It’s A Great Time To Buy A Business

As you look to purchase a business make sure you are doing it for the right reasons.  Don’t just say, “I want to get rich.”  That line of thinking probably won’t cut it, unfortunately.  You need to make sure you have wisdom, passion, and a sound plan for your new business.  Do your Due Diligence!!  The timing is right to purchase, in fact 2015 through 2017 may be one of the very best times EVER to buy a business.  There are a number of factors that make this the best time in history to buy:

  • Supply and Demand
  • Capital Availability
  • Larger Companies Are Worth More
  • Strategic Savings

1. Supply & Demand

As Baby Boomers are exiting their companies – there are lots of sellers, but there are not as many buyers as there were 10 years ago.  This makes the selection of businesses to buy better than the past.  Also technology has helped in this regard.  Most Capital Advisors that provide buy side searches or sell side representation have access to websites that list companies that are up for sale.  This makes it much easier to find the demographic fit, niche fit, and value that the buyers are looking for.  Therefore, when a business owner comes to a Capital Advisor they are receiving information on numerous companies that are interested in selling, and have more choices than they would have had at any time in the past.

2. Capital Availability

The Private Equity Groups, Private Investors, and Banks have more money on the sidelines that they want to put to use in the marketplace than ever before.  Additionally, interest rates are still at historic lows (however this could change slightly in 2016 – so keep an eye on this) – so borrowing capital to buy a business can be done very efficiently.

3. Larger Companies Are Worth More

Acquiring 1 to 3 competitors and building your current company may change the multiple you get on an exit from 4x to 6x of EBITDA.  The big difference here is that you may be buying a smaller business for 3x the earnings and later as you combine it with your business and thus resell a larger business in the future, you may be able to get a rate arbitrage on your purchase.  Thus, the same business you bought for more than 3x.

4. Strategic Savings

If you already own a company in the given industry and you acquire another one, the savings could be 5 to 25% on expenses for the combined company.  Which means you could add more profit and cash flow than the prior owner.  There are many different expense categories that would overlap, and when you combine companies you wouldn’t have to pay twice!

For more information on how LBA Haynes Strand Capital Advisors can help you successfully buy a business, click here for your no cost consultation!  In the meantime, click the button below to download your free report: “The Essential Guide To Successful Mergers and Acquisitions.”

Attention Business Owners: Don’t Just Survive….Thrive!

Are you helping your business thrive or are you helping it survive? If you are a business owner you may be spending too much time focusing on how to keep the ship afloat and not focusing enough on the opportunity to shift your time and attention to helping your business thrive.  One option to assist you is outsourcing business functions to professionals.  Look outside your company for consultants, for example a CPA firm that provides bookkeeping or outsourced accounting services.  This can save you time and money, as the fee will likely be less than hiring a full time accountant on your staff.

The moral of the story: Don’t try to wear all the hats!

Business owners that try to wear all the hats simply don’t have time to focus on their business.  They are too busy focused on the mundane activities such as accounting, marketing, hr, etc. As the leader of your business, you should be spending 0% of your time crunching numbers of everyday finances, and 100% of your time finding ways to increase the overall value of your business.

Let’s examine how outsourcing your accounting function can give you a tighter grip on managing your business in its entirety:

Outsourcing Saves Time

Your accounting department shouldn’t require a babysitter. You might think it’s your duty to manage work flow, or you might just be intent on keeping a close eye on your company’s finances. Is this really the best use of your time as the leader of your business? What you should be doing is checking in to each of your departments, ensuring smooth sailing, and then getting back to running your business as a whole.  

Outsourced accounting allows you to do this by taking all accounting issues off your hands. With an outside accounting firm, you are relieved of the day-to-day oversight of your company’s finances. Your available time increases, and you feel confident in taking that time to tackle other, more important, business issues.

Outsourcing Gives You An Organized System

When you ask your bookkeeper for a specific document, they should be able to retrieve it immediately. There shouldn’t be massive amounts of time spent digging through files and searching through desktops.

If you’re like most successful business owners, disorganization conflicts with your strategically structured approach to running a business. When you have a CPA firm on your team, your files are classified by revenue, or expense or location – however YOU want them to be classified. Which brings us to your next point…

Outsourcing Puts You In Control

You obviously have control over your business if you own it, but are things being managed according to your guidelines? Are the financial policies and procedures your company requires being put into place? You may not have tremendous accounting knowledge, but you have ideas on how you’d like to see your reports compiled and presented.

A good CPA firm abides by these ideas, taking your business plans and reporting preferences and arranging them in an easy-to-read, comprehensible format. For example, if you’re not 100% in tune with 100% of your expenditures, a CPA firm might recommend a weekly, monthly or quarterly cash flow analysis, depending on your needs.

The fact that you are not an accounting expert shouldn’t prevent you from creating policies around your finances.

Leading your business means bringing about a brighter future, looking at the overall picture, and not busying yourself with daily duties throughout your departments. Even if your accounting department is performing adequately, as a leader, it is your responsibility to turn “adequate” into “effective” if you want to achieve sustainable business success. Outsourced accounting services ensure this effectiveness, and give you the time and tools you need to lead your business.

Want to learn more about the benefits outsourced accounting provides for your business?  Click here to start the conversation about your financial future with LBA Haynes Strand or click the button below to download your free whitepaper on the subject!

Delegation

Business Owners: Delegation Is The Key To Sustainable Value

Business Owners need to learn how to properly delegate roles in order to create a sustainable business. We have seen instances where business owners, who have worked as an “army of 1”, leave their business or retire and the value of the business leaves as well. If you really want  to make a difference in your employees lives and you want to create a lasting business long after you leave, you must learn the art of delegation!

Delegation is tough for some business owners. It is about empowering others to step up and make decisions on behalf of YOUR business and it is about you TRUSTING those employees to do so. Let me ask you a simple question:  Why did you start your business? Look back to when you were a wide eyed, optimistic entrepreneur. You started your business probably because you had a passion and wanted to make a difference in some kind of capacity. You have now created a successful business, one that has value and one that employs actual people! It has been successful, however you still feel the need to make every decision on your own.

What is your company going to do when you retire? Is it going to continue to run successfully or is it going to run like a ship without a captain?

If you want it to run successfully when you are gone, you must master delegation. Stop wearing every hat in the business and find people who are capable and willing to help your business grow. Find people you can trust to make the right decisions, that work within your value system and your business’ objectives. If you fail at this your business will likely fail soon after you leave.

To learn more, contact our team at LBA Haynes Strand Capital Advisors for your no-cost consultation!

Results of the Contractor Payment Survey

A CPA Firm should not just strive to be your accountant, but strive to be an industry resource to you. Your CPA Firm should be active in local trade organizations and in local chambers, to keep you up to speed with recent changes that may affect your business. As a firm that includes a large number of construction related clients, we are members of the Construction Financial Management Association (CFMA). We do this to be active in the local construction community as well as to represent our clients.

As a member, we receive valuable information, in many different forms, that we can in turn communicate to our clients. At the bottom of this blog, you can find the results of a survey titled, “Contractor Payment Survey.” This survey was put together by the Institute of Certified Construction Industry Financial Professionals. On August 10th, the survey was mailed to 925 CCIFPs and was also posted on the CFMA Cafe website that reached approximately 7000 members. The survey was then closed on August 17th with 142 respondents. 

Questions included in the survey are:
  • On average, how long does it take to collect payments?
  • How does your current collection time compare to last year?
  • How does your current collection time compare to three years ago?
  • Of all payment transactions you received during the last year, what percent were checks, ACH/wire, or credit card?
  • When considering your total revenue for the last year, what percent was received from checks, ACH/wire, and/or credit card?
  • What is your gross annual revenue?
  • What is your total number of employees?

Results of Contractor Payment Survey: CLICK HERE