Why Deals Fall Apart — Loss Of Momentum

Deals fall apart for many reasons – some reasonable, others unreasonable.

For example:
  • The seller doesn’t have all his financials up to date.
  • The seller doesn’t have his legal/environmental/administrative affairs up to date.
  • The buyer can’t come up with the necessary financing.
  • The well known “surprise” surfaces causing the deal to fall apart.

The list could go on and on and this subject has been covered many times. However, there are more hidden reasons that threaten to end a deal usually half to three-quarters of the way to closing. These hidden reasons silently lead to a lack of or loss of momentum.

This essentially means a lack of forward progress. No one notices at first. Even the advisors who are busy doing the necessary due diligence and paperwork don’t notice the waning or missing momentum.  Even though a slow-down in momentum may not be noticeable at first, an experienced business intermediary will catch it.

Let’s say a buyer can’t get through to the seller.  The buyer leaves repeated messages, but the calls are not returned.  (The reverse can also happen, but for our example we’ll assume the seller is unresponsive.) The buyer then calls the intermediary.  The intermediary assures the buyer that he or she will call the seller and have him or her get in touch.  The intermediary calls the seller and receives the same response. Calls are not returned.  Even if calls are returned the seller may fail to provide documents, financial information, etc.

To the experienced intermediary the “red flag” goes up. Something is wrong. If not resolved immediately, the deal will lose its momentum and things can fall apart quite rapidly. What is this hidden element that causes a loss of momentum? It is generally not price or anything concrete.

It often boils down to an emotional issue. The buyer or seller gets what we call “cold feet.” Often it is the seller who has decided that he really doesn’t want to sell and doesn’t know what to do.  It may also be that the buyer has discovered something that is quite concerning and doesn’t know how to handle it. Maybe the chemistry between buyer and seller is just not there for one or the other of them. Whatever the reason, the reluctant party just tries to ignore the proceedings and lack of momentum occurs.

The sooner this loss of momentum is addressed, the better the chance for the deal to continue to closing. Because the root of the problem is often an emotional issue, it has to be faced directly. An advisor, the intermediary or someone close to the person should immediately make a personal visit. Another suggestion is to get the buyer and seller together for lunch or dinner, preferably the latter. Regardless of how it happens, the loss of momentum should be addressed if the sale has any chance of closing.

Copyright: Business Brokerage Press, Inc

The 3 Ways To Negotiate

There are three major negotiation methods.

1. Take it or leave it. A buyer makes an offer or a seller makes a counter-offer – both sides can let the “chips fall where they may.”

2. Split the difference. The buyer and seller, one or the other, or both, decide to split the difference between what the buyer is willing to offer and what the seller is willing to accept. A real oversimplification, but often used.

3. This for that. Both buyer and seller have to find out what is important to each.  So many of these important areas are non-monetary and involve personal things such as allowing the owner’s son to continue employment with the firm.  The buyer may want to move the business.

There is an old adage that advises, “Never negotiate your own deal!”

The first thing both sides have to decide on is who will represent them.  Will they have their attorney, their intermediary or will they go it alone?  Intermediaries are a good choice for a seller.  They have done it before, are good advocates for their side and they understand the company and the seller.

How do the parties get together in a win-win negotiation?  The first step is for both sides to work with their advisors to settle on the price and deal structure positions.  Both sides should be able to present their side of these issues.  Which is more important – price or terms, or non-monetary items?

Information is vital to a buyer.  Buyers should keep in mind that the seller knows more about the business than he or she does.  Both buyer and seller need to anticipate what is important to the other and keep that in mind when discussing the deal.  Buyer and seller should do due diligence on each other. Both buyer and seller must be able to walk away from a deal that is just not going to work.

Bob Woolf, the famous sports agent said in his book, Friendly Persuasion: My Life as a Negotiator, “I never think of Bob Woolf, the famous sports agent said in his book, Friendly Persuasion: My Life as a Negotiator, “I never think of negotiating against anyone.  I work with people to come to an agreement.  Deals are put together.”

Copyright: Business Brokerage Press, Inc.

What Makes Your Company Unique?

There are unique attributes of a company that make it more attractive to a possible acquirer and/or more valuable. Certainly, the numbers are important, but potential buyers will also look beyond them. Factors that make your company special or unique can often not only make the difference in a possible sale or merger, but also can dramatically increase value. Review the following to see if any of them apply to your company and if they are transferable to new ownership.

Brand Name or Identity

Do any of your products have a well recognizable name? It doesn’t have to be Kleenex or Coke, but a name that might be well known in a specific geographic region, or a name that is identified with a specific product. A product with a unique appearance, taste, or image is also a big plus. For example, Cape Cod Potato Chips have a unique regional identity, and also a distinctive taste. Both factors are big pluses when it comes time to sell.

Dominant Market Position

A company doesn’t have to be a Fortune 500 firm to have a dominant position in the market place. Being the major player in a niche market is a dominant position. Possible purchasers and acquirers, such as buy-out groups, look to the major players in a particular industry regardless of how small it is.

Customer Lists

Newsletters and other publications have, over the years, built mailing lists and subscriber lists that create a unique loyalty base. Just as many personal services have created this base, a number of other factors have contributed to the building of it. The resulting loyalty may allow the company to charge a higher price for its product or service.

Intangible Assets

A long and favorable lease (assuming it can be transferred to a new owner) can be a big plus for a retail business. A recognizable franchise name can also be a big plus. Other examples of intangible assets that can create value are: customer lists, proprietary software, an effective advertising program, etc.

Price Advantage

The ability to charge less for similar products is a unique factor. For example, Wal-Mart has built an empire on the ability to provide products at a very low price. Some companies do this by building alliances with designers or manufacturers. In some cases, these alliances develop into partnerships so that a lower price can be offered. Most companies are not in Wal-Mart’s category, but the same relationships can be built to create low costs and subsequent price advantages.

Difficulty of Replication

A company that produces a product or service that cannot be easily replicated has an advantage over other firms. We all know that CPA and law firms have unique licensing attributes that prevent just anyone off of the street from creating competition. Some firms have government licensing or agreements that are granted on a very limited basis. Others provide tie-ins that limit others from competing. For example, a coffee company that provides free coffee makers with the use of their coffee.

Proprietary Technology

Technology, trade secrets, specialized applications, confidentiality agreements protecting proprietary information – all of these can add up to add value to a company. These factors may not be copyrighted or patented, but if a chain of confidentiality is built – then these items can be unique to the company.

There are certainly other unique factors that give a company a special appeal to a prospective purchaser and, at the same time, increase value. Many business owners have to go beyond the numbers and take an objective look at the factors that make their company unique.

Copyright Business Brokerage Press, Inc.

Get Out Of Town: Increase The Value Of Your Business

Vacation - it's often an elusive concept for the owners of small businesses. Even when owners do take time off, chances are they're still checking in constantly, which has become increasingly easy to do in this age of the smartphone and ever-omnipresent Internet connectivity. The ironic thing is that this constant owner involvement can actually be detrimental to the value of the business from the perspective of potential buyers.
As we have discussed in previous articles, it is important for owners to get out of town occasionally in order to help increase the value of the business in the long term. The attributes of a quality business include:

An owner-driven business is not an attractive asset in a buyer's eyes. An in-place team that can provide continuity and assist in the growth of the business under new ownership IS. An enterprise with infrastructure guiding its revenue-generating capacity is much more appealing than one with a singular person holding the key to the revenue engine. It is important to have systems running the business and an experienced staff running those systems.

If you want to improve your business - plan an extended vacation! Your staff and family will be glad! It can help you see where the gaps are and where improvements need to be made in order to decrease owner dependence and increase business efficiencies and value.
Owners need to always treat their businesses as an investment, not a lifestyle. Avoid the trap of letting personal identities get wrapped up in the company.
Business owners that believe they are doing the best for their company and family by handling everything are actually creating a trap for themselves. Too many owners find themselves unable to easily extricate themselves from their businesses. They cannot go on an extended vacation, cannot be away from the business without constant communication, and worry that things will fall apart or not be done correctly if they are not there. Sound familiar?
Rather than being strapped like a prisoner to your business take the steps to free yourself and your business...... and then.....sell it and take a walk on the beach.

What Drives The Value of a Restaurant?

The valuation of a restaurant is much like any other business valuation. But, there are certain factors unique to the restaurant industry. The following are key elements that impact the valuation of food and beverage businesses. The list is not in any specific order.

1. Location, Location, Location

A high traffic, high demand, prime location with booming business in the area and a mid-to-high income population can add significant value. Parking, signage, and access are also important. Keep in mind, however, that a good location is not a stand-alone secret to success. Location Location Location must be followed up with Execution Execution Execution! Good management is key. Over the past 40 years we have sold some restaurants and fast food places as many as four times. With good management, the same location that was once a loser can be turned into a winner by good management -- and vice versa.

2. Lease / Rent

The terms of the lease, such as assignment provisions, relationship to market rent, rent as percentage of gross revenues, remaining term, escalation clauses, and solid renewal options are key to the value of a restaurant.

3. Age and Condition of Equipment

The better the condition of the facility and equipment, the better the perceived value will be. Buyers will consider if there will be additional capital required to upgrade the facility or equipment, which will impact the price paid for the business.

4. Stability of Earnings and Revenues

Accuracy, completeness and ability to verify the financial records of the business greatly impact deal value. Restaurants with revenues and earnings showing year-over-year growth will command a higher value than one showing a decline. Historical profitability is a key factor for determining the actual price. If financial records do not accurately reflect the cash-flow picture of the business, the onus is on the seller to prove the true financial benefits of owning the business.

5. Hours of Operation

While gross revenue and earnings are important, one factor that may be easily overlooked is the number of days and hours the establishment is operated to achieve those numbers. A busy lunch spot in a business district that can make its money during bank hours, and close on weekends, is worth more than a restaurant that's open longer hours, more days, and doing the same amount of business.

6. Conversion Potential

Can the restaurant be converted into another concept that will not compete with other restaurants within same particular center or demographic? Are there proper permits and certain licenses, such as a liquor license, or a favorable lease in place, good equipment? Buyers consider taking over such existing establishments, even if it is not profitable.

7. Food & Labor Costs

Food and labor costs are significant considerations in a restaurant business. These costs vary based upon the type of restaurant, whether full service, fast food, or when a large percentage of liquor sales are involved. Costs should be within acceptable margin ranges as a percentage of gross revenue.

8. Cleanliness

Cleanliness and appearance is fundamental in affecting the first impression when selling a restaurant. A clean, well-kept establishment assures potential buyers that they are investing in a healthy establishment. A sloppy restaurant, on the other hand, triggers the red flag that the business has even more serious problems lurking beneath the surface.

9. Staff

Employee attitude and customer service go hand-in-hand and will be noticed. Positive, upbeat employees can be a sign that the restaurant is on the right track, while cranky, disgruntled staff members can be a sign of a problem. Keeping in mind that the new owner will probably want to retain most of the existing staff, problem employees should be replaced before the restaurant goes on the market. Would you frequent a restaurant with an inattentive, cranky wait staff?

10. Reputation & Goodwill

You can be guaranteed that prospective buyers are going to ask around and check the internet for information. Yelp and other such venues are used extensively these days and serves as the perfect place to check out a restaurant's reputation. Special awards or special recognitions are a leg-up on the competition and contribute to reputation and goodwill, which will increase perceived value in the marketplace. If possible, respond to any recent negative internet reviews. A web site presence that delivers name recognition to those searching the net has become a very important component of value.

11. Licenses

Make sure the restaurant meets all applicable health codes and all licenses are current - including the liquor license if alcoholic beverages are sold. Any issues here could put a successful sale in jeopardy. A liquor license for a restaurant serving dinner will attract customers and increase sales. The value of a liquor license should not be overlooked. The cost of permits, licenses, and fees has driven upwards the cost of starting a new restaurant. For this reason buyers do consider taking over an existing establishment even if it is not profitable.

12. Growth Potential

Is the concept franchisable? Can a catering or delivery service be added? Is there room to add an outdoor venue? Is there an opportunity to establish an advertising campaign, or increase email or text marketing to bring in the customer base? Articulating a solid growth strategy is important in attracting aggressive buyers.

13. Motivation of the Seller / Reason for the Sale

This is one of the first questions buyers ask, whether it be a restaurant or any other type of business. Keep in mind that no one wants to buy a business that the owners no longer believe in. A buyer wants to hear that you are excited about the future potential of your business and that there is a good reason that you personally need to sell. Since this question will most likely be asked of you face-to-face, be prepared to explain your reasons. A crisp response could make all the difference

What Serious Buyers Look For When Looking For A Business To Purchase

Serious buyers want to carefully look at the financials of a company under consideration and all of the other major aspects of the company. However, there are a few other areas that the serious buyer will investigate that sellers may overlook.

The Industry – The buyer will want to take a serious look at the industry itself, the customers, the suppliers, the competition, etc. This investigation will cover the strengths, weaknesses, threats from competition, and opportunities of the potential acquisition. With the growth of the “big box” retailers, much power has shifted from the manufacturer to the retailer. A manufacturer may want to increase prices, but if Wal-Mart says no, it’s a very powerful no.

Discretionary Costs – Some sellers will reduce their expenses in discretionary areas such as advertising, public relations, research and development, thus making for a higher bottom line. However, these cuts will hurt the future bottom line, and smart buyers will take notice of this.

Obsolete Inventory – This is another area that buyers take a serious look at and that can impact the purchase price. No one wants to pay for inventory that is unusable, antiquated or unsalable.

Wages and Salaries – A company may be paying minimum wages, or offering few or low-cost benefits, a limited retirement program, etc. These cost-saving devices will make the bottom line look good, but employee turnover may create expensive problems later on. If the target company is to be absorbed by another, compensation issues could be critical.

Capital Expenditures – The serious buyer will take a very close look at machinery and equipment to make sure they are up to date and on a par with, or superior to, that of the competition. Replacing outdated equipment can modify projections and may affect an offering price.

Cash Flow – Serious buyers will take a long look at the cash flow statements and the areas that affect them. The buyer wants to know that the business will continue to generate positive cash flow after the acquisition (i.e.: after servicing the debt and after paying a reasonable salary to the owner or general manager).

Other areas that sellers overlook, but that the serious buyer does not:
  • Internal controls/systems
  • financial agreements with lenders
  • governmental controls
  • anti-trust issues
  • legal matters
  • environmental concerns.

© Copyright 2015 Business Brokerage Press, Inc.

Is It The Age Of Aquarius For Selling Businesses?

You may have been reading or hearing that conditions in the business-for-sale marketplace have been synchronizing and harmonizing. The stars are aligning, charting an agreeable economic climate in the acquisition universe for Baby-Boomer Business Owners.
Anyone reading our newsletters has been kept aware of the stats, and the numerous articles written on this subject recently from all the big-name business magazines, media news outlets, and others like us: "There's a perfect storm approaching for exiting business owners," "Why you should consider selling your business now," "Small businesses are selling faster than ever," and "Get set for greater intensity by serious buyers."

It's about timing it right. And right now, the time is golden.

The ideal time to sell a business is when....

  • The stock market is hot/high (it is)
  • Interest rates are low (they are)
  • Inflation rate is low (it is)
  • Financing is abundant (it is)
  • Market is brisk (it is)
  • When demand is higher than supply (it is)
  • Buyers abound (they are)
  • Pricing is favorable (it is)
  • The company is performing well (is it?)
  • The owner is ready (are you?)

Today's economic atmosphere and the aging population of boomer business owners seem to be aligned, the perfect window for an exit.

The moon may not be in the seventh house. And only an astrologer knows for sure if Jupiter has aligned with Mars. But we can all recognize the glaring signs hinting that now is looking like the Age of Aquarius for selling businesses.

In astrology the Age of Aquarius mimics the ancient Mayan prophesy for the next Golden Age and The 5th Dimension sang about the "dawning of the Age of Aquarius.....mystic crystal revelations....let the sunshine in."

We don't need a crystal ball to see the revelations. We're shining the light on the clear circumstances that signal that the timing could not be better for owners of good-performing companies in many industry sectors to consider selling. With prices and demand at current levels, it could be a good time for even some not-so well-performing companies to sell.

However, for those who have not prepared for such an event, start first with understanding the aspects of your business that determine its salability.....from the financial aspects to the other drivers of business value. Get to know the process and what to expect. Gain an understanding of the motives of your most probable buyer, anticipate their questions, vet potential problem areas of your business that might inhibit or delay an eventual sale. These are all keys to having a positive result in the business-for-sale world.

The bottom line is that markets change quickly, and business values change along with it. We touted these same conditions during the period 2006 through early 2008. And, well, after that.....the winds of change occurred.

I suggest that it's better to look back on this auspicious time and know you sold your company at the right time, or to look back and know that you at least gave appropriate consideration to this subject.

Is this window in time your opportunity to enjoy your golden years?

Supplier Concentration And Business Value

Concentration in the acquisition world is a bad word. Businesses with high supplier concentration attract fewer buyers and this lowers the price. What’s too high? Having a supplier with 40% of your business is too high. Diversify if at all possible.

When buyers look at a company for sale, they look at risk. Supplier concentration is one of the top risk factors that are examined.

Why? Because if customers push the throttle, the suppliers furnish the gas. A company cannot sell its products to customers if it cannot secure what it needs from suppliers. Any adverse change in a company’s relationships with its key suppliers, or loss of the supply of one of the company’s key products, could have an adverse effect on the business. Therefore, the nature and stability of suppliers is an important consideration in identifying a company’s risk.

There’s a tendency for small business owners to find a good supplier to rely on for the bulk of their material or product needs. If you find someone reliable, why not make your life easier and stick with a trusted entity, right? Not so much when you’re trying to sell your business. Buyers buy to grow the business, not to keep the status quo. So, as a business grows, the importance of the supplier factor becomes even more critical. Growth can be significantly hindered or halted altogether for lack of available resources.

So, what would you do if your main supplier went out of business or had some kind of disaster that strangled output? What if the supplier requests a large cost increase that you cannot mitigate? What if they sold to one of your competitors? How fast could you get new products and materials? And, at what cost? These are questions buyers would ask. So, if you are considering the sale of your business, you can either develop additional supplier relationships in preparation of selling your business later, or sell now and accept a lower price.

Don’t Fall For It: The 5 Mistakes Business Owners Make When Dreaming Of Selling Their Company

By Mark Tepper

If there’s one thing I’ve learned in my years of working as a Certified Financial Planner™, it’s that entrepreneurs are a special breed of people. They’re motivated. They’re inspired. They’re incredibly tenacious. They’re smart. They’re optimistic. And they know how to get what they want.

On the flip side, many entrepreneurs are guilty of being a little pie-in-the-sky—especially when it comes to their own businesses. Unrealistic expectations of the exit process can both hinder the sale of a company and affect the morale of an entrepreneur getting ready to sell. Be wary of the mistakes below and you’ll enter the exit-planning process better informed, better equipped strategically, and more likely to enjoy your sale process.
1. Assuming They’ll Find Perfect Suitors Immediately
  • Since most entrepreneurs have enjoyed a lot of hard-earned success, it’s no wonder many assume that a buyer (or two or three . . .) will appear as soon as they’re ready to sell. Unfortunately, that’s just not the case for the majority of sellers. Nearly 80 percent of companies on the market won’t sell. Knowing this will stop you from becoming too impatient and will let you take steps now to ensure that your business is attractive to the buyers who are out there.
2. Assuming Their Business Will Sell for Many Times Their EBITDA
  • This is a big one. In my experience, most entrepreneurs automatically assume they will sell their business for four or five times their EBITDA easily. That’s because most haven’t done much research into average sales prices in their markets. According to a 2013 Q3 BizBuySell Insight Report, the average sale price for a small business was $180,000, with a multiple of 0.6. That comes out to a 60 percent value of EBITDA—not anywhere near 500 percent.
3. Assuming They’re Unstoppable
  • Hubris: It’s what entrepreneur Frederic Kerrest calls “a startup’s worst mistake” in his Forbes guest post. He writes, “It’s a big mistake that startups and established companies alike make. It lulls them into cockiness, complacency and a sense of invincibility and causes them to lose sight of what matters most—making customers successful.” Know your strengths, weaknesses, and your competition and you’ll make your company more profitable now and more saleable in the future.
4. Assuming They Can Sell Their Business Themselves
  • Many entrepreneurs may be attracted to the idea of selling their own business because they think they’ll save money and won’t have to pay any broker’s fees. While that may be true in the short term, selling your business without an exit team will hurt you in the long run and is essentially guaranteed to leave you with less money in the end.
5. Assuming Their Exit Is an Isolated Event
  • When fantasizing about the sale of your business, do you picture yourself signing a deal, cashing your check, and hopping on a plane to your favorite vacation destination? Many do. But you shouldn’t think of your exit as a one-time event: It’s a dynamic process that should take at least two or three years. Be willing to put the time into exit planning. You won’t be sorry.

The Best Time To Sell A Business Could be Right Now!

By Jim Stauder

The Dow Jones closed at an all-time high on Friday, September 19, 2014. And the NASDAQ and S&P were within ¼ of 1% of their all-time highs. As a result, corporations, private equity groups, and individual investors are flush with cash – trillions of dollars.

Where can they go with all that cash? Interest rates are so low that fixed income investments are not attractive. Whereas it’s typical to have a stock market correction (10% tumble) about once every 1 1/2 years, it’s been almost 3 years since the last correction. With international tensions in Ukraine, Russia, Iran and the Islamic radical group ISIS setting its sights on terrorizing the US economy, how much longer can the (stock market) good times last? Where can that cash best be used to achieve adequate returns on investment? The answer – business acquisitions.

The buyer demand for good businesses with good cash flow has always exceeded the supply of good businesses available for acquisition. However, with buyers having more cash than ever, the numbers of interested buyers can only increase. In addition, interest rates are extremely low, enabling buyers to finance their acquisitions at reasonable rates. However, the low interest rate window cannot remain open forever. The Federal Reserve policies will certainly result in an increase in interest rates over the next year or two. When that happens, buyer’s will experience an increase in debt service requirements which will ultimately result in reduced business sale prices for business owners.

What about the macro-economic environment? Well, quite frankly, it’s confusing. We have been in the midst of the most tepid recovery ever. Are we in a new normal? We’re improving, or so it seems, ever so slowly. But what does the future hold? With the 2016 elections creeping up, the existing international tensions and a President who is less than business-friendly, can we count on an improving macro-economy over the next few years? Or, might we enter another recession triggered by a political or international incident? It may be best to hedge your bets by counting on the latter, but who really knows?

In 2011, the SBA raised the maximum loan amount for the SBA 7a program to $5,000,000. Based on recently released SBA statistics, 7a loans through 9/5/13 vs. 9/5/12 were up 13.8% and 9/5/14 vs. 9/5/13 were up 11.0%. For the two year period through 9/5/14, 7a loans are up a whopping 26.3%! Good businesses with good cash flow can often be financed with SBA 7a loans with low down payments and low interest rates. These facts are indicative of the availability of funds to make a business acquisition in today’s environment.

What about taxes on the sale of a business? Are tax rates likely to be increased or decreased? Despite the recent increase in the capital gains rate, there always seems to be a push to further “tax the rich”. Again, who knows what might happen? But, in my opinion, the chances of future tax rate increases far outweigh the likelihood of a future tax rate decrease.

The optimal time to sell a business is when it has experienced three good years in a row. In our slowly improving economy, many business owners have had annual increases in cash flow since 2011. The problem is that one bad year can have a severe detrimental effect on business valuations. Unfortunately business values decline much faster than they increase or recover from a negative blip. To gain a further understanding, consider reading “Bad Timing – Waiting too Long to Sell” on the How to Plan and Sell a Business website.

So are all the “stars aligned”? In light of the paragraphs above, many are. But, a business owner must also consider their own personal readiness to exit their business, which should be balanced against the positive alignment of other factors. To learn more, consider reading “The Right Time to Sell Your Business” on the How to Plan and Sell a Business website.

Nevertheless, with the “stars aligned” positively in many respects, along with the potential for negative occurrences, it is a great time to at least think seriously about selling your business in this window of opportunity. The best time to sell a business could be right now!

If not now, when?

Written By Jim Stauder, Founder/Author of "How To Plan And Sell A Business." 

Business Goodwill vs. Personal Goodwill & How They Impact The Sale Price Of Your Business

Every small business owner invests copious amounts of blood, sweat and tears into their business.  Late nights and early mornings, weekends away from their loved ones, hours lying sleepless, wondering what entrepreneurial surprises are coming next.  All this effort is intended to make the business a success – and to make it worth more than just the sum of its tangible parts.  So when the time comes to sell, every business owner wants, even expects, to be paid handily for their sweat equity.  And in most cases, the owner is disappointed that potential purchasers are not willing to pay what they consider a fair price for this equity.
Let’s start by defining the word “goodwill”, in the context of valuing a business.  The fair market value of any business is made up of the value of tangible assets (eg. inventory, accounts receivable, equipment, land and buildings, etc.) and the value of intangible assets (eg. customer lists, brand awareness, proprietary processes, etc.).  Some intangible assets are specifically identifiable and can be valued; the rest make up what we call “goodwill.”  In most business valuations, the amount by which the fair market value of the business exceeds the value of its tangible and identifiable intangible assets is considered “goodwill.” 
From a purchaser’s perspective, goodwill is the premium they are willing to pay for a particular business, rather than just buying the tangible assets directly and starting the business themselves.  It represents the investment they are willing to make to buy an existing business, based upon the incremental income and cash flow it generates over starting the same business from scratch.
Valuing goodwill is by far the most challenging aspect of determining the fair market value of any business.  And it generally makes up the majority of the difference between what a seller is hoping to be paid, and what a buyer is prepared to pay, for any business.
Now we will break “goodwill” into two components:
·       Personal goodwill (also known as “professional goodwill”) attaches to a particular individual rather than to the business that the individual owns.
·       Business goodwill (or “enterprise goodwill”) is derived from characteristics specific to a particular business, regardless of who owns or operates it.
To highlight the differences between these two components of goodwill, consider the following example of two hypothetical hair salons, “Cut Above” and “Perfect Look.” The two businesses, located two miles apart, have virtually identical ownership structures, assets, liabilities, revenues and net income. Beyond those similarities, the salons have little in common.
Cut Above is in a busy shopping mall and serves customers on a walk-in basis. Profits are split evenly among the owners. In contrast, Perfect Look is in a quiet neighborhood and requires customers to make appointments, often weeks in advance, with a particular stylist. Profits are allocated based on the revenue generated by each owner.
Although both salons produce virtually identical benefits for their respective owners, there is a difference in the nature of the goodwill of Cut Above’s owners versus that of Perfect Look’s owners. The owners of Cut Above receive earnings tied directly to the enterprise, such as its location, business model and mechanism for distributing profit. The owners of Perfect Look, however, receive earnings tied directly to their personal skills, reputation and repeat clientele. Thus, an owner of Cut Above would typically possess a higher level of business goodwill, and a Perfect Look owner would have a higher level of personal goodwill.
In a business sale, a Cut Above owner would likely find it easier to transfer to a prospective buyer the goodwill associated with his/her ownership interest, due to the expectation that the earnings of Cut Above would continue at historical levels regardless of who owned the business. However, an owner of Perfect Look would likely have a harder time transferring his/her goodwill, due to the expected decline in earnings from the regular clients who are more loyal to him/her than to the salon.
To summarize, a potential purchaser is willing to pay more for business goodwill, because it is more likely to accrue to them when they are the owner.  However, they are likely to heavily discount personal goodwill, because it is unlikely to accrue to them when they are the owner.
Fortunately, given the availability of time and strategic planning/execution, there are ways to convert some personal goodwill to business goodwill.  Depending on the specific situation, these could include:
·       Building the business brand, so that customers become more familiar with the brand then with the individuals operating the business
·       Building and diversifying the management team, so that expertise, customer relationships and other intangible assets stay with the ongoing managers of the business, even if the owner has moved on to greener pastures (or sandier beaches!)
·       Standardizing and documenting processes and procedures, so that the departing business owner is not the “go-to” person for every situation
·       Encouraging the owner to spend more time “on the business” rather than “in the business” – even if a sale of the business is not contemplated, this is often a very healthy transition for most entrepreneurial businesses.
To maximize the success of converting personal goodwill to business goodwill, the process should begin years before the business is offered for sale.  Not only do some of the initiatives take time to implement, but showing a track record of the business thriving independently of the departing owner(s) will provide confidence to the prospective purchaser that the business goodwill is maintainable.
Written By Bob Lawrence, President, Breakaway Business Transition Planning Ltd.

Learn From Other People's Mistakes: 8 Sure-Fire Lessons Before Selling Your Business

Selling your business is the most important transaction you will ever make. It would be a shame to spend 20 years building your business like a pro, only to exit like an amateur.

By avoiding these eight common novice mistakes you’ll have a more profitable and satisfying experience.

1. Selling Because Of An Unsolicited Offer To Buy

Got an offer from a competitor?  Or, perhaps a Chinese company looking to buy a customer base in the U.S. These are not unusual occurrences these days. There are countless stories about a competitor coming in with a spontaneous, unexpected offer and after a little light negotiating the owner sells. Another common story is the owner tells his banker, lawyer, or accountant that he is considering selling. His well-meaning professional says, “I have another client that is interested your business. I will introduce you.” The next thing you know the business is sold. Believe me, these folks are buying your business at a big discount. If you previously were not considering this business sale, you probably have not taken some important steps to improve business value and optimize your exit. You may not have prepared for an identity and lifestyle to replace the void that will be left by the separation from your company. Wouldn't you rather be prepared and exit on your own terms….better terms.

2. Poor Books And Records

Business owners wear many hats, but usually lack that one hat that doesn’t fit so well. More likely than not, financial record keeping is simmering on the back burner. A buyer is going to do a comprehensive look into your financial records. If they look a little scrubby, the buyer’s confidence in the business takes a nose dive while his perception of risk increases. The transaction value is often attacked well beyond the economic impact of any uncertainties in the numbers. Get a good accountant to do your books.

3. Going It Alone

The business owner may be the foremost expert in his industry, but it is likely that he’s a novice in business-for-sale know-how. Since the sale of a business is a once-in a-lifetime occurrence for most owners, mistakes at this juncture have a huge impact. He possibly can leave a lot of money on the table. For instance, is it a better deal to structure some of the transaction value as an earn out based on post acquisition sales performance? Do you understand the difference in after tax proceeds between an asset sale and a stock sale? Your everyday bookkeeper may not, but a tax accountant surely does. Is your business attorney familiar with business transfer legal work? Would he advise you properly on Reps and Warranties that will be in the purchase agreement? Your buyer’s team will have this experience. Your team should match that experience or it may cost you way more than professional fees.

4. Skeletons In the Closet

If your company has skeletons, the due diligence process will surely dig them up. Are there environmental issues, regulatory violations, or employment contract issues, for instance. Air out the closet and brush away the cobwebs. The best scenario would be that warts can be taken care of before the sale. If a problem is not resolvable immediately, but is fixable within a reasonable period of time, the buyer may leverage the issue to attack the price for an amount far in excess of the actual impact of the issue. The worst case scenario is that a complicated, unresolved problem is discovered late in the process and the buyer walks away.

5. Mum's The Word

Confidentiality in the business sale process is crucial. If your competitors find out, they can cause a lot of damage to your customers. Human capital is a significant portion of your company’s value. What if your best employees get skittish and leave for greener pastures? What if bankers get nervous and decide to limit lines of credit? What if suppliers feel uneasy and demand cash on delivery that impacts your cash flow? There is a right time to communicate your sale to those who have a stake in your company, but mum’s the word until that time.

6. Contracts

Are your day-to-day contracts in place with employees, customers, contractors, suppliers, landlord? Is your office lease transferable, can it be renegotiated? If your company has patents or trademarks, are they properly licensed or registered? Are your customer agreements assignable? Contracts or Agreements can kill deals, they can also cause issues after the sale that can come back to bite you.

7. Not Understanding The Value Of Your Business

Business valuation is a tricky thing. It takes finesse and lots of experience. A good business broker or M & A advisor is your best bet. Business valuation firms are great for appraising partner dissolution, divorce, or gift and estate tax situations.  However, they tend to be very conservative and their results could vary significantly from the value your business could fetch in the competitive open market.

8. Getting Beat Up In Negotiations And Due Diligence

Your objective is to get the best price and terms. I know this is a shocker, but the buyer is trying to pay as little as possible and get contractual terms favorable to him. These goals are not compatible with yours. The buyer is going to fight hard on issues like total price, cash at close, earn outs, seller notes, reps and warranties, escrow and holdbacks, and post closing adjustments. If this is not the buyer’s first rodeo, you can get trampled during negotiations. And, before you know it, your appetizing Whopper-of-a-deal turns into a Cheeseburger,

Due diligence has a dual purpose for the buyer. The first is obviously to insure that he knows exactly what he is paying for. The second is to reduce purchase price. If you don’t have a good team of advisors, you could be getting the short end of the stick.

There is an old proverb that says when a man with money and no experience meets a man with experience, the man with the experience walks away with the money and the man with the money walks away with some experience. Keep in mind when contemplating the sale of your business that it will likely be your first and only experience. Avoid these mistakes and make that experience a profitable one.

Planning To Sell Your Business In The Next Three Or Four Years? --> Start Working On It Now.

Written By: Tom Scharf, Partner at Walthall CPAs
When getting ready to sell a house or a car, the first thing people do is clean it up and get rid of the clutter. It is not different when selling a business. The process just has to begin much sooner.

Buyers look at the past three or four years of financial performance, so that is when the cleanup process should begin. Sellers need to look at what the future buyer will be looking for and organize appropriately. It is important to consider the following before deciding to sell:

Are you taking out too much compensation, travel, entertainment or other related expenses? -- This may save you money on income taxes, but buyers have a difficult time differentiating between what is required for business and what is excess. A buyer may agree to pay x-times, so an additional $100,000 of expenses could cost you hundreds of thousands of dollars in sale value. With excess expenses, your bottom line or net income is lower, which makes the profitability and the amount a buyer will pay lower.

If your business is an S corporation or LLC, consider taking out equity distributions that don’t affect operating income. -- Equity distributions are taken out after profits that were already taxed. Since profits will be higher because of taking out equity distributions versus owner compensation, the business will be viewed to be more valuable. Earnings (amount of profit or after-tax net income) are only subject to income tax and not employment tax, which may also save money.

Are you keeping more inventories and working capital in the business than you actually need to run it? -- Buyers will assume that the inventory and working capital level that the seller maintained is what is needed. Take those dollars out of the business now or they will be lost inside the purchase price. You only need enough inventory to meet business needs, and that is what the buyers look at. Don’t put the money into inventory when it is not required or it is money lost.

Have you carefully evaluated capital investments to ensure you still will own the business to see the return on those investments? -- Depreciation expense is added back to calculate EBITDA (earnings before interest, taxes, depreciation and amortization). Lease expenses are not added back. One will cost you money upfront while the other will cost money over time and come out of future expenses. Reconsider hiring staff and salesmen to develop or market new products or business lines as that can take years of added expenses to develop income for future periods.

Have you done what you can to reduce risk? -- Try to lock up significant customers into long-term purchase contracts. Add employee safety programs to reduce workmen’s compensation claims. Document your product warranty policies and product usage terms. Prepare an employee handbook if one does not exist.

Have you kept good records? -- Buyers will be interested not only in your financial performance, but inventory and accounts receivable turnover, rates of closing on quotes and employment records of your staff.

Are you preparing annual financial statements for your business, and are they done by an outside accountant? -- Most buyers will do their own due diligence, but having financial statements done using Generally Accepted Accounting Standards by an outside CPA will add credibility to your financial results. Income tax returns are prepared to yield the lowest possible income, using accelerated methods to write off expenditures for equipment or product development. Tax returns may not reflect the true income of the business that you want to present to a buyer.

A very important thing to consider when deciding to sell your business is to keep your heart in the business up until the day you sell it. A business is only sellable if it is profitable. The more you can grow and increase your profits, the more your business will be worth to the buyer.

Written By: Tom Scharf, Partner at Walthall CPAs

Buying A Business? | Buyer Beware: Do You Really Want to Meet Employees Prior to Closing?

We have all been there before—you are cruising along with some great momentum, on the verge of putting a deal together, until suddenly the buyer thinks they should be allowed to meet and speak with employees prior to the closing. This can sometimes stop a deal in its tracks, but in my opinion, it never should. This article will focus on how to deal with this issue and cite a real life example to demonstrate why meeting employees ahead of time is a bad idea for both the seller and the buyer.

As intermediaries, we always look to protect our clients. When a buyer wants access to employees before closing, the risks to the seller are numerous and obvious (loss of confidentiality, disruption to the business, concerned employees, etc.). However, if these are the only arguments made when representing a seller, the buyer may not see the entire picture and perhaps even feel that some of their concerns are being validated. The key is to express to the buyer why it is not in their own interest to let the cat out of the bag prior to closing.

Now, there may be some exceptions, such as a key employee, manager or member of a bona fide executive management team (rare for a small business). Even in these instances, you will want to carefully consider the timing and nature of bringing others into the fold. Also, please note this advice pertains primarily to main street transactions and some at the low end of the lower middle market.

During a typical sell-side engagement (if there is such a thing), when a buyer suggests the notion of meeting with the employees prior to closing, my reply is rather straight-forward. While I do explain the reasons mentioned above that would be harmful to the seller, I also go on to explain why it could be harmful to the buyer after they buy the business. Specifically, if an announcement is made that the business is for sale a few weeks or so prior to the closing, you are in effect giving the employees a reason and a head start to find another job. I explain that most of these people do not have the slightest idea of what it means to buy or sell a small business and they may associate a negative connotation or at least some uncertainty with the sale. Those living paycheck-to-paycheck will undoubtedly be concerned. They have all seen the headlines about public company megamergers and the layoffs that will sometimes result. But they have no frame of reference for a small privately-held business transaction because it’s just that – private.

Chances are that the buyer had not considered these concepts and will want to know how to mitigate employee concern, even if an announcement is made after the closing. Now they are moving into the right mindset. I explain that the message is to be nothing but positive and reassuring; "rah-rah", so to speak. The buyer will want to explain that nothing is to change and that they intend to keep everyone employed. Further, since there is usually a transition period with the seller, they will explain that their "beloved" boss is not going anywhere for a while and remaining with the business. So, while there may

be some initial shock from the employees, seeing the seller and buyer working together every day post-closing and seeing that nothing has changed from a job security or quality of working life perspective usually keeps the status quo. Before long, it’s business as usual. The unknown is what causes employees to look elsewhere, which is exactly what a buyer creates by exposing the truth early and then showing up at some point in the future to begin running the business.

The "case study" that I would like to share concerns a deal that I managed where the buyer was allowed to meet with employees prior to the closing. However, this was a transaction where I represented the buyer, not the seller. My firm does quite a bit of buy-side representation, which can be grueling at times. But that is a different article for a different day.

We were still a month or so out from the target closing date and my client wanted to meet with the employees. Naturally, I discussed the reasons why it may not be a good idea. However, despite my advice, this was something they really wanted to do and the seller did not object. The meeting seemed to go fine and everyone was happy. Subsequently, the deal dragged on for the all too familiar challenges that we face as intermediaries—hoops to jump through with the bank, negotiating the definitive agreement, and the seller and their CPA deciding they want to defer closing into the new year for tax purposes. But we eventually got the deal done and again, everyone was happy—or so we thought. Less than six weeks after the closing, one of the lead technicians left to work for a competitor. This is a specialized business and experienced people can be hard to find. My client learned that this was not something that was put into play after the fact, but that this person had looked for another once learning the business was being sold. Apparently, the grass was indeed greener for this individual, who I firmly believe would never have left had they not had some time to wonder what it would be like to work for a new owner. This did sting a bit for my client, especially as they were still getting acclimated to the new business. But luckily, it was not catastrophic and they have since rebounded. I can only imagine that others have not been as fortunate.

The point here is simple. Seller and buyer have aligned interests when it comes to this delicate matter. This is not mere rhetoric when we are protecting our sellers but good, practical advice that any buyer must also consider. Deals are always about balancing the risk with reward and in my experience, most buyers are not properly assessing their own risks when asking to meet with employees prior to closing.

Jeff MacAdam, CBI, Co-Founder & Vice President, The Bridlebrook Group

Buying Or Selling A Business? -- Is It SBA Financeable?

There is a general misconception in the small-business acquisition marketplace that a person could easily purchase any type of business through the SBA with a low down payment and get a loan for the rest. Most people also believe that SBA loans are a major source of small business financing. But data shows that SBA-guaranteed loans make up a small portion of the value of the overall small business lending market.

The SBA's primary business loan program - the 7(a) program - is designed to help businesses that otherwise might face challenges in getting approved for loans by guaranteeing a part of the funding provided by financial institutions.  The 7(a) program is used for a variety of business purposes and helps only about one percent of American businesses obtain loans, according to the U.S. Small Business Administration 2013 Congressional Budge Justification report. Since the business acquisition loan is only one type of loan the SBA provides, this means that SBA loans approved for business acquisitions is a fraction of one percent of all its loans.

With that said, specific criteria must be met in order to be approved for SBA financing for a small business acquisition. Here are three guidelines:

1. Cash Flow is King - All business acquisition loans are evaluated based on the historical cash flow reported in the business’s tax returns. The performance of the business subsequent to the most recent year’s tax returns is important, but your lender will be relying heavily on the cash flow reported in the tax returns to ensure that there is sufficient cash flow to repay the loan. Your lender will also be evaluating your personal financial situation to understand what your personal debt obligations are and how much money you need to withdraw, if any, from the cash flow of the business. Businesses with minimal or even negative cash flow can often still be financed if the borrower has a favorable personal financial situation.

2. Experience is Important -Your lender will want to know why you are qualified to own and operate the business you want to buy. If you don’t have experience owning, operating, or working within a similar type of business, you will need to make a strong case that you have professional experience that is "transferable" to your target business in order to qualify for SBA financing.

3. Create a Business Plan - Even borrowers with extremely strong industry experience will be asked, at a minimum, to create financial projections that reflect the borrower’s estimates of revenues and operating expenses after the business is purchased. Many lenders will require all borrowers applying for a business acquisition loan to provide a business plan, regardless of experience. Borrowers with less impressive resumes can attempt to mitigate their lack of experience by providing a thorough, comprehensive business plan that shows the lender they have completed a substantial amount of due diligence on the business being purchased. 

Also not well-understood, is that in the eyes of the SBA, not all business types are created equal. Some categories of small to medium size businesses are more likely to receive SBA loans than others. Mr. George Heaslip, known as “The Loan Professor,” is a SBA loan originator based in Florida with many years of experience. The following list represents his ranking of business types in alphabetical order using a 0-5 numerical rating, five being the most likely to receive loan approval.

3             A/C and Heating
2             Advertising / Promotion
0             Adult Merchandise
3             Agricultural (sod, seeds, equipment)
2             Aircraft Maintenance
1             Air Duct Cleaning
2             Alarm Companies (Residential and Industrial)
2             Amusement / Theme Parks with real estate
4             Animal Care & Grooming Facilities with R.E.
2.5         Animal Grooming, without real estate
2             Antiques Dealer
3             Appliance Sales / Repairs
2             Art Gallery
2             Arts and Crafts
2             Art Framing
4             Assisted Living Facilities, with real estate
4             Auto Body Shop, with real estate
3             Auto Body Shop, leased facility
4             Auto Car Wash, with real estate
3             Auto Dealership (new, larger facility)
0             Auto Delivery
2             Auto Glass
0             Automobiles, Rental
4             Auto Parts Shops, with real estate (including tires)
3             Auto Painting, with real estate
2             Auto Painting, without real estate
3             Auto Parts / Accessories, leased facility
2             Auto Repair Shops, with real estate
2.5         Auto Sales Centers, with real estate
2.5         Auto Salvage
1             Awards / Prizes Engraving
3.5         Baker, with real estate (in business several years)
2             Barges (sea transport)
3.5         Bar / Restaurant, with R.E. (operating several years)
1             Beauty Salons / Tanning Salons
3             Bed & Breakfast, established, with real estate
1             Billiard Parlor
3             Boat Storage Facilities, with real estate
0             Boat Tours
1             Book Store
1.5         Bookkeeping Services
1.5         Boutiques
3.5         Bowling Alley Lounge & Restaurant, with real estate
2             Bridal / Baby Shops
2             Building Materials
2.5         Building Renovations
1.5         Business Brokerage Franchise Offices
0             Cards, Greeting
2             Carpet Cleaning
4             Car Wash, Established, with real estate
1.5         Cartridges Refill (Printer)
0             Casino
3             Catering Facilities, Established, with real estate
3             Cement Products Manufacturer, with real estate
4             Child Care Centers, with real estate
2             Child Care Centers, without real estate
1.5         Chiropractic
0             Churches
0             Cigar Store
2             Cleaning, Clothing
3             Cleaning, Janitorial
3             Closet Interior Manufacturers
2             Clothing
3             Coin Laundry
0             Collection Agency
1             Computer Supplies
2             Construction / General Contractor
4             Consulting Companies with exceptional tax returns
3             Consignment Shops
3             Contractor, established
1             Convenience Stores, without real estate
2             Convenience Stores, with real estate
3             Crane Services (Construction / Equipment Install)
2             Damage Restoration
0             Data Management
3             Deli, with real estate
2             Delivery Services
4             Distribution Centers, with real estate
3             Distribution Centers, without real estate
5             Doctors
2             Document Shredding
4             Dog & Cat Kennels, with real estate
3             Dry Cleaners & Laundromats, without real estate
2             Dry Cleaners, with real estate
2             Educational / Schools
2             Embroidery Services, with commercial accounts
3             Electrical Contractors
2.5         Employment Placement Companies
3             Environmental Cleanup
1             Electronics / Computers
2             Equipment Sales, Service, & Rentals
3             Equipment Sales, Service & Rentals, with real estate
4             Equipment Suppliers / Installers
1             Event Planning
4             Export Products Manufacturers
4             Exterminating Companies
4             Fabrication Factories, with real estate
4             Factories (Manufacturing)
3             Farm Equipment Sales & Service
4             Fast Food Franchise, with R.E. (on Franchise registry)
1             Financing Related
2             Firearms
3.5         Fireplace & Furniture Manufacturers
2             Fish Farm
0             Fishing Vessels
3             Fitness Health Club, not leased
3             Flooring Contractor
2             Floral Center
2             Food Business, Retail
3             Freight Forwarding, with real estate
5             Funeral Homes, with real estate
0             Game Room
3.5         Garden Centers, Indoor & Outdoor, established & growing
2             Gas Station / Truck Stop, with real estate
1             Gas Station with Convenience Store
0             Gift Shop
3             Glass Company
1             Gourmet Catering
3.5         Gravel Pits & Dredge Companies
3             Grocery Store, with real estate
2             Grocery Store, without real estate
2             Guard Company, security
1             Gyms
0             Hair Salon
5             Hardware Stores, with R.E. & no big box competition
3             Health Products Store
1             Hobby Shops
4             Home Health Care Services
2             Hotels and Motels
1             Ice Cream / Yogurt Shops
0             Import Companies
2             Insurance Agencies (franchise)
4             Interior/Exterior Design Units Mfg (Closet,Fireplace,BBQ,Patio)
1             Internet Related
3             Janitorial
4             Janitorial Service Companies (incl. parking lots maintenance)
2             Jewelry / Retail
3.5         Landscaping with commercial accounts
1.5         Landscaping without commercial accounts
2             Landscaping companies with legal employees
4             Law Firm
0             Limo Business
3             Liquor Package Store, with real estate
2             Liquor Store without real estate
2             Locksmith
4             Machine Shop, with real estate
3             Machine Shop, without real estate
1             Maid Service
2             Mail Package Service
5             Manufacturing Facilities, with real estate
5             Manufacturing Facilities that export
4             Manufacturing Facilities, without real estate
3             Marinas, with real estate
3.5         Marinas, with established restaurant and real estate
2             Marine Related
1             Marketing Company
1             Massage
5             Medical Related, with real estate
4             Medical / Supplies / Distribution, leased facility
3.5         Metal Fabricators, with real estate and growth record
0             Micro Breweries
3.5         Millwrights
2             Movers
0             Non Profit Organizations
0             Nail Salon
2             Nursery / Plants
4.5         Nursing Home, with real estate
3             Nursing Home, without real estate
2             Nutritional Store, if a franchise on registry
2             Painters
2.5         Parking Lot Cleaning & Maintenance
1             Party Goods
4             Pawn Shops, if in a freestanding building
2             Personal Services
0             Personnel & Staffing
2             Pest Control
4             Pet Centers, with real estate
4             Pharmacies
5             Pharmacies that do compounding
1             Pizza Shop
0             Pressure Cleaning
4            Preschools, with real estate
2.5         Preschools, without real estate
1             Printing & Typesetting
3             Plumbing Supply
2.5         Pool and Spa
5             Recycling Facilities, established, with real estate
1             Rental Business
2             Repair Services, if licensed
4.5         Restaurants, with standalone bldg., in business many yrs
3             Restaurants, franchises, with excellent financial records
2             Restaurants, other
3             Retail Misc., with standalone bldg., in business many yrs
4             Retail, with 3 yrs of excellent historical cash flow)
3             Roofing Contractor
4             Roofing Maintenance
1             Routes
2             Security Systems
5             Self-Storage Facilities
2             Sign Companies
2             Site Preparation
0             Skin and Massage
2.5         Recreational Facilities and Clubs
1             Security Related
1             Shoes / Shoe Repairs
2             Skating Rinks, with real estate
2             Sod Distribution
3             Software Service, with 3 years steady growth
3             Sports Bar, established, with real estate
2             Sports Related
2             Sub Shop (Sandwiches)
1             Tailoring
1             Tax Preparation
1             Telephone Related
5             Therapy Centers and Therapy In-Home Services
1             Tobacco Related
3             Towing Service
3             Trade Contractor
4             Training School, with real estate
2             Training School, without real estate
2             Transportation
0             Travel Agency
2.5         Tree Farm
3             Truck Repair, with real estate
2             Truck Repair, without real estate
4             Truck and Car Washes, with real estate
4.5         Truck Fleet Service (Towing & Repair), with real estate
1             Tutoring
0             Valet Parking
2             Variety Store, non-franchise
3             Variety Store, franchise with real estate
0             Vending Machine Route
0             Video Related
4             Uniforms Manufacturing, with real estate
0             Used Car Dealership / Lots
2             Water / Damage Repair
2             Water Purification
1             Web Hosting
2             Well Drilling
3.5         Wholesale Distribution, with real estate
2             Wholesale Distribution, without real estate
2             Yogurt Shop