Rules of Thumb Methodology
Begin by analyzing the history of your Richmond business to determine how much profit the business has been earning in excess of your own salary and benefits. Project future data based on your specific history, as well as general market trends to establish if the past is a fair representation of the future. This is typically known as “Rules of Thumb” methodology.

Market and Industry Trends
In examining trends, it is necessary to consider such items as supplier price changes, competition, and how the particular industry is performing. Also, take a look at prices paid recently for comparable companies in similar locations. Additionally, compare your company’s year-end gross profit and operating income to other industry competitors. If your company is closer to the top of the range in profitability, you can command a higher price for your business.

Owner Benefits
Investigate the value of your business by using the Multiple Method; a pre-determined multiple (usually between 1 and 3) multiplied by the earnings of the business. The earnings or “Owner Benefits” amount can typically be used as an effective basis. This number is the total funds that you can foresee being available from the business based on past experience. The value is derived by adding the owner’s salary and benefits to the business’s profits; then adding back non-cash expenses.

The multiple that is used is mainly based on the industry. It is usually one time the value calculated if the business owner is the entire business, such as consulting or freelance services. Businesses with a solid customer base and more than 3 years in business most likely will be worth 2-3 times the basis.

ROI
Another calculation that should be looked at is the Return on Investment (ROI) that a buyer could expect to receive if they purchase your business. This is calculated simply as Gain from Investment minus Cost of Investment divided by Cost of Investment.

Assets
In addition, take into consideration the value of the business’ assets. This includes inventory and equipment.

Overall, it is important to keep accurate financial records. Buyers seeking financing to purchase your business will need to present information to back up the price being paid for the business.

About the Author
BusinessMart.com has become the fastest growing business for sale search engine, helping buyers and sellers of small businesses and franchises. BusinessMart.com has many resources to help you on your journey to start your own business, sell your existing business or open a franchise. BusinessMart.com has thousands of businesses for sale in the US and Canada.

Many find the idea of running a small business appealing, but lose their motivation after dealing with business plans, investors, and legal issues associated with new startups. For those disheartened by such risky undertakings, buying an existing business is often a simpler and safer alternative.

Advantages

The main reason to buy an existing business in Richmond Virginia is the drastic reduction in startup costs of time, money, and energy. In addition, cash flow may start immediately thanks to existing inventory and receivables. Other benefits include preexisting customer goodwill and easier financing opportunities, if the business has a positive track record.

Disadvantages

The biggest block to buying a small business in Richmond Virginia outright is the initial purchasing cost. As the business concept, customer base, brands, and other fundamental work have already been done, the financial costs of acquiring an existing business is usually greater then starting one from nothing. Other possible disadvantages include hidden problems associated with the business and receivables that are valued at the time of purchase, but later turn out to be noncollectable. Good research is the key to avoiding these problems.

Only 10 % of People Complete the Process
Importance of the role of a Richmond business broker in buying a business further increases with the fact that 90 % of the people who start their search for buying a business give up without making the final deal. The biggest reason seems to be that people do not understand in advance that this process is so much involving. Most of these people who leave the task without completing it are the first time buyers. Frustration because of making one after one crucial decisions force them to abandon the project.

Hiring a professional Richmond Business Broker is always Useful
Buying a business is a rare opportunity for the most of the people in their lives. It is always useful to hire the services of an experienced and professional business broker who can help you to go through the overall process of buying a business smoothly. Here are some examples of how a Richmond business broker can help you.

A business broker in Richmond with his experience of the industry is right person to tell you that how much amount of money you can afford for this purpose. By having a proper understanding of your financial goals he can guide you that which type of business will be best suitable for you. Moreover, a Richmond business broker is the best person to guide you about the geographical location. He can provide you the names of the businesses that are available for sale in addition to gathering the and also evaluating the information regarding these businesses. Role of the business broker in buying a business is not only limited up to all this. He can structure the offer for purchase, manage finances for you and can close the deal.

Most of the business brokers prefer talking personally to the people. So in the very first meeting with your business broker, let him know what is the period you have set for completing the deal. Also tell him about your expectations from the business in question. Tell him clearly about the availability of the finds and how much cash is readily available. Role of a business broker does not end here. It can also help you in managing the finance from third party if need be.

Alexander Gordon is a writer for - The Small Business Consulting Community. Sign-up for the free success steps newsletter and get our booklet valued at $24.95 for free as a special bonus. The newsletter provides daily strategies on starting and significantly growing a business.

For assistance in buying a small Richmond business, contact
Activa Business Brokers.

Business brokers in Richmond Virginia run the gamut from those who specialize in small businesses to those whose expertise is vital when buying or selling a larger business.

Brokers of businesses in Richmond can also assist in the buying and selling of real estate used for commercial purposes. In fact some Richmond business brokers specialize in commercial real estate transactions that are tied to an operating business.

When seeking to buy or sell a small business in Richmond, a broker should be the first stop on your list. Many businesses are not advertised for sale in the general media, so a Richmond business broker oftentimes is your only source of finding the business that is right for you.

Franchise Opportunities are one of the areas in which a Virginia Business Broker can provide reliable information.

The article below is by Regis Murray, who writes for BusinessMart.com.

Pretty much anyone who has ever investigated franchising, as a
business opportunity, understands that McDonald’s has been one
of the most successful franchising opportunities available. They
also understand that McDonald’s requires a minimum of $250,000
of non-borrowed personal resources just to start the discussion
process with McDonald’s.

Other franchise opportunities exist in many industries, and most
people assume that the start up cost will be pretty steep. But
the truth is that there are many opportunities that are really
affordable for the potential new business owner.

The beauty about the franchise opportunity is that it is the
franchisor’s responsibility to secure a location for doing
business, and they present their franchisees with a blueprint to
success. It is a fact that few McDonald’s franchises go under,
and the reason for that is the McDonald Corporation’s commitment
to the success of their franchisees.

For the person who wants to own his or her own business, the
franchise opportunity makes the most sense in a lot of cases.
Since the franchisor does all of the legwork to ensure the
success of the franchisee, and since the franchisor provides a
blueprint for success and national advertising, the chance of the
franchisee succeeding is greatly improved.

But a potential franchisee does not need to think only in terms
of restaurants. If he or she were to shop the marketplace, they
will find many business opportunities in many industries, at many
different price-points.

Franchises in the service industry are booming now, with
franchise opportunities being offered in a diverse range of
service industries. Pet care has been one of the fastest growing
areas with franchises available in pet grooming, pet supplies and
pet accommodation, to name a few. If you don’t like the idea of
working with animals, you could pursue a franchise in the pest
control sector. This is another rapidly growing industry. Who
doesn’t have pests of some type that they would like to
eliminate?

What about home services? Franchise opportunities abound in
services such as gardening, lawn care, home maintenance, window
cleaning, general cleaning, interior decorating; the list goes
on. Every area of the home that you have chores, there is bound
to be a business opportunity available.

With so many opportunities available, you may wonder if it is
possible to earn a good or reasonable living by purchasing a
franchise. The reality is that the franchisor does not make any
money unless you are successful with the franchise. Well-managed
franchise operations carefully map out territories to ensure that
the franchise operators will have enough potential customers to
succeed.

Furthermore, franchisors have a business model that is already
proven and profitable. You have your franchise territory, you
have your franchise model, and you will most likely have a
franchise manager or coach to help you along the way. Follow the
model, do the hard work and develop your client base, and your
franchise will not only boom, your franchise will become a
valuable asset that can be sold at a later date if you should
choose to sell it.

If you feel that you do not have the skills to run a franchise
business, then think again. If you can start a lawn mower, you
can buy into a lawn care franchise. If you can wash and groom
pets, you can buy into a pet grooming franchise. With the diverse
range of franchising opportunities available, you only need to
look at what type of business you would be interested in owning,
then find the right franchise business opportunity to suit your
goals.

With the support of the franchisor, you will be well on your way
to running a successful business and becoming another local
success story in a long line of successful franchise owners. Your
future business success will be enhanced by its participation in
a successful network of franchise operators who, over time, like
the McDonald’s franchise example, may develop a national and
perhaps international reputation as a respected business and
business model.

The franchise world is full of opportunities, but the franchising
opportunity will not drop into your lap. It is up to you to take
the steps necessary to research the possibilities and find a
franchising opportunity that you will be happy to participate.

Find an industry that suits your skills and interests, and then
find a franchise broker or franchise agent who can help you find
and secure the business of your dreams. Brokers and agents can
connect you to a franchise opportunity that meets your budget,
your skills, and the level of commitment you are required to
bring to your new business. Buy a franchise - it’s the first
step to whole new career, income level, and lifestyle.

For more insight on Virginia franchise opportunities, visit ActivaBB.com.

Richard Parker is President of The Business Buyer Resource Center and author of How To Buy A Good Business At A Great Price.

In his article below, he makes a strong case for the benefit of using a business broker when buying a business.

One of the most frequent questions I am asked by prospective business buyers is whether or not they should hire a business broker. My initial response is always: “yes…but.” The “but” is that you should “use” one, not “hire” one. A business broker can have a very specific and important role in the buying process. The “but” is related to understanding what that role is.

Business brokers almost always represent the seller. The seller pays their commission and even if they are assisting you in the process, they have a fiduciary duty to the seller. This is not to say that they won’t provide you with helpful advice.

Why then, you may ask, should you use a broker?

In the past sixteen years, I have personally purchased ten businesses. I have used a business broker in nearly every transaction. Even though I would consider myself a very savvy buyer, there are three things that a business broker can do that are very helpful.

Business For Sale Listings

They can provide you with access to business for sale listings and details about the business that you may not discover on your own. Although the majority of businesses sold in the U.S. are not done through brokers, some states have a multiple listing service of businesses for sale, similar to residential real estate. In states that do not offer this, brokers will often only show you their own listings. In those cases, you’d have to work with several brokers just to see a variety. You may want to search for your state’s, “business broker association” and see if such a service exists.

Have A Buffer Between You and The Seller

They can be a conduit to help deliver bad news to the seller. There may be instances where you have to retract or modify an offer and certainly times where you’ll need to adopt an aggressive negotiating position. Since you’ll most likely need the seller to train you after the purchase, it’s not a good idea to aggravate them too severely. As such, let the business broker deliver the bad news.

The Paperwork Is Astounding

A business purchase, no matter how small, requires a tremendous amount of coordination and document chasing. The data you’ll need from a seller to evaluate a business, the documentation required to close a deal, and the overall chasing that must be done between buyer/seller and their professional advisors can be astounding. A good broker will be an enormous help putting all of it together.

Using The Right One

In addition to being frequently asked by clients about brokers, I also receive the greatest number of complaints from readers about brokers. While many of these complaints are justified, equal amounts are due to a basic misunderstanding of what a broker can or cannot do.

A business broker cannot help you buy the right business. They can assist you, but ultimately, it is up to you to make that decision. A business broker cannot afford to spend countless unpaid hours searching for the right business for you. The search is something that you must do. They’ll provide you with the tools to do it, but it’s your responsibility to get the ball rolling.

A business broker cannot conduct the investigation for you. They may suggest common things to look for, but they won’t be your detective. A business broker cannot negotiate the best deal for you. Most will certainly attempt to bring all parties to a point of understanding, but if you want the best deal, then you must realize that nobody cares more about your investment than you do.
Meet with several until you find one who makes you feel comfortable.

In my course, How To Buy A Good Business At A Great Price©, there is an entire chapter devoted to finding and using the right broker; however, here are a few questions you should ask them:

• How experienced are they?
• How many transactions have they been involved with?
• Have they ever owned their own business?
• Do they specialize in a particular business type?
• What references can they provide?
• How many clients are they working with presently?
• How many agents work in their office?
• Of the total number of businesses they’ve sold in the past year, how many were their own listings and how many belonged to other agents? (This will indicate their willingness to suggest businesses to you based upon your needs, not simply because it’s their listing).

Your Presentation Will Determine Everything

Don’t just call or email a broker inquiring about a particular listing. The point of your contact is to first determine how effectively they communicate and how eager they are for good buyer prospects. If they do not reply to your email or return your call within 24 hours, forget them (unless of course their voice mail indicates they’re out of town). I’ve heard some brokers say they’re too busy to return buyer emails. Some only reply after they get a second or third inquiry from a buyer. I don’t care how flooded the market may be with buyers, or how inundated they are with buyer emails, there is no excuse for not getting back to people in a timely manner.

Help Them To Help You

Once you begin to speak with a broker, if you feel good about their attitude, follow up and input, arrange to meet them. Keep in mind that you want them to keep an eye out for the hottest listings for you.

To accomplish that you must convey several things to them:

• Show them you’re serious. A business broker wants to be sure that if the right opportunity comes along, you’ll be ready to buy!
• Prepare a laundry list of the types of businesses you’re interested in purchasing
• Present them with your personal financial statement
• Tell them precisely how much money you have to invest
• Ask them for suggestions as to how you should conduct your search
• Ask them to show you how to best navigate the Internet
• Call them regularly, at least once a week.
• For the first couple of businesses that you locate on your own, ask them to check them out. See how long it takes for them to give you data or follow up with you. If it’s more than a couple of days, use someone else.

Much of this information may be confusing to a first-time buyer. It’s logical to think that brokers should be falling all over to get your business. Unfortunately, this is not the case. I have always found this a little bizarre. Typically, this is not the philosophy employed by most brokers. This is an inventory business. Brokers make money by having good listings. A lot can be said for that, but let’s remember that every seller needs a buyer. If not, no deal!

Business brokers have a role to play. Use them effectively and they can be a solid asset to help you complete the deal. Likewise, if they do not demonstrate a serious commitment to follow up on your requests, then get another broker.

But remember, no matter how effective a broker is, when all is said and done, the task of buying the right business is ultimately, entirely, in your hands!

Richard Parker is the President of The Business Buyer Resource Center and author of How To Buy A Good Business At A Great Price

For assistance in buying a small Virginia business, contact
Activa Business Brokers.

A bar or night club business in Virginia can be very profitable - that is, if you know what you’re doing and can avoid the many pitfalls that are unique to this business. Consulting a Virginia business broker can open your eyes to the obstacles facing those who want to operate a bar in Virginia.

Read what author Brian Ernst has to say about buying a bar, night club or restaurant in Virginia.

You might want to try a lounge, disco, or sports bar type of business and will might say to yourself, “How hard can it be?” In this type of business, education is key. And what I mean of education is experience in this type of business or you must have a clear understanding of the nightclub business.

It is important because without the experience in this type of business you will never understand what to do and how to manage and fix things if problems may occur in the future.

This type of business is a high-risk business and usually short lifespan. At first, you will probably draw a lot of customers like people in a festive spirit with a little alcohol part with their money much easier.

Many of the bars and night clubs fall because of two main reasons. It ’s because they didn’t have enough capital to keep the business going and a lack of knowledge about the business. Running a lounge, sports bar, or other night club can be difficult if you have no idea what you are doing.

Experts in this business recommend that the best place to learn this type of business to start is at the bottom. You must learn how to handle situations like the violent drunker and drug dealers making transactions in your club. Also, you must also learn how to deal with unexpected problems that may cause your business to fail. What if a spouse who is trying to get her husband to come home and holds you responsible? And what if one of your patrons drives home drunk and kills someone? How do you handle this kind of situations?

In a bar or night club business, the best way to learn how to handle these kind of situations is by starting at the bottom. It is important to observe and learn what other bar or night club owners do to maintain this type of business. Be prepared in whatever problems that may approach you and learn from them. Then, you will be ready to handle these risks when you start your own bar or night club business.

When buying a bar or night club for sale, you should also consider hiring a manager. Since being an owner and a manager at the same time is a difficult task. You could hire a manager but this could be more expensive than you would like to handle.

Bars and night clubs won’t stay long without costumers. Costumers are the ones that keep the business going so it is important to attract as many costumers as possible. Costumers come in all ages, walks of life, and financial conditions. Your understanding of what customers’ want will form the basis of your concept, your layout, your operational policies and others. In order to draw a certain type of costumers, bars and night clubs usually are based on some type of theme. Sports bar themes will draw crowd that are sport-minded gathering for snacks, drinks, and to watch some sports before heading home. Some huge cities have bars or night clubs with a Country Western theme offering western dancing too. There are also bars around colleges and universities that are more of a pop or rock theme. Non-alcoholic teen clubs that will cater to the 15- to 20-year-old age group will have music appealing to that age group is also a good theme. Bar and night club businesses are different types of businesses. Providing exceptional service can also leave positive impression to your customers and keep them coming back. Picking the right theme is very essential for the growth of your bar and night club business.

Since the bar and night club business is an entertainment business, it must be treated very seriously. This type of business is a high-risk business and usually short lifespan. You, as an owner and the manager, must be very careful of the important details. This means you are going to need efficient point of sale system that reports receipts, bouncers to take care of matters and security systems to keep from getting robbed since most robberies happen after the bar closes while the owner is counting money. Also, your management and staff should explore many methods to create the safest environment possible for customers to enjoy their nights out. Make sure that your facility is in accordance with fire ordinances in your area, including number and size of exits.

The bar and night club business can be prosperous but at the same time dangerous. It is not as simple as selling alcohol but it is a complex business that requires not only personal or financial investment but also hard work and guts. If you really want to get into it make sure you are careful of all the critical details. Treat the business like a business and not a hobby and it will more than likely do you well.

If you are interested in reprinting more relevant articles, please contact service@globalbx.com for more information.

Search hundreds of night clubs for sale at www.globalbx.com.

For advice on buying a Virginia bar or restaurant, contact Activa Business Brokers in Richmond, Virginia.

“Virginia has maintained the top spot since Forbe’s first Best States ranking in 2006.”

“Virginia remains an excellent location for new or existing businesses. It has the best regulatory environment by our count, thanks to the second-best incentive programs in the country–as well as the fifth best tort atmosphere.”

The above quotes on the Virginia Business Brokers site are taken from the Forbe’s article, which can be read in full here: Virginia is the Best State for Business.

Virginia is one of the best states for starting a business. The Virginia legislature has created a straightforward process for creating a Virginia limited liability company. However, there are strict rules and requirements including name rules, registered agent requirements, other mandated information and even document formatting rules.

Avoid the hassle and delays of rejected filings by making sure you understand the filing requirements or use a reputable attorney or formation service to for your limited liability company in Virginia. A proper formation is important for preserving the benefits as well.

While not meant to provide legal advice, this article from VirginiaBusinessFormation.com can act as a foundation in learning the benefits of choosing a LLC form of business structure.

Virginia Business Brokers advises you to contact an experienced attorney or a qualified Virginia business broker.

A Virginia limited liability company is the most common legal entity for small business. This is because it offers the most benefits over other legal entity structures. Understand the three major benefits so you can ensure you take advantage of them.

Limiting Liability Protection

Entrepreneurship is one of the best paths to financial freedom in the US. However, without limited liability entities, a business owner would expose everything he owned in order to start a business.

Without a legal entity such as a Virginia limited liability company, you could operate your business as a sole proprietor but in this case, everything you own would be at risk of loss for business related activity: your house, automobiles, savings, jewelry, real estate . . . nothing is protected.

The essential benefit of a limited liability company in Virginia is that the law imposes a layer of protection between members of the LLC (who are the owners) and the activities of the business which could give rise to lawsuits and other liabilities.

This protection is the same benefit afforded by corporations but with a Virginia limited liability company, you are not required to meet the formalities and other requirements imposed by a corporation. The LLC is a much simpler entity.

Now, this layer of protection does have some limitations. However, it is significant enough over no protection especially in the world today where business lawsuits are an epidemic.

Virginia Limited Liability Company Offers the Most Tax Choices

The LLC in Virginia is the most common vehicle for small business owners for several reasons. The Internal Revenue Service in 1997 passed a set of tax regulations which basically gave the LLC the right to choose how it wants to be taxed without any requirements.

This was a revolutionary move by the IRS and resulted in the number of limited liability company formations each year surpassing corporations. The Virginia limited liability company can afford its owners with limited liability protection, the ability to actively participate in the business operations and a single layer of income taxation without having to add any additional complexity to its structure.

Plus, for those LLC businesses which determine that a corporate taxation structure is better, a limited liability company in Virginia can elect C corporation or S corporation taxation. Accordingly, a Virginia LLC business can still retain the simplicity and flexibility of a Virginia limited liability company under the state laws and get benefits of corporate taxation without being subject to the more onerous requirements of a corporate legal entity.

Professionalism

If you want a head start in getting customers or other parties to do business with you, a limited liability company in Virginia will help. By having an official legal entity as your business entity, your business will be seen as a more official and professional business to the public.

There are so many fly by night and unprofessional businesses out there. It is so easy to start a sole proprietor business. Anyone can come up with a business name and call themselves a business.

However, if a customer sees a business which is an LLC (by having the LLC designation in the company name), it shows that the owners had a more formal business start up process by caring about the benefits of a formal legal entity and making the effort to form a Virginia limited liability company and completing the organization process.

Trust is important for a sustainable business. Having a limited liability company in Virginia can help.

For a FREE Virginia LLC Name Search and LLC Guide or to Learn More about the Virginia Limited Liability Company, visit www.VirginiaBusinessFormation.com