



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  If you need my help with your project, give me a call at (506) 381-8416.

Do you live in the Maritimes?  I’ve got workshops coming up on buying and selling businesses in the fall.  Book now http://davidbarnett.eventbrite.ca


Thanks and I’ll see you next time. 

Sunday, September 11, 2016

Ed asks: What would David look for in a new franchise opportunity? How to Buy a Business - How to buy a franchise




Ed recently downloaded a copy of my 2015 Best-seller, Franchise Warnings from www.franchisewarnings.com

He wrote me an e-mail saying that he was looking at franchises and enjoyed the book.  He thought that the central theme of the book was ‘do your homework.’

It’s not.  The book’s purpose was to dispel the myth that buying a franchise is less risky than starting a business from scratch.  Watch the video here: https://youtu.be/JUItDU5cn-E



Ed also asks what I would look for if I were buying a new franchise.  Interesting question.
My first idea is that I would want a fee based franchise over a royalty based one.  It allows you to grow the business and keep more of the gravy for yourself.

Secondly, I would need to ensure that the business systems were actually provided and worked well.  I know of a two franchises who provide no operating manual and one where the systems are very poor. (I’m sure they’re not alone.)

For my third item, watch the video ;)

To learn more about buying a business, visit www.BusinessBuyerAdvantage.com

If you’d like to learn how to create high returns by making local private lending and lease deals, check out http://www.LocalInvestingCourse.com The Local Investing Academy starts at the end of September.  For a quick introduction, read Invest Local.  It’s available from Amazon stores worldwide or as a .pdf here: https://gum.co/quoB



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 Toronto or the Maritimes?  I’ve got workshops coming up for Toronto in September on buying and selling businesses and in October-December in the Maritimes.  Book now http://davidbarnett.eventbrite.ca


Thanks and I’ll see you next time. 

Sunday, August 28, 2016

How to Buy a Business with NO MONEY- Should you? David C Barnett



How to buy a business with NO MONEY?

I’ve gotten some questions from viewers asking how they could buy a business with no money. 
There is a belief out there that if you can structure things correctly, it’s possible to buy a profitable business while using none of your own money.

I’ve done deals where a buyer borrowed all the money to buy a business, but they did so by putting up some personal assets as collateral.

I’ve done deals where a buyer gets a seller to essentially finance 100% of the purchase, but the buyer was using lots of their own money to improve the business with a short timeline to re-financing it. 
In both cases, we can hardly say that the buyers had ‘no money.’  They certainly had resources to help them make the deals happen.

I made this video to explain the different scenarios that someone might conceivably buy a business with no money and the dangers for the buyers and sellers in each. Watch: https://youtu.be/NVTgDT7Cc2g



In asset purchases, the danger for a buyer, even if there is no down-payment, is that there will be insufficient operating capital and you’d be in a cash flow crisis from day one.

In share deals, if there is a net-positive operating capital balance, the buyer could fleece the company and run away with cash and the seller would be left with nothing.  Who would put themselves in this kind of position other than a parent handing over a business to a child?

The one opportunity for buyers to get their hands on a business with ‘no money’ is usually when there is negative equity.  Watch the video to see my thoughts on this.

If you’d like to learn how to create high returns by making local private lending and lease deals, check out http://www.LocalInvestingCourse.com The Local Investing Academy starts in September.  For a quick introduction, read Invest Local.  It’s available from Amazon stores worldwide or as a .pdf here: https://gum.co/quoB 

http://www.localinvestingcourse.com


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 just to the left of this post.

Do you live in Toronto or the Maritimes?  I’ve got workshops coming up for Toronto in September on buying and selling businesses and in October-December in the Maritimes.  Book now http://davidbarnett.eventbrite.ca


Thanks and I’ll see you next time. 

Sunday, August 21, 2016

Why can’t a borrower offer the same collateral to many lenders?



I got a question from a viewer in Prince Edward Island the other day. 

He had read my 2014 best-selling book, Invest Local, and had a question about preparing information for a lawyer in order to register security on a lending deal.

Many people who are contemplating investing in a small business via making a secured loan often wonder how they can make sure the borrower isn’t offering the same collateral to more than one lender.

I made this video to explain how registries work and give a brief history of how they came to be. Watch: https://youtu.be/MeFAmvf6veE



The PPSR registries (or UCC registries) allow you to publicly record the fact that a certain piece of property has been pledged as loan collateral.  They’re the most versatile registries because you can record a lien on almost any kind of property (outside of real estate.)

The system is so straight forward that many local investors register their own security using online services.  This is in contrast to real estate registries which are strictly the domain of attorneys because they are so complex and every jurisdiction is unique.

I’ve done dozens of deals where I’ve registered myself, using a third party service provider,  as a lender in a PPSA database.  I’ve also done many lien-searches when investigating the purchase of used vehicles or equipment.

It’s critical to learn how this works if you want to deal in lending or used equipment because a lender’s rights under a lien don’t go away if the property is sold. 

Simply put, if you buy an RV and there is an outstanding loan secured against it and the loan goes into default, the lender can still take it to satisfy the debt whether you bought it or not.

If you’d like to learn how to create high returns by making local private lending and lease deals, check out http://www.LocalInvestingCourse.com The Local Investing Academy starts in September.  For a quick introduction, read Invest Local.  It’s available from Amazon stores worldwide or as a .pdf here: https://gum.co/quoB

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 to the left of this post.

Do you live in Toronto or the Maritimes?  I’ve got workshops coming up for Toronto in September on buying and selling businesses and in October-December in the Maritimes.  Book now http://davidbarnett.eventbrite.ca

Thanks and I’ll see you next time.





Sunday, August 14, 2016

Why do some business sellers make you WAIT so long for info? How to Buy a Business - David C Barnett



Why does the seller make me WAIT so long for information?

I got a call from a client the other day.  He’s been trying to decide if he wants to pursue a business that is rumoured to be for sale.

I say ‘rumoured’ because it certainly doesn’t seem like it’s for sale.  The owner says he wants to sell, he speaks highly of the business and its potential, but he just won’t hand over the information the buyer is asking for; the latest financial statements.

What on Earth is going on? I explain the possibilities in this video: https://youtu.be/BwNY7cpSZhI



The first thing that is obvious is that this seller hasn’t read my best-selling book; How to Sell MyOwn Business. If he had, he would know that you never go out looking for buyers and talk with them before you’re completely prepared to answer all their questions and you’ve got your ‘package’ together. 

Putting together Confidential Business Profiles is part of what I do for my clients.

From the seller’s perspective here’s what may be going on:
  1. There may have been a pressing emotional or personal need which pushed the owner to decide to sell and this need may no longer be so aggravating.
  2. If the business is profitable, then the longer the seller delays the sale, the more money they make in the interim.
  3. There may be some pressing business needs that require their attention in the present, selling the business may actually be a ‘side project’ and doesn’t get the proper attention.
  4. Outside advisors or service providers like accountants may not be available because of workloads or vacations.
Let’s be clear, any delays caused by the seller are not good for the deal. They upset the buyer and buyers can be hard to find.

One of the hazards of this scenario is that the more a buyer follows up and ‘chases’ the seller, the more the seller may begin to think that the buyer is in love with the business.

This can cause them to believe they can get more money for the business.  As a buyer, this is bad.
So stop it.  Stop following up, emailing and calling the seller continuously.  Slow down. Look at other businesses.

One of the problems from a buyer’s point of view is that they may be imagining themselves as the owner.  They start to get excited and REALLY want to buy the business NOW. 

This is called Buyer Fever and it’s a very dangerous illness.  It can cost people hundreds of thousands of dollars in over-payments when it leads them to make bad deals and not do proper due-diligence.

If you’d like help to buy or sell a business, call me at (506) 381-8416 or visit www.HowToSellMyOwnBusiness.com or www.BusinessBuyerAdvantage.com

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 just to the left of this post.

Do you live in Toronto or the Maritimes?  I’ve got workshops coming up for Toronto in September on buying and selling businesses and in October-December in the Maritimes.  Book now http://davidbarnett.eventbrite.ca

If you’d like to learn how to create high returns by making local private lending deals, check out http://www.LocalInvestingCourse.com The Local Investing Academy starts in September. 
Thanks and I’ll see you next time.





Sunday, August 7, 2016

Buying assets vs. buying shares - How to Buy a Business, How to Sell a Business



When buying or selling a business, a common question that comes up is whether to buy or sell the shares or the assets of the business.

For some people who are not familiar with this, the concept can be hard to grasp.  That’s why I made this video to explain things in simple terms: https://youtu.be/HgDLgwbXgj0



Here’s an illustration.  Imagine that Mark owns a lawn maintenance company; Mark’s Lawns Inc.  Mark’s Lawns Inc. owns a tractor.

If you wanted to get into the lawn maintenance business you could buy Mark’s Lawns Inc.  The ownership of the tractor doesn’t change.  It was and still is owned by Mark’s Lawns Inc.  In this case, the seller is Mark.  He’s selling the shares of the corporation to you.

The other way to buy the business would be to buy the tractor.  In this case, Mark’s Lawns Inc. is the seller.  The ownership of Mark’s Lawns Inc. doesn’t change.  Mark will still own this corporation after the transaction, the only difference is that the company will have money in it instead of a tractor.

Because corporations are people under the law, a share sale makes a new owner subject to liabilities to past events.  An attorney will do their best to structure warranties to try to protect a buyer but at the end of the day, a share sale could expose a buyer to unwanted liabilities.

Asset sales are technically just the purchase of ‘stuff.’  In this regard a buyer doesn’t necessarily have to worry about most of the past issues with the corporation.  Also there are usually tax advantages for buyers who buy assets because equipment that may have been fully depreciated by a seller may now appear on the buyer’s books at fair market value and can be depreciated again by the buyer.

Seller’s know this and there is an equal tax disadvantage vis-à-vis depreciated equipment.  Also, in some places, such as Canada, there is preferred tax treatment on the sale of shares of an eligible corporation.

So when people ask me if they should buy or sell shares or assets I tell them this: Buyers should try to buy assets, sellers should try to sell shares but at the end of the day it doesn’t matter.

The type of transaction will form part of the negotiation. 

Let me give you a simple example.  A seller wants $250,000 for their business.  A buyer offers $200,000.  The seller says that they can’t go that low unless the buyer is willing to purchase shares… a deal is struck.

The tax advantages/disadvantages of either form of sale are known by both parties and can sometimes be estimated by both parties.  As such, it just comes down to dollars and cents in most cases.. unless there are specific reasons to buy shares such as contracts, government regulation, etc… but that is a subject for another day.

If you’d like help to buy or sell a business, call me at (506) 381-8416 or visit www.HowToSellMyOwnBusiness.com or www.BusinessBuyerAdvantage.com

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 to the left of this post in the form.  

Improve your business each and every day, download my FREE daily cheat sheet and hang it in your work area to keep yourself focused. https://gum.co/15Questions/FREE 

Do you live in Toronto?  I’ve got workshops coming up for Toronto in September on buying and selling businesses.  Book now, there isn’t much room left..  http://davidbarnett.eventbrite.ca

If you’d like to learn how to create high returns by making local private lending deals, check out http://www.LocalInvestingCourse.com The Local Investing Academy starts in September. 
Thanks and I’ll see you next time.