How to Conduct Due Diligence

By Anne W. Brown

When a business is sold the process that normally occurs is that a conditional deal is negotiated with a few contingencies. One of the most important conditions is that the business for sale is subject to "due diligence" by the company buyer. The due diligence process entails the buyer to investigate facts and to determine that all representations are as stated and to essentially satisfy themselves that they are ok with proceeding with the transaction. It truly is the time for the buyer to check facts and do some 'homework' on the business.

During due diligence it is always recommended that buyers rely on their own professionals (lawyer, accountant and other professionals as needed).

The purpose of this article is to outline some more common activities that are on a due diligence checklist during a business for sale transaction. Please note that every deal is different - some require more thorough business investigation and some less.

Common items on a business due diligence checklist:

Financial Statements. The past 3-5 years of income statements and balance sheets. Accountant-prepared statements are preferred.

Tax Returns & Government Filings. Business income tax returns for the past 3-5 years to assist in validating the stated business financial results. Also, Ontario retail sales tax returns, GST returns, WSIB returns and other pertinent government filings should be reviewed as well as federal Canadian income tax returns too. Discuss with your accountant what is required.

Asset List. A complete list of assets included in the business sale. A proper summary should include the age, estimate fair market value and serial number for equipment and machinery.

Leased Equipment List. Similarly, there should be a list of equipment or other assets under lease that will be transferred or assumed by the buyer.

The Business Premises Lease. The buyer needs to review the premises lease and satisfy themselves with the terms and that the lease is assumable. All leases and contracts should be reviewed by the buyer's lawyer.

Employee Information. If it is not feasible to identify the employees by name then certainly by job title with information regarding job descriptions, compensation including benefits and bonuses, tenure of employment, any employment agreements or contract labour. Employee issue should be reviewed by a lawyer in order understand how best to handle employees during the transition as well as any surviving liabilities to the new owner.

Contracts. A copy of contracts with existing business customers or vendors.

Permits. A list of permits or licenses required to operate the company.

Operating Documentation. If the business has a process or operating procedures that are critical to its success, these should be reviewed during due diligence.

Lawsuits. If there are any pending or existing lawsuits that the business for sale is involved with, these must be reviewed with your lawyer.

List of Top Customers. This must be identified in order to determine that the business is not reliant on a few customers for a large percentage of its revenue. If not identified by name then these customers can be identified by a description and sales volume.

Copy of Marketing Materials. Samples of flyers, ads, newspaper inserts, etc. A buyer should have a fair degree of understanding about the company's marketing activities.

As always take the advice of a business broker so you don't miss out on anything that could cost you later but please rely on the guidance of your professional advisers - your lawyer & accountant to assist you through the due diligence process.

Business Broker

Ontario business brokerage serving the southern Ontario, Canada region from Toronto to Hamilton. Professional services to buyers and sellers of small businesses. Contact us for assistance.

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Purchasing Wholesale Versus Purchasing Discount

By Karen Ali Whitten

How much cash can you really save if you purchase at wholesale rates? To answer this, try to look at the income structure of the retail market.

Most retail shops will mark up the cost of their goods one hundred percent, or double their own price. In this instance, you can clearly save fifty percent of your cash if you make your purchase straight from the wholesale provider, instead of purchasing from the shop. Basically, by purchasing directly from the wholesale supplier, you're not paying any service premium to the retail shop. The retail shop can charge more than the wholesaler as it is more convenient for the purchaser to locate most items in a retail shop than to hunt for a wholesale provider that does not have a principal storefront site in the middle of town.

In addition, many wholesale suppliers will not vend products to an individual buyer; they will only deal with an established industry that will purchase in volume from the wholesaler. Usually the wholesale supplier will have minimum purchase requirements that can be as low as five hundred dollars or as high as twenty thousand dollars. Essentially, most individuals accept retail rates as a fact of life as it takes some additional time and effort to discover how to reach the wholesale provider directly, and in many instances, it is impossible to do business with the wholesaler, unless you are a real business.

Now try to look at the discount pricing structure, which is what most individuals look for in saving their cash. When a shop offers discount rates, they will not mark up the product one hundred percent; they will proffer a discount from the full retail rate of twenty to forty percent. They still have to make an income, so they won't reduce the rate fifty percent, but they're making less of an income in the hopes of getting people to deal with them.

One more point about purchasing from discount shop is that you need to be cautious about how many of their items are actually being offered at discounts. A normal strategy is to attract shoppers into the shop with big discounts of normal retail rates on some popular goods. Then when you're in the shop, many of the other products will be selling at full retail rate. In many instances, you just won't be able to tell if a product in that shop is discounted or full retail, since it is not possible to do price comparisons on each product when you are in the shop itself.

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Three Kinds of Businesses That Thrive in a Recession.

By Stephanie Valentine

When we visited Cancun, Mexico this past winter for our annual 5-week R&R trip, we were amazed at how many storefronts and clubs were completely empty. Senor Frog's had virtually no business, and the shopping centers for tourists were so empty that they echoed. It was like walking through a very luxurious ghost town. Some stores in our local town back here in Colorado are starting to look the same way, but not all businesses.

There are three kinds of businesses that seem to thrive during any recession: discount stores, maintenance shops, and stores that recycle goods.

Discount Stores
Of course, Walmart is coming up roses with its low-price guarantee. The giant retailer increased its annual stock dividends by 15% in March, while other retailers are closing their doors. But other kinds of discount stores are also doing very well.

For instance, beauty schools all around the country are seeing a surge in business. People want to look good, even as the economy comes crashing down around them. At just $5-$7 per haircut and $35 for a hair color (versus $25 for a cut and $75 for a color at a regular salon), beauty schools are attracting customers like crazy. Discount stores empower consumers to stretch their hard-earned dollars, and are earning profits on their sheer volume of business.

Maintenance Shops
Drive past any new car dealer and you'll see a shiny ghost town. No one wants to buy a gas-guzzling new car in this economy. Instead, people are doing their own oil changes and trying to make their older cars last longer. Car service centers are experiencing a surge in business, with people bring their cars in for more complicated maintenance issues. Experts predict that service centers will see even more business if the price of gas stays low, as many people plan to take road trips this summer as an inexpensive way to get away. Those road trippers will want their cars tuned up before hitting the road. Other maintenance-type businesses growing include all kinds of repair shops, from shoe repair to computer repair.

Recycled Goods
When it comes to saving money, consumers are thinking thrift shops, eBay, pawn shops, and auctions. Second-hand stuff has never been more valuable, and people are flocking to second-hand venues to both buy and sell. While major retailers like Macy's are laying off thousands of employees, some thrift store chains are doubling the size of their staff. Experts are also predicting an increase in swap meets, better business on eBay and other auction sites, and a rosy future for pawn shops. Investing in recycling used goods is about to be very big business.

Does this give you some ideas for your small business?

Stephanie Valentine has been a small business owner for over 15 years. Her blog, http://www.gosmallbizblog.com, offers helpful tips on taxes, productivity, revenue generation, and more for small business owners. She also writes about online MLM marketing at http://www.gomlmonline.com/blog

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Catering Business is Not Only About Making Peanut Butter and Jelly Sandwiches

By Jeffrey Bossak

Have you ever thought about the key difference between failure and success? It is 'the tool' which makes a difference? Here, tool stands for the approach. In a catering supplies business, you can easily mark this factor. For instance, caterers who have expertise in varieties of dishes, ingredients and equipments for the food preparation, they can easily establish their special recognition.

Now please do mention that the above mentioned paragraph does not interpret any formulae. In a catering business, being a good cook is not enough. You may need to invest money on disposable cutlery, tableware, drink ware and so on. Of course, these are expensive stuffs and make the access bit harder in the catering profession for beginners. Here are few tips which may prove money saving tips:
• Established professionals suggest beginners to contact restaurants that are closing down or are want to get rid of old inventories. Here, you can get quality stuffs on the most economic price.
• Internet is another very good option. There is fierce competition on the World Wide Web amongst online catering goods suppliers. So, here is good chance of getting quality products on cheaper price.
• You can also team up with few other caterers and can order in bulk. You can get substantial lower price through bulk marketing.
• If you join some associations in your own business then again it may open doors of discount catering supplies.

Ask cooks about the significance of the best cooking equipment and you will know how determining it is in the successful catering career. An immaculate combination of the right equipment and supplies helps them in preparing the food in the best way. Here exposes the significance of 'business blueprint'. With the help of catering business blueprint, one can effectively execute the strategy. Even, you will get the result exactly at par the prediction. You will get the idea whether you would need financer help or not. In other words, blueprint also deals with crisis management in the quite impressive way.

In the end, how can we forget the famous quote of the famous TV character 'Aardvark Arthur'? He says, "the catering business is tough when you only know how to make peanut butter and jelly sandwiches."

Growing Your Restaurant Business - Advantages of Direct Mail Advertising

By Jim Negron

Direct Mail Advertising is a great way to grow your restaurant business. Unlike newspapers, radio or TV, direct mail allows you to put your advertising dollars exactly where your potential customers live. You can target geographically by neighborhood or demographically by age, income, ethnicity, etc., or a combination of both.

Direct mail advertising also allows you to control your budget, by the size of your mailings (how many pieces) and the frequency of your mailings.

There are many other advantages, here are just a few:

• It's personal, between you and your prospect
• It's not as public as other media, your competitors won't have access to your coupons and special offers as they do in newspapers and other media
• It's limited to one mail piece per household, which means special offers will not be abused, for example, by prospects buying more than one newspaper and clipping multiple coupons
• Response is easy to track
• You can compare results by neighborhoods and determine your best market area

At this point, you might be asking yourself, if direct mail is so powerful, why isn't every restaurant in town doing it?

It's true, direct mail can play a big role in growing your restaurant business, however, it is going to take some effort and a budget. It's not just a matter of putting your menu or a few coupons together and mailing them out. A successful campaign is a bit more complicated than that. To gain some insight into the process, I suggest reading blogs and online articles such as this one, which contains ideas and tips on design, mailing lists, direct mail strategies etc.

Of course, everyone wants to hit a home run the first time at bat, but prepared for some hits and misses. Every mailing is important and provides an opportunity for you to learn more about your market area. Results will vary, even if no one responds, that is still a result (obviously not what you were hoping for) and the result, that no one or few people responded, can be used to make a course correction.

So, if you have decided to start a direct mail campaign, begin with a mailing that is large enough to establish a base line of results, usually about 2000 to 3000 pieces. Don't be tempted to save money on printing by ordering large quantities to be used in future mailings. What if your offers fall flat and don't work. Then you'll be stuck with the extras or worse, feel obligated to mail them and repeat the results.

Direct mail advertising works. It can work for you. But, unless you are prepared to stick with it, you may be wasting your time and money. It is going to take some trial and error. The good news is, that over time, with experience, results will become predictable. That's when you can expand your efforts, and direct mail advertising won't be costing you money, it will make you money.

Read our blog. It contains great marketing ideas for direct mail advertising that can be read in a minute or less.

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Should You STOP Spending Money For Advertising in a Recession?

Each Business owner needs to watch every penny these days, spending money in a recession is a difficult thing to do. But, what about spending on advertising?

When difficult financial times occur, business owners need to make some tough decisions. Yet, eliminating your advertising budget may not be in your company's best interest. In many cases your direct or indirect advertising will drive sales to your company. If that advertisement is no longer in the paper, on the radio, or visible by supporting your local little league team, it can be very difficult to find additional sales.

Even in bad economic times, you still need to be in a growth push. One advantage you should have in these challenging economic times is that many vendors will be willing to negotiate cost with you. You should be able to find some good advertising deals to keep your costs in line. If your business situation is real bad, and the idea of spending any money for advertising is not possible, then wait until it is. If you need to walk away from advertising for now until things improve, then do so. When you eventually do get back to advertising, you should start slow and carefully.

There is one key point to keep in mind about advertising. Make sure you test and monitor what advertising vehicle is bringing you the business. This is important so you are not just spending your dollars on 3 or 4 advertising campaigns and not knowing which ones are working and which are not.

Thus, if you need sales, and most businesses do need to grow, then investing in some form of advertising is a good approach. Make sure to only spend what you have available in your advertising budget.

Denise Willow writes for several websites and contributes to others. She focuses on Business and Fashion items. Here is one of her websites: http://www.mylaptopcomputerbags.com Here is another: http://www.flatwallets.org

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Experience Days - Something For Everyone?

By Gino Hitshopi

When it comes to an employer showing their appreciation for the work their staff do, it can be a challenging process. The old adage 'it's the thought that counts' has never been truer than now. Experience days offer a way to demonstrate a certain degree of thought, in a way that more traditional gifts such as Champagne and chocolates cannot really do.

But what is an experience day? The term has risen to prominence over recent years, as a way to give a memory rather than an actual gift. Experience days can often give someone the opportunity to do something that they would not normally, either because of monetary of time restraints - or indeed because they lack the impetus to do so.

An experience day is a very wide term that encompasses a whole host of possibilities. You might choose to give someone the chance to go skydiving; surely there are few thrills akin to jumping out of a high altitude aircraft? For those who prefer to take their thrills at a more leisurely speed, there is always the spa day. Spa days give people the opportunity to really be pampered - and are often great ideas for experience days.

Of course, experiences are not necessarily only for giving to other people - they can be organised for yourself too. It is a great way to treat yourself or your loved ones when something important has happened. People sometimes set these experience days up if they achieve certain targets - either at work or in more personal matters.

If the experience day is revealed a little before the actual event takes place, there is a certain excitement which builds up and, in a way, is part of the gift itself. A book voucher does not hold this kind of value. But it does pose the minor problem of what to choose. There are a great many companies offering these kind of experience days, and the really good ones will offer a range of experience days, so that whoever you have in mind (or what you have in mind for yourself), there should be something to fit the bill. A company offering experience days that has a good reputation will probably provide a lot of information regarding the options available.

A hot air balloon ride is likely to provide some good memories, and offers a unique combination of a relaxed atmosphere with the thrill of gliding over beautiful countryside below. For those seeking extra thrills, you could choose skydiving or a jet fighter ride. Rally car driving is another high octane activity that is likely to top the wish lists of the adrenaline seeker.

Makeovers, facials, cooking experiences, massages, pedicures - the list of more laid-back experience days is similarly long. There are also fun ideas for younger people as well. With so many options, there is sure to be an ideal experience day for everyone.

Gino Hitshopi is highly experienced in the realm of experience days, having worked in related industries for many years. For more information please visit: http://www.totalexperience.co.nz/

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