Net Operating Loss Carryback Option Extended
Under a revenue procedure recently issued by the IRS, many businesses can use losses incurred during the economic downturn of 2008-09 to reduce income from prior tax years. The provision allows businesses to elect to carryback a net operating loss (NOL) for a period of three, four or five years, or a loss from operations for four or five years, to offset taxable income in those preceding taxable years. The procedure applies to taxpayers that incurred an NOL or a loss from operations for a taxable year ending after December 31, 2007, and beginning before January 1, 2010 (it had previously been limited to an end date of January 2009).
A net operating loss typically occurs during a period in which a company’s allowable tax deductions are greater than its taxable income, resulting in a negative taxable income, which generally happens when a company has incurred more expenses than revenues during the period. The NOL carryback procedure can be used to recover past tax payments or reduce future tax payments.
An NOL or loss from operations carried back five years may offset no more than 50% of a taxpayer’s taxable income in that fifth preceding year. This limitation does not apply to the fourth or third preceding year. The relief provided under the Worker, Homeownership, and Business Assistance Act of 2009 differs from similar relief issued earlier this year in that the previous relief was limited to small businesses. The current relief is applicable to any taxpayer with business losses, except those that received payments under the Troubled Asset Relief Program.
Tuesday, March 16, 2010
Monday, December 21, 2009
SBA Recovery Act Funding Extended
News
Home / News / Press Releases
Recent Press Releases
Dec 19 2009
SBA Recovery Act Funding Extended
Defense Appropriations Bill contains funding to extend programs thru February 2010.
WASHINGTON – With Recovery Act funding running out and with almost 1,000 small businesses on a waiting list for about $500 million in SBA-backed loans, the Senate today voted to extend funding for vital SBA Recovery Act provisions through February 2010. United States Senator Mary L. Landrieu, D-La., chair of the Senate Committee on Small Business and Entrepreneurship, who along with 12 of her colleagues, requested this extension and praised the inclusion of funds to continue vital Small Business Administration (SBA) lending programs.
“Small businesses have been left in limbo since the funding ran out in late November. Today’s action by the Senate will immediately clear the waiting list established by the SBA and will provide a lifeline to small businesses in need of credit,” Senator Landrieu said. “With these additional funds, SBA will be able to offer lenders a higher guarantee for 7(a) loans and a fee waiver on 504 loans, and reduce the cost of capital for small businesses by waiving the fees on both 7(a) and 504 loans. These changes proved very effective at jumpstarting small business lending, and the need to continue them is clear. Since funds from the Recovery Act ran out in late November, we’ve seen the volume for 7(a) and 504 loans drastically decrease. Reinstating these funds is a important to small businesses and our overall economic recovery and job-creation efforts.”
Senator Landrieu, along with 12 other Senators, sent a letter to the Senate Appropriations Committee asking for the funds to continue these provisions from the Recovery Act. Of the $479 million dollars requested from the Senators, $125 million is included in the DoD appropriations bill, with the remaining $354 million included in the jobs-creation package introduced in the House. The House jobs-creation package, which is expected to be considered by the Senate early next year, also includes the authorization to extend the authorization for the 90-guarantee on SBA loans through FY2010.
To view a copy of the Senator request for funding, please click here.
Home / News / Press Releases
Recent Press Releases
Dec 19 2009
SBA Recovery Act Funding Extended
Defense Appropriations Bill contains funding to extend programs thru February 2010.
WASHINGTON – With Recovery Act funding running out and with almost 1,000 small businesses on a waiting list for about $500 million in SBA-backed loans, the Senate today voted to extend funding for vital SBA Recovery Act provisions through February 2010. United States Senator Mary L. Landrieu, D-La., chair of the Senate Committee on Small Business and Entrepreneurship, who along with 12 of her colleagues, requested this extension and praised the inclusion of funds to continue vital Small Business Administration (SBA) lending programs.
“Small businesses have been left in limbo since the funding ran out in late November. Today’s action by the Senate will immediately clear the waiting list established by the SBA and will provide a lifeline to small businesses in need of credit,” Senator Landrieu said. “With these additional funds, SBA will be able to offer lenders a higher guarantee for 7(a) loans and a fee waiver on 504 loans, and reduce the cost of capital for small businesses by waiving the fees on both 7(a) and 504 loans. These changes proved very effective at jumpstarting small business lending, and the need to continue them is clear. Since funds from the Recovery Act ran out in late November, we’ve seen the volume for 7(a) and 504 loans drastically decrease. Reinstating these funds is a important to small businesses and our overall economic recovery and job-creation efforts.”
Senator Landrieu, along with 12 other Senators, sent a letter to the Senate Appropriations Committee asking for the funds to continue these provisions from the Recovery Act. Of the $479 million dollars requested from the Senators, $125 million is included in the DoD appropriations bill, with the remaining $354 million included in the jobs-creation package introduced in the House. The House jobs-creation package, which is expected to be considered by the Senate early next year, also includes the authorization to extend the authorization for the 90-guarantee on SBA loans through FY2010.
To view a copy of the Senator request for funding, please click here.
Tuesday, October 13, 2009
A Retail Business For Sale
Buying A Retail Business For Sale
If you are thinking about buying a retail business, there is a lot that you must consider outside of the basic nuts and bolts of the business. There is an old saying that retail success hinges on three factors: "location, location, location." While this is true to a large extent, it’s not always the case. When looking at a retail business for sale, your number-one goal must be to determine what “drives” the customers to the store.
Location
If the business relies on its location then you’ll want to be certain:
The lease in place is transferable/assignable and is long-term. You must negotiate additional options to give yourself at least ten years of contract length.
Is there an anchor tenant that brings customers to the locale? If so, then you’ll want to know how long their lease is, and if they have any plans to relocate in the near-term. Also, be certain that this anchor tenant is solid financially - think about all the poor merchants who relied on K-Mart and General Cinema traffic. The stores surrounding these faced disastrous situations when they closed numerous locations.
Is there any planned road construction that can impact the business? Typically, major roads undergo some form of construction every ten years or so. Visit the city hall/planning office to see when the last work was done and what plans, if any, may be in place.
Above all, think about every possible situation that can impact the location and investigate it thoroughly.
If the operation is driven by its product offering you’ll want to be certain that you’re capable of continuing to identify the types of products that customers want. If this function is performed by an employee/buyer, you may want to have them own a stake in the business as well. However, if you’re not 100% comfortable with performing this function yourself, or are not the type that has an “eye” for product, you may not want to go down this road.
Marketing
For some retail businesses, it’s the marketing that brings in the customers, and location takes a back seat. These are destination locations. Furniture and specialty retailers are typical examples. They spend a fortune on advertising and promotion, and they get the people to the stores. Here again, if this is what drives the business then you’ll want to be certain that your greatest skill lies in this area.
Avoid Working 100 Hours Per Week!
The biggest issue that I discuss with clients who want to become retail merchants is for them to get a true grasp upon the actual workload that’s required in this environment. Retail hours can be hell, especially if you’re in a mall where you’re required to maintain certain hours. I meet far too many retailers who seem to work seven days a week. It does not have to be this way, as long as you set up the business to run properly without you having to be there every minute.
Hire great people! Getting good employees is an ongoing challenge. You shouldn’t be afraid to churn through employees until you get the right ones. Pay them well. Train them effectively. Put policies and procedures in place that allows them to get up to speed quickly. Work towards having a key manager in place that can relieve you of some of the daily burdens. Never, ever, tolerate stealing. Hire a mystery shopping company to do an assessment at least once a year. It’s a great way to learn what the customers are experiencing.
Implement the most effective technology you can afford. There are tremendous systems available today for point-of-sale tracking, inventory management, accounting modules, etc. Systematize everything so that you’re not beholden to being there every minute. One program that I’ve seen quite a bit of is RetailPro. It appears to be very robust and cost-effective. It’s well worth checking out. There are many others available as well.
Growing The Business
If your agenda is to make a lot of money, then it’s hard to do so with one location. Growth requires expansion. Many times, however, one successful location does not translate well into a second successful one. This usually happens because the owners cannot duplicate the business effectively. That’s why systems are crucial. It’s also why you need to have a crystal-clear view of what brings in the customers and then be able to duplicate it effectively.
The other reason why this happens is that the owner is the business and then ends up trying to be effective in two location. Guess what? It doesn’t work! Build the first one. Get the recipe in place that includes a top-notch manager. Then you can decide to either run the second one yourself or put in the manager from the existing location.
If you’re running a large-sized operation, you may want to consider opening a second one that may be a bit smaller, with an option to expand. This doesn’t always work, but should be considered.
Certainly when thinking about buying a retail operation, and growth is your objective, you have to decide if it’s even a possibility, or is it too specialized? If you buy a scuba diving store that’s on the ocean, well you cannot open up a second location in a rural area and expect similar results. The business itself may be restrictive from a growth perspective.
What’s A Retail Business Worth?
Just like any other business resale, there are no “golden rules” to establishing the value of a retail business. The main issue must always be how much the business is making. This is the key component that must dictate the purchase price. Inventory is one element that clouds many retail business purchases. You need the inventory to drive revenue. It may or may not be treated separately in the price.
Notwithstanding this, the combination of the profit and inventory acquisition cannot over-inflate the price to the point where it’s not a feasible investment. Liquor stores, for example, may sell at a reduced multiple of earnings, but inventory is priced and purchased separately. Conversely, a clothing retailer may be sold at one fixed amount and includes all of the assets.
When it comes to inventory, your investigation must conclude if the product is saleable, and in what time frame. Specialty retailers usually have a ton of obsolete or slower-selling product. If there’s old inventory it must be discounted heavily in the valuation.
Ultimately, you will find retail businesses selling around the time times range (typically) plus an optimal level of inventory to operate the business. But again,I never endorse broad-brushed or generalized valuations so take this point only as a barometer.
What To Do Next?
Lots of people have made lots of money operating retail businesses. If you’re cut out for it, you can also be successful. But, you’ll want to weigh all of the factors to be certain that this type of business fits both your strengths and the lifestyle you want.
In most regions, there are always an abundance of retail businesses listed for sale. In addition to the business-for-sale Websites, check out the local business broker sites, and keep an eye on the classifieds as many retailers attempt to sell their businesses privately. Often times, a local merchant will foolishly hire a commercial real estate agent to sell their business and so you should review the multiple listing sites, as well. While many people think that it all comes down to location, the savvy retail business buyer knows there’s far more to consider in the equation. Have a great week
Posted by Richard Parker
If you are thinking about buying a retail business, there is a lot that you must consider outside of the basic nuts and bolts of the business. There is an old saying that retail success hinges on three factors: "location, location, location." While this is true to a large extent, it’s not always the case. When looking at a retail business for sale, your number-one goal must be to determine what “drives” the customers to the store.
Location
If the business relies on its location then you’ll want to be certain:
The lease in place is transferable/assignable and is long-term. You must negotiate additional options to give yourself at least ten years of contract length.
Is there an anchor tenant that brings customers to the locale? If so, then you’ll want to know how long their lease is, and if they have any plans to relocate in the near-term. Also, be certain that this anchor tenant is solid financially - think about all the poor merchants who relied on K-Mart and General Cinema traffic. The stores surrounding these faced disastrous situations when they closed numerous locations.
Is there any planned road construction that can impact the business? Typically, major roads undergo some form of construction every ten years or so. Visit the city hall/planning office to see when the last work was done and what plans, if any, may be in place.
Above all, think about every possible situation that can impact the location and investigate it thoroughly.
If the operation is driven by its product offering you’ll want to be certain that you’re capable of continuing to identify the types of products that customers want. If this function is performed by an employee/buyer, you may want to have them own a stake in the business as well. However, if you’re not 100% comfortable with performing this function yourself, or are not the type that has an “eye” for product, you may not want to go down this road.
Marketing
For some retail businesses, it’s the marketing that brings in the customers, and location takes a back seat. These are destination locations. Furniture and specialty retailers are typical examples. They spend a fortune on advertising and promotion, and they get the people to the stores. Here again, if this is what drives the business then you’ll want to be certain that your greatest skill lies in this area.
Avoid Working 100 Hours Per Week!
The biggest issue that I discuss with clients who want to become retail merchants is for them to get a true grasp upon the actual workload that’s required in this environment. Retail hours can be hell, especially if you’re in a mall where you’re required to maintain certain hours. I meet far too many retailers who seem to work seven days a week. It does not have to be this way, as long as you set up the business to run properly without you having to be there every minute.
Hire great people! Getting good employees is an ongoing challenge. You shouldn’t be afraid to churn through employees until you get the right ones. Pay them well. Train them effectively. Put policies and procedures in place that allows them to get up to speed quickly. Work towards having a key manager in place that can relieve you of some of the daily burdens. Never, ever, tolerate stealing. Hire a mystery shopping company to do an assessment at least once a year. It’s a great way to learn what the customers are experiencing.
Implement the most effective technology you can afford. There are tremendous systems available today for point-of-sale tracking, inventory management, accounting modules, etc. Systematize everything so that you’re not beholden to being there every minute. One program that I’ve seen quite a bit of is RetailPro. It appears to be very robust and cost-effective. It’s well worth checking out. There are many others available as well.
Growing The Business
If your agenda is to make a lot of money, then it’s hard to do so with one location. Growth requires expansion. Many times, however, one successful location does not translate well into a second successful one. This usually happens because the owners cannot duplicate the business effectively. That’s why systems are crucial. It’s also why you need to have a crystal-clear view of what brings in the customers and then be able to duplicate it effectively.
The other reason why this happens is that the owner is the business and then ends up trying to be effective in two location. Guess what? It doesn’t work! Build the first one. Get the recipe in place that includes a top-notch manager. Then you can decide to either run the second one yourself or put in the manager from the existing location.
If you’re running a large-sized operation, you may want to consider opening a second one that may be a bit smaller, with an option to expand. This doesn’t always work, but should be considered.
Certainly when thinking about buying a retail operation, and growth is your objective, you have to decide if it’s even a possibility, or is it too specialized? If you buy a scuba diving store that’s on the ocean, well you cannot open up a second location in a rural area and expect similar results. The business itself may be restrictive from a growth perspective.
What’s A Retail Business Worth?
Just like any other business resale, there are no “golden rules” to establishing the value of a retail business. The main issue must always be how much the business is making. This is the key component that must dictate the purchase price. Inventory is one element that clouds many retail business purchases. You need the inventory to drive revenue. It may or may not be treated separately in the price.
Notwithstanding this, the combination of the profit and inventory acquisition cannot over-inflate the price to the point where it’s not a feasible investment. Liquor stores, for example, may sell at a reduced multiple of earnings, but inventory is priced and purchased separately. Conversely, a clothing retailer may be sold at one fixed amount and includes all of the assets.
When it comes to inventory, your investigation must conclude if the product is saleable, and in what time frame. Specialty retailers usually have a ton of obsolete or slower-selling product. If there’s old inventory it must be discounted heavily in the valuation.
Ultimately, you will find retail businesses selling around the time times range (typically) plus an optimal level of inventory to operate the business. But again,I never endorse broad-brushed or generalized valuations so take this point only as a barometer.
What To Do Next?
Lots of people have made lots of money operating retail businesses. If you’re cut out for it, you can also be successful. But, you’ll want to weigh all of the factors to be certain that this type of business fits both your strengths and the lifestyle you want.
In most regions, there are always an abundance of retail businesses listed for sale. In addition to the business-for-sale Websites, check out the local business broker sites, and keep an eye on the classifieds as many retailers attempt to sell their businesses privately. Often times, a local merchant will foolishly hire a commercial real estate agent to sell their business and so you should review the multiple listing sites, as well. While many people think that it all comes down to location, the savvy retail business buyer knows there’s far more to consider in the equation. Have a great week
Posted by Richard Parker
Key Tax Changes for 2009
Key Tax Changes for 2009
As you prepare to work through your taxes for 2009, consider the following business changes. This year’s shifts may offer an opportunity to save money, so you, your accountant and/or your tax preparer should be prepared.
Section 179—The American Recovery and Reinvestment Act makes several important changes to the equipment write-off rules, but only for 2009. First, the maximum amount that can be written off under Section 179 is $250,000 and the investment limitation is $800,000 for tax years beginning in 2009. The maximum amount of equipment placed in service in 2009 was scheduled to fall to $133,000, a $117,000 decrease from 2008, when a temporary $250,000 ceiling was in effect, but the 2008 levels have been extended.
Bonus depreciation—The 50% bonus depreciation deduction for qualifying property has been extended an additional year and applies to property placed in service before January 1, 2010 (January 1, 2011 for certain other property, including that with a longer production period).
Bonus depreciation is only available for new property and only property depreciable under MACRS with a recovery period of 20 years or less. Bonus depreciation is automatic. You can, however, elect out of it. (You might consider doing so if 2009 is a particularly bad year and you expect to be in a higher bracket in future years.)
The luxury car depreciation caps for vehicles that qualify for bonus depreciation are increased by $8,000 for vehicles placed in service before January 1, 2010. Thus, the limit on cars is $10,960; the limit on trucks and vans is $11,060.
Depreciation of restaurants and retail stores—The current 15-year depreciation period for tenant and restaurant improvements is expanded to include buildings housing restaurants, and improvements made to retail stores that are placed in service in 2009.
Payroll tax changes—The maximum amount of wages subject to Social Security tax has increased to $106,800 for 2009, up from $102,000 in 2008. That means you should stop making (and paying) Social Security for employees once they reach $106,801 in eligible earnings in 2009. The tax rate remains 7.65% on employers and employees.
Self-employment tax contribution base increased—The maximum amount of self-employment income subject to Social Security taxes increases to $106,800 in 2009, up from $102,000 in 2008. The self-employment tax rate remains 15.3%.
Estimated tax relief for small business owners—If an individual’s Adjusted Gross Income for 2008 was less than $500,000, and more than half of gross income was from a business with fewer than 500 workers, the owner’s estimated income taxes for 2009 estimated payments can be based on the lesser of 90% of tax liability for 2008 or 2009. The usual estimated tax benchmarks of 100% or 110% of tax liability do not apply.
Withholding changes—The IRS has announced changes in withholding rates for 2009 and 2010. These changes are the result of the Making Work Pay provision of the American Recovery and Reinvestment Act (ARRA), which provides a refundable tax credit of up to $400 for working individuals and $800 for married taxpayers filing joint returns. This tax credit will be calculated at a rate of 6.2% of earned income and will phase out for taxpayers with adjusted gross income in excess of $75,000, or $150,000 for married couples filing jointly. (See the new withholding tables for more information.)
Estimated tax payments for small business owners—There are several ways to avoid a penalty for failure to pay estimated taxes. Most taxpayers avoid the penalty by paying in at least as much as the liability on the prior year’s return. For example, your total tax liability for 2008 was $8,000. If you pay at least $2,000 per quarter in 2009, you’ll avoid any penalty. If your adjusted gross income on last year’s return was more than $150,000, you’ll need to pay at least 110% of last year’s liability. (If you expect your tax liability to be lower than in the prior year, you can pay estimates based on your annualized, actual income for the year. This involves more computations.)
For tax years beginning in 2009, the 100% (or 110%) requirement for a “qualified individual” is reduced to 90%. A qualified individual is one whose:
adjusted gross income shown on the individual’s prior year tax return was less than $500,000 ($250,000 for a married person filing separately), and
the individual certifies that more than 50% of the preceding year’s gross income was from a small business.
Increased retirement plan contributions—In 2009, small business owners have the opportunity to invest more tax-deductible money in their retirement savings accounts. New contribution limits are:
401(k) elective deferrals up to $16,500 (plus another $5,500 for those age 50 or older by the end of 2009). In 2008, the limits were $15,500 (plus another $5,000 for those age 50 or older by the end of 2008).
SEP and profit-sharing plan limit of $49,000 (up from $46,000).
Defined benefit (pension plan) limit of $195,000 (up from $185,000).
Increased deductions for Health Savings Accounts (HSAs)—You can contribute more in 2009 to business HSAs, with a 100% tax deduction up to a limit of $5,950 for a family, and $3,000 for an individual.
First-time buyers with home-based businesses—If you operate your small business from an office situated within a first-time home purchase, you can still qualify for additional tax incentives, if you purchased your home between April 9, 2008 and June 30, 2009.
Lower mileage rates—As expected, the IRS lowered the standard mileage rates for the business use of vehicles. Beginning on January 1, 2009, the standard mileage rate for the use of a car (also vans, pickups or panel trucks) is:
55 cents per mile for business miles driven
24 cents per mile driven for medical or moving purposes
14 cents per mile driven in service of charitable organizations
Maximum automobile value for using the cents-per-mile valuation rule—For 2009, an employer providing a passenger automobile for the personal use of an employee may determine the value of the personal use by using the vehicle cents-per-mile value rule if the vehicle’s fair market value on the date it is first made available to the employee does not exceed $15,000 for a passenger automobile other than a truck or van, or $15,200 for a truck or van.
Commuting and parking benefits for employees—Beginning in 2009, businesses can pay $230 a month in tax-free parking for employees, up $10 per month from 2008. The cap on tax-free transit passes rises to $230 a month. In addition, you can offer employees who prefer to cycle to work a new tax-free benefit of $20 per month to cover the cost of buying, maintaining and storing a bicycle for commuting purposes.
For Quick Reference
The chart below outlines a number of personal and business tax rate changes.
Social Security/Medicare
2008
2009
Social Security Taxable Wage Base
$102,000
$106,800
Medicare Taxable Wage Base
No limit
No limit
Individual Retirement Accounts
2008
2009
Roth IRA
Lesser of $5,000 or 100% of earned income
Lesser of $5,000 or 100% of earned income
Traditional IRA
Lesser of $5,000 or 100% of earned income
Lesser of $5,000 or 100% of earned income
Roth and traditional IRA additional annual “catch-up” contributions for account owners age 50 and older,
$1,000
$1,000
Annual Qualified Plan Limits
2008
2009
Defined contribution plan dollar limit on additions to qualified plans, 403(b) plans and SEP plans
$46,000
$49,000
Defined benefit plan limit on benefits
Lesser of $185,000 or 100% of average compensation for highest three consecutive years
Lesser of $180,000 or 100% of average compensation for highest three consecutive years
Maximum compensation used to determine contributions
$230,000
$225,000
Elective deferral limits for 401(k) plans, 403(b) plans, 457(b) plans, and SAR-SEPs Unchanged for 2008
Lesser of $15,500 or 100% participant's compensation
Lesser of $16,500 or 100% participant's compensation
Additional catch-up contributions (individuals age 50 or older) for 401(k) plans, 403(b) plans, 457(b) plans, and SAR-SEPs
$5,000
$5,500
Elective deferral limits for SIMPLE 401(k) plans and SIMPLE IRA plans
Lesser of $10,500 or 100% participant's compensation
Lesser of $11,500 or 100% participant's compensation
Additional catch-up contributions (individuals age 50 or older) for SIMPLE 401(k) plans and SIMPLE IRA plans
$2,500
$2,500
Compensation defining highly compensated employee
$105,000
$110,000
Compensation threshold used to determine a key employee in a top-heavy plan
$1 for more than 5% owners; $145,000 for officers; $150,000 for more than 1% owners
$1 for more than 5% owners; $160,000 for officers; $150,000 for more than 1% owners
Compensation triggering Simplified Employee Pension (SEP) contribution requirement
$500
$550
Driving Deductions
2008
2009
Business mileage, cents per mile
50.5 (first half)58.5 (second half )
55
Charitable mileage, cents per mile
14
14
Medical and moving mileage, cents per mile
19 (first half)27 (second half)
24
Business Equipment
2008
2009
Maximum Section 179 Expense Deduction
$250,000
$250,000
Phase-out for Section 179
$800,000
$800,000
Qualified Transportation Fringe Benefit Exclusion
2008
2009
Commuter highway vehicle and transit pass, per month
$115
$230
Qualified parking, per month
$220
$230
Standard Deductions
2008
2009
Married filing jointly or surviving spouse
$10,900
$11,400
Single (and married filing separately)
$5,450
$5,700
Heads of Household
$8,000
$8,350
Itemized Deduction Phase-Out
2008
2009
Married filing separately
$159,650
$159,950
Personal Exemption
2008
2009
Amount
$3,500
$3,650
Sources: Internal Revenue Service, Small Business Tax Center, and IRS Small Business and Self-Employed Tax Center. Thanks to Martin G. Meyer, principal at B. Meyer Bookkeeping Services, for his help with the “For Quick Reference” list.
As you prepare to work through your taxes for 2009, consider the following business changes. This year’s shifts may offer an opportunity to save money, so you, your accountant and/or your tax preparer should be prepared.
Section 179—The American Recovery and Reinvestment Act makes several important changes to the equipment write-off rules, but only for 2009. First, the maximum amount that can be written off under Section 179 is $250,000 and the investment limitation is $800,000 for tax years beginning in 2009. The maximum amount of equipment placed in service in 2009 was scheduled to fall to $133,000, a $117,000 decrease from 2008, when a temporary $250,000 ceiling was in effect, but the 2008 levels have been extended.
Bonus depreciation—The 50% bonus depreciation deduction for qualifying property has been extended an additional year and applies to property placed in service before January 1, 2010 (January 1, 2011 for certain other property, including that with a longer production period).
Bonus depreciation is only available for new property and only property depreciable under MACRS with a recovery period of 20 years or less. Bonus depreciation is automatic. You can, however, elect out of it. (You might consider doing so if 2009 is a particularly bad year and you expect to be in a higher bracket in future years.)
The luxury car depreciation caps for vehicles that qualify for bonus depreciation are increased by $8,000 for vehicles placed in service before January 1, 2010. Thus, the limit on cars is $10,960; the limit on trucks and vans is $11,060.
Depreciation of restaurants and retail stores—The current 15-year depreciation period for tenant and restaurant improvements is expanded to include buildings housing restaurants, and improvements made to retail stores that are placed in service in 2009.
Payroll tax changes—The maximum amount of wages subject to Social Security tax has increased to $106,800 for 2009, up from $102,000 in 2008. That means you should stop making (and paying) Social Security for employees once they reach $106,801 in eligible earnings in 2009. The tax rate remains 7.65% on employers and employees.
Self-employment tax contribution base increased—The maximum amount of self-employment income subject to Social Security taxes increases to $106,800 in 2009, up from $102,000 in 2008. The self-employment tax rate remains 15.3%.
Estimated tax relief for small business owners—If an individual’s Adjusted Gross Income for 2008 was less than $500,000, and more than half of gross income was from a business with fewer than 500 workers, the owner’s estimated income taxes for 2009 estimated payments can be based on the lesser of 90% of tax liability for 2008 or 2009. The usual estimated tax benchmarks of 100% or 110% of tax liability do not apply.
Withholding changes—The IRS has announced changes in withholding rates for 2009 and 2010. These changes are the result of the Making Work Pay provision of the American Recovery and Reinvestment Act (ARRA), which provides a refundable tax credit of up to $400 for working individuals and $800 for married taxpayers filing joint returns. This tax credit will be calculated at a rate of 6.2% of earned income and will phase out for taxpayers with adjusted gross income in excess of $75,000, or $150,000 for married couples filing jointly. (See the new withholding tables for more information.)
Estimated tax payments for small business owners—There are several ways to avoid a penalty for failure to pay estimated taxes. Most taxpayers avoid the penalty by paying in at least as much as the liability on the prior year’s return. For example, your total tax liability for 2008 was $8,000. If you pay at least $2,000 per quarter in 2009, you’ll avoid any penalty. If your adjusted gross income on last year’s return was more than $150,000, you’ll need to pay at least 110% of last year’s liability. (If you expect your tax liability to be lower than in the prior year, you can pay estimates based on your annualized, actual income for the year. This involves more computations.)
For tax years beginning in 2009, the 100% (or 110%) requirement for a “qualified individual” is reduced to 90%. A qualified individual is one whose:
adjusted gross income shown on the individual’s prior year tax return was less than $500,000 ($250,000 for a married person filing separately), and
the individual certifies that more than 50% of the preceding year’s gross income was from a small business.
Increased retirement plan contributions—In 2009, small business owners have the opportunity to invest more tax-deductible money in their retirement savings accounts. New contribution limits are:
401(k) elective deferrals up to $16,500 (plus another $5,500 for those age 50 or older by the end of 2009). In 2008, the limits were $15,500 (plus another $5,000 for those age 50 or older by the end of 2008).
SEP and profit-sharing plan limit of $49,000 (up from $46,000).
Defined benefit (pension plan) limit of $195,000 (up from $185,000).
Increased deductions for Health Savings Accounts (HSAs)—You can contribute more in 2009 to business HSAs, with a 100% tax deduction up to a limit of $5,950 for a family, and $3,000 for an individual.
First-time buyers with home-based businesses—If you operate your small business from an office situated within a first-time home purchase, you can still qualify for additional tax incentives, if you purchased your home between April 9, 2008 and June 30, 2009.
Lower mileage rates—As expected, the IRS lowered the standard mileage rates for the business use of vehicles. Beginning on January 1, 2009, the standard mileage rate for the use of a car (also vans, pickups or panel trucks) is:
55 cents per mile for business miles driven
24 cents per mile driven for medical or moving purposes
14 cents per mile driven in service of charitable organizations
Maximum automobile value for using the cents-per-mile valuation rule—For 2009, an employer providing a passenger automobile for the personal use of an employee may determine the value of the personal use by using the vehicle cents-per-mile value rule if the vehicle’s fair market value on the date it is first made available to the employee does not exceed $15,000 for a passenger automobile other than a truck or van, or $15,200 for a truck or van.
Commuting and parking benefits for employees—Beginning in 2009, businesses can pay $230 a month in tax-free parking for employees, up $10 per month from 2008. The cap on tax-free transit passes rises to $230 a month. In addition, you can offer employees who prefer to cycle to work a new tax-free benefit of $20 per month to cover the cost of buying, maintaining and storing a bicycle for commuting purposes.
For Quick Reference
The chart below outlines a number of personal and business tax rate changes.
Social Security/Medicare
2008
2009
Social Security Taxable Wage Base
$102,000
$106,800
Medicare Taxable Wage Base
No limit
No limit
Individual Retirement Accounts
2008
2009
Roth IRA
Lesser of $5,000 or 100% of earned income
Lesser of $5,000 or 100% of earned income
Traditional IRA
Lesser of $5,000 or 100% of earned income
Lesser of $5,000 or 100% of earned income
Roth and traditional IRA additional annual “catch-up” contributions for account owners age 50 and older,
$1,000
$1,000
Annual Qualified Plan Limits
2008
2009
Defined contribution plan dollar limit on additions to qualified plans, 403(b) plans and SEP plans
$46,000
$49,000
Defined benefit plan limit on benefits
Lesser of $185,000 or 100% of average compensation for highest three consecutive years
Lesser of $180,000 or 100% of average compensation for highest three consecutive years
Maximum compensation used to determine contributions
$230,000
$225,000
Elective deferral limits for 401(k) plans, 403(b) plans, 457(b) plans, and SAR-SEPs Unchanged for 2008
Lesser of $15,500 or 100% participant's compensation
Lesser of $16,500 or 100% participant's compensation
Additional catch-up contributions (individuals age 50 or older) for 401(k) plans, 403(b) plans, 457(b) plans, and SAR-SEPs
$5,000
$5,500
Elective deferral limits for SIMPLE 401(k) plans and SIMPLE IRA plans
Lesser of $10,500 or 100% participant's compensation
Lesser of $11,500 or 100% participant's compensation
Additional catch-up contributions (individuals age 50 or older) for SIMPLE 401(k) plans and SIMPLE IRA plans
$2,500
$2,500
Compensation defining highly compensated employee
$105,000
$110,000
Compensation threshold used to determine a key employee in a top-heavy plan
$1 for more than 5% owners; $145,000 for officers; $150,000 for more than 1% owners
$1 for more than 5% owners; $160,000 for officers; $150,000 for more than 1% owners
Compensation triggering Simplified Employee Pension (SEP) contribution requirement
$500
$550
Driving Deductions
2008
2009
Business mileage, cents per mile
50.5 (first half)58.5 (second half )
55
Charitable mileage, cents per mile
14
14
Medical and moving mileage, cents per mile
19 (first half)27 (second half)
24
Business Equipment
2008
2009
Maximum Section 179 Expense Deduction
$250,000
$250,000
Phase-out for Section 179
$800,000
$800,000
Qualified Transportation Fringe Benefit Exclusion
2008
2009
Commuter highway vehicle and transit pass, per month
$115
$230
Qualified parking, per month
$220
$230
Standard Deductions
2008
2009
Married filing jointly or surviving spouse
$10,900
$11,400
Single (and married filing separately)
$5,450
$5,700
Heads of Household
$8,000
$8,350
Itemized Deduction Phase-Out
2008
2009
Married filing separately
$159,650
$159,950
Personal Exemption
2008
2009
Amount
$3,500
$3,650
Sources: Internal Revenue Service, Small Business Tax Center, and IRS Small Business and Self-Employed Tax Center. Thanks to Martin G. Meyer, principal at B. Meyer Bookkeeping Services, for his help with the “For Quick Reference” list.
Sellers, In the case of an audit...
What IRS Auditors Look for When Examining a Business
In the case of audit, be aware that the IRS training manual tells its auditors that they are examining you, not just your tax return. The auditor wants to see how you match up with the income reported on your return, or what the IRS terms “economic reality.” According to Frederick W. Daily, tax attorney and author of Stand Up To the IRS and Tax Savvy for Small Business, if your business is audited, the IRS is likely to investigate the following issues:
Does your lifestyle square with your reported income? “An auditor sizes you up for dress, jewelry, car and furnishings in your home or office, if given a chance to make these observations. Someone who looks like a Vegas high roller, with the tax return of a missionary, will cause any auditor to dig deeper,” Daily says.
Does your business handle a lot of cash? If your business handles a lot of cash, expect the auditor to suspect skimming, or diverting income into your own pocket, without declaring it.
Did you write off auto expenses for your only car? Personal use of your business-deducted set of wheels is so common that auditors expect to find it. That doesn’t mean they’ll accept it, however. Auditors don’t believe you use your one-and-only auto 100% for business and never to run to the grocery store or the dentist. If you operate your car for both business and pleasure and claim a high percentage of business usage, keep good records (preferably a mileage log).
Did you claim personal entertainment, meals or vacation costs as business expenses? Travel and entertainment business expenses are another area where the IRS knows it can strike gold. Document all travel and entertainment deductions. Taking buddies to the ball game and calling it business won’t fly if you can’t explain the business relationship in a credible fashion.
Did you “forget” to report all of your business sales or receipts? If you failed to report significant business income—$10,000 or more—strongly consider hiring a tax pro to handle the audit. Remove yourself from the process altogether.
If the auditor finds evidence of large amounts of unreported income, and it looks intentional, he may call in the IRS criminal investigation team.
If you have employees, are you filing payroll tax returns and making tax payments? Employment taxes are a routine part of every audit of a small enterprise.
And last but not least, if you hire people you call “independent contractors,” are they really employees? The IRS routinely conducts audits of businesses that hire independent contractors, because of the tax savings associated with hiring contractors instead of employees.
This list is by no means complete. These are just the most likely things an IRS auditor will look for, Daily notes. If your small business is being audited by the IRS, speak with your accountant, tax preparer or tax attorney about the steps you need to take to prepare.
In the case of audit, be aware that the IRS training manual tells its auditors that they are examining you, not just your tax return. The auditor wants to see how you match up with the income reported on your return, or what the IRS terms “economic reality.” According to Frederick W. Daily, tax attorney and author of Stand Up To the IRS and Tax Savvy for Small Business, if your business is audited, the IRS is likely to investigate the following issues:
Does your lifestyle square with your reported income? “An auditor sizes you up for dress, jewelry, car and furnishings in your home or office, if given a chance to make these observations. Someone who looks like a Vegas high roller, with the tax return of a missionary, will cause any auditor to dig deeper,” Daily says.
Does your business handle a lot of cash? If your business handles a lot of cash, expect the auditor to suspect skimming, or diverting income into your own pocket, without declaring it.
Did you write off auto expenses for your only car? Personal use of your business-deducted set of wheels is so common that auditors expect to find it. That doesn’t mean they’ll accept it, however. Auditors don’t believe you use your one-and-only auto 100% for business and never to run to the grocery store or the dentist. If you operate your car for both business and pleasure and claim a high percentage of business usage, keep good records (preferably a mileage log).
Did you claim personal entertainment, meals or vacation costs as business expenses? Travel and entertainment business expenses are another area where the IRS knows it can strike gold. Document all travel and entertainment deductions. Taking buddies to the ball game and calling it business won’t fly if you can’t explain the business relationship in a credible fashion.
Did you “forget” to report all of your business sales or receipts? If you failed to report significant business income—$10,000 or more—strongly consider hiring a tax pro to handle the audit. Remove yourself from the process altogether.
If the auditor finds evidence of large amounts of unreported income, and it looks intentional, he may call in the IRS criminal investigation team.
If you have employees, are you filing payroll tax returns and making tax payments? Employment taxes are a routine part of every audit of a small enterprise.
And last but not least, if you hire people you call “independent contractors,” are they really employees? The IRS routinely conducts audits of businesses that hire independent contractors, because of the tax savings associated with hiring contractors instead of employees.
This list is by no means complete. These are just the most likely things an IRS auditor will look for, Daily notes. If your small business is being audited by the IRS, speak with your accountant, tax preparer or tax attorney about the steps you need to take to prepare.
Tuesday, September 22, 2009
You Have to Want to BUY a Business to get a deal done
Do You Really Need To Buy A Business Or Just Want To?
I tend to get a lot of blog comments in the fourth quarter each year from dejected buyers who had started the year off hoping to buy a business, and find themselves on the cusp of giving up. And so, I want to take some preemptive action and provide a business buyer’s attitude check-up, which I know will help you as you search for the right business for sale.
A series of events happened since last Monday the 14th that triggered this week’s comments so please allow me to give you a roundabout explanation.
I am not really a sports nut, but I am fanatical about two specific teams. Although I follow each with insane dedication, once they are out of the playoff picture, I lose much of my overall interest in the game.
First, I have been a die-hard Buffalo Bills fan since I started watching NFL football in the thirty plus years ago. No doubt, a few of you will point to four consecutive Super Bowl appearances in the 1990’s without a championship (at least they got to the big show), or most recently, last Monday’s last-minute loss to the Patriots (I thought they played brilliantly and way above what anyone anticipated). No problem; I, like most Buffalo Bills fans, have skin as thick as a Buick (we need it). Regardless of their dismal performance since those great years in the 90’s, my faith in them has never waivered. In fact, it has gotten stronger.
Second, coming from Canada where hockey is pretty much a religion, I have followed the Montreal Canadiens (yes, spelled with an “e”), since I was born. I watch sixty-plus games a year, and with them as well, I shall forever remain a loyal fan.
So why am I telling you this and what the heck does it have to do with buying a business?
Actually, it has a ton to do with it…..
I have always been bothered by the awful statistics in this industry, and namely that less than ten percent of the people who look to buy a business ever complete a transaction. It blows my mind that so many people could actually abandon a dream-like project once they hit a roadblock or two, because that is the only possible explanation. Of course, they hit hurdles because they don’t know what they are doing, and most buyers do not have the common sense to educate themselves first, even if they have zero experience buying businesses.
Simply giving up on buying a business because of a few hurdles would be similar to The Bills burning all their equipment and folding the team because they lost a game, or a Super Bowl, or four, or whatever.
That is not what successful people do.
I look at The Bills loss last week the same way every business buyer has to look at any hurdles, challenges or setbacks they encounter while looking for the right business for sale.
The team’s prior loss was history; it’s what they would do next that counts.
To me, a win in week two, after such a tough defeat, would actually build more character than a win over The Patriots would have provided. Sure enough they came out flying in their game on Sunday and won convincingly. That shows their true core.
Similarly, if you are not making progress buying a business, or a deal dies, or a seller’s numbers are off, you don’t just give up. You hit the ground ever harder.
Your loyalty to this project has to mirror that of a dedicated sports fan who never gives up on their team. If your team loses, you don’t jump on another team’s bandwagon. That’s not a fan.
When a deal collapses (and they will), or brokers don’t call you back, or you cannot come to terms with a seller, or you uncover huge problems during due diligence, you don’t just toss in the towel and start looking for a job (even if there were any of those available). You have to file the experience. You learn from it, and you move on to finding the next and hopefully better opportunity.
Buying a business can be a time-consuming and very frustrating process. You can always find reasons not to buy a particular business, or blame your lack of progress to external forces, or kowtow to people’s opinions that now is not the time to buy a business. These same people would tell you the exact same thing if the economy was booming.
The anguish doesn’t end there. There will be businesses you like that are snapped up by other buyers before you can make an offer. You could go into due diligence on numerous businesses only to be forced to walk from the deal.
You will encounter situations where you can easily justify abandoning the project. That is probably why so many do. However, the one common trait every successful business buyer has is a core belief in what they are doing. They do not approach buying a business with the attitude that if a good opportunity surfaces they will investigate it. That is what “lookers” do; not buyers.
A true prospective business buyer fundamentally know that they MUST become a business owner because they are no longer willing to keep doing whatever it is that they have been up to this point.
Successful business buyers don’t just want to buy a business; they NEED to buy one.
If you do not have a burning need to buy a business, let me save you a lot of time – start filling out job applications because you don’t have the mindset to buy a business.
When you truly “need” something, you keep forging ahead until you get it. That is what defines success.
If you are going to attack this project in any meaningful way, you will have setbacks; it is inevitable, but you need to stay focused on the goal line.
Just like The Bills, who no matter what happens, no matter what anyone else says, no matter how many times they get knocked down, they show up to play every Sunday. So too must you get into the game, take some hits, but you have to fight until you get to the end zone.
To read some very helpful articles about buying a business visit www.diomo.com
Have a great week.
I tend to get a lot of blog comments in the fourth quarter each year from dejected buyers who had started the year off hoping to buy a business, and find themselves on the cusp of giving up. And so, I want to take some preemptive action and provide a business buyer’s attitude check-up, which I know will help you as you search for the right business for sale.
A series of events happened since last Monday the 14th that triggered this week’s comments so please allow me to give you a roundabout explanation.
I am not really a sports nut, but I am fanatical about two specific teams. Although I follow each with insane dedication, once they are out of the playoff picture, I lose much of my overall interest in the game.
First, I have been a die-hard Buffalo Bills fan since I started watching NFL football in the thirty plus years ago. No doubt, a few of you will point to four consecutive Super Bowl appearances in the 1990’s without a championship (at least they got to the big show), or most recently, last Monday’s last-minute loss to the Patriots (I thought they played brilliantly and way above what anyone anticipated). No problem; I, like most Buffalo Bills fans, have skin as thick as a Buick (we need it). Regardless of their dismal performance since those great years in the 90’s, my faith in them has never waivered. In fact, it has gotten stronger.
Second, coming from Canada where hockey is pretty much a religion, I have followed the Montreal Canadiens (yes, spelled with an “e”), since I was born. I watch sixty-plus games a year, and with them as well, I shall forever remain a loyal fan.
So why am I telling you this and what the heck does it have to do with buying a business?
Actually, it has a ton to do with it…..
I have always been bothered by the awful statistics in this industry, and namely that less than ten percent of the people who look to buy a business ever complete a transaction. It blows my mind that so many people could actually abandon a dream-like project once they hit a roadblock or two, because that is the only possible explanation. Of course, they hit hurdles because they don’t know what they are doing, and most buyers do not have the common sense to educate themselves first, even if they have zero experience buying businesses.
Simply giving up on buying a business because of a few hurdles would be similar to The Bills burning all their equipment and folding the team because they lost a game, or a Super Bowl, or four, or whatever.
That is not what successful people do.
I look at The Bills loss last week the same way every business buyer has to look at any hurdles, challenges or setbacks they encounter while looking for the right business for sale.
The team’s prior loss was history; it’s what they would do next that counts.
To me, a win in week two, after such a tough defeat, would actually build more character than a win over The Patriots would have provided. Sure enough they came out flying in their game on Sunday and won convincingly. That shows their true core.
Similarly, if you are not making progress buying a business, or a deal dies, or a seller’s numbers are off, you don’t just give up. You hit the ground ever harder.
Your loyalty to this project has to mirror that of a dedicated sports fan who never gives up on their team. If your team loses, you don’t jump on another team’s bandwagon. That’s not a fan.
When a deal collapses (and they will), or brokers don’t call you back, or you cannot come to terms with a seller, or you uncover huge problems during due diligence, you don’t just toss in the towel and start looking for a job (even if there were any of those available). You have to file the experience. You learn from it, and you move on to finding the next and hopefully better opportunity.
Buying a business can be a time-consuming and very frustrating process. You can always find reasons not to buy a particular business, or blame your lack of progress to external forces, or kowtow to people’s opinions that now is not the time to buy a business. These same people would tell you the exact same thing if the economy was booming.
The anguish doesn’t end there. There will be businesses you like that are snapped up by other buyers before you can make an offer. You could go into due diligence on numerous businesses only to be forced to walk from the deal.
You will encounter situations where you can easily justify abandoning the project. That is probably why so many do. However, the one common trait every successful business buyer has is a core belief in what they are doing. They do not approach buying a business with the attitude that if a good opportunity surfaces they will investigate it. That is what “lookers” do; not buyers.
A true prospective business buyer fundamentally know that they MUST become a business owner because they are no longer willing to keep doing whatever it is that they have been up to this point.
Successful business buyers don’t just want to buy a business; they NEED to buy one.
If you do not have a burning need to buy a business, let me save you a lot of time – start filling out job applications because you don’t have the mindset to buy a business.
When you truly “need” something, you keep forging ahead until you get it. That is what defines success.
If you are going to attack this project in any meaningful way, you will have setbacks; it is inevitable, but you need to stay focused on the goal line.
Just like The Bills, who no matter what happens, no matter what anyone else says, no matter how many times they get knocked down, they show up to play every Sunday. So too must you get into the game, take some hits, but you have to fight until you get to the end zone.
To read some very helpful articles about buying a business visit www.diomo.com
Have a great week.
by Richard Parker, the President and Founder of Diomo Corporation
Tuesday, September 8, 2009
UnderstandingThe marketing side of a business for sale
Understanding The Marketing Side Of Any Business For Sale
One of the most common mistakes people make when buying a business is in their analysis of the marketing activities, strengths and weaknesses of any business for sale they are considering.
It doesn’t matter whether you are thinking of buying a business for $100,000 or ten million dollars, understanding its marketing practices is crucial. However, the mistake made most often by buyers is they spend their time targeting all of the so-called wonderful things they are going to do to improve the business after they take over instead of effectively analyzing what the company is doing presently, or has done in the past.
Often times, this thinking overshadows the reality of the business, and can result in a buyer lulling themselves into believing they can implement certain changes, that may not necessarily materialize as they had envisioned.
Obviously, it is important to identify growth opportunities in any business being considered. But, too much focus on the upside can often derail a deal. If a buyer becomes too consumed with areas to grow the business, they will typically run into obstacles during their investigation that may upend their plans. If this happens too frequently, they may sour on the deal altogether, and decide against buying the business., when in fact they may be walking from a good business.When evaluating marketing opportunities, the main consideration must always be whether or not you are starting from a solid platform. That is why buying a business that has all the fundamentals in place to assure its stability after the purchase, is more important than fantasizing about the things one can do to make the business better in the future.
Buyers are frequently surprised to learn that a business for sale doesn’t have a marketing plan. Instead of a concrete plan, it has simply evolved into doing to same old thing year after year, with similar results, and the owners do not seem to mind the monotony. Unfortunately, in today’s business environment, businesses that cease to look for ways to grow generally are poised for a decline.
Conversely, the actual marketing plan may simply be in the owner’s gut. They understand the business intimately, and know what initiatives they should jump on, and which they should avoid. In businesses where the owner has run the marketing with a “gut feel”, you need to determine whether or not that instinct can transition to you as the new buyer. Better yet, can you translate that “know-how” to a written plan?
You will want to learn about the past marketing initiatives that the company undertook, and what were the results. You may be shocked to discover that marketing is just an afterthought for the business. I find this to be quite common in retail businesses, and especially those that rely heavily on its location. It is almost as though the owners just sit there waiting for traffic to come by. In these cases, you need to determine what, if anything can be done to get more people through the door. If in fact the business is helpless in this regard, do not fool yourself into believing you will have any more success.
As you look at any business, avoid trying to visualize for grandiose schemes to build the business. Instead, look for fundamentals that can ultimately be leveraged into growth.
For example, the simplest way to grow a business is to generate more revenue with the existing client base. It is always easier and less expensive to get customers who know you to buy more, than it is to acquire new customers. No matter what the business may be, there are always additional products or services that you can offer.
Look for competitive advantages. Why do customers buy from the business versus the competition? If you cannot identify a very clear reason, this can be a very worrisome sign. The business landscape is more competitive than ever right now, and it will not ease up anytime soon. Unless the business offers something that cannot be readily purchased elsewhere, rest assured that customers will shop around.
Does the company compete mainly on price, quality or service? It is impossible to be do all three. Whatever it is, what else can you do to exploit it?
Can the business be expanded geographically? Does it make sense to open up a second location? If that seems obvious, why hasn’t the seller done so? Or, maybe they have and it failed. If so, why? If additional locations would seem to be a logical path to grow, spend the time to determine how much it will cost to do so. Can the existing cash flow support expansion? If not, how will you access the funds needed?
Are there mechanisms in place to test and measure new marketing projects? This is the single most important aspect to marketing, and so if none exists, you will want to be certain you set them into action.
Has the company tested new price points? How did they arrive at the current pricing schemes? How often can, or do they raise prices? Clearly, if they operate in a highly competitive marketplace, this may not be feasible.
Marketing is not a big mystery. In fact, it is quite simple. It is strictly the ability to determine who is your prospect, what that they want, how much will they pay, and how can you get it to them. That's it. However, it does take some work. Most often, you really need to get immersed into the business so that you too can get a true “gut feel” for the business.
Once you marry off that instinctual understanding with an actionable plan, you can grow any business. So until that time, while looking at any business to buy, focus on its core elements to be certain you have a rock-solid platform from which to grow. After all, it is always easy to deal with the upside, but you need to be certain there will not be any downside once you get the keys to the business.
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