Time to Get Going:

Opportunity Knocks!

by Glen Cooper, CBI, CBA, BVAL

Vice President, New Hampshire Business Sales, Inc. & President, Maine Business Brokers

Adapted from the Fall 2008 issue of Business Buying & Selling

The quarterly newsletter of Maine Business Brokers

 Uncertainty creates opportunity. Times like these create tomorrow’s business legends.

      Today’s global changes in telecommunications, science, economics and politics are overwhelming. People around the globe are seeking new ways to cope with these changes. We are right in the middle of the mess that will be tomorrow’s “best thing that could have happened to us.”

      For those of us who are entrepreneurs, these are exciting times.

 And we are in America!

When I really take stock of what I have in life, I remember that I can’t complain – I get to live in America!

      Okay, I’ll admit: we have our problems. Well, actually, I would be bored if we didn’t.

      The United States, however, is still the greatest home for our investments. America is as physically, socially, politically and economically safe as anywhere else on earth. Other places may be shaky, but things still work here. We also have a great lifestyle. Who in the world doesn’t want to have what we have?

      Owning our own small business is also the best kind of investment. First, WE are in control. Second, owning our own business is the single best way to shelter income from excessive taxes, precisely BECAUSE we are in control. Maybe the best thing about owning a small business is that it is an invigorating and growth-producing experience. Yes, small business ownership is hard work. But that’s good. Because it is hard, it makes us tough.

A Once-in-a-Lifetime Market!

It is, in fact, a great time to sell OR buy.

      “How could it possibly be both a great time to sell AND a great time to buy?” you ask. Am I nuts? No, I’m a little creative sometimes, but not nuts. This really is a once-in-a-lifetime business buying and selling market.

      Today’s unique population demographics, fast-paced telecommunications, scientific advances and temporary chaos of world financial markets are all combining at once to create this one-of-a-kind market situation.

      Precisely because most people hesitate to act in a time of uncertainty, it is the ideal time to make our move, to become a leader in our field. People follow leaders. This situation offers a unique opportunity for each of us to lead the way in whatever we do.

       It’s a great time to sell IF it’s our time to do so, or if we need to sell in order to buy something else. It’s a great time to buy IF we can. So, within that context, it’s both a sellers’ and buyers’ market!

  Time to Sell?

      If it’s our time to sell, now is a good time because capital gains tax rates – now and in the near term future – are likely to remain low, or get even lower, for small businesses. They ARE low right now. Both major political parties have also indicated they favor further capital gains tax reductions for small businesses in the future. The definition of a small business differs, but it often is set at “under 50 employees.” That’s about 95% of all businesses in the U.S.

      A second reason it’s a good time to sell is that third party financing (from banks and other lenders) is still available at low interest rates and on pretty creative terms. This unsettled banking environment will bring out more alternatives, not fewer. Just watch and see!

      A third reason it’s a sellers’ market is that the hesitant sellers have withdrawn from the market, lessening the number of competing businesses for sale. Many sellers pull back in times like these, even though there really isn’t a good reason to do so.

      Finally, if our sales are up in this down economy, we will get extra amounts of buyer attention. Most businesses are experiencing a sales downturn, so the ones that are stable or growing are getting second and third “looks” by motivated buyers.

Time to Buy?

      If we are potential business buyers, there are businesses to buy that are bargains right now. It’s a great time to take that second or third “look,” especially at businesses whose sales and profits are temporarily down. Some business owners simply must sell and can’t wait. In that circumstance, most sellers will offer reasonable prices and generous seller financing.

      When available seller financing is combined with still-available loans at still-low lending rates from third parties, the resulting down payment requirement and loan package combination can be quite favorable. Lenders actually get more creative when times are tough, especially for well-qualified buyers.

      Finally, differences in technological and/or business savvy between a seller and a buyer can often create an opportunity for the buyer. Today’s rapid changes and generational differences contribute to this current phenomenon. The seller may not see a particular opportunity at all, or simply may be unwilling to pursue it.

      Many sellers, for example, just don’t want to computerize their businesses or develop a marketing strategy that involves using the Internet in what is being called “social media networking.” There are many businesses that can be re-invented and grown quickly with better use of today’s technology.

We Have More Power Today

When the system is broken, we actually have more power. That doesn’t seem intuitively correct, but it is. Let me explain.

      We are witnessing vast changes in the variables I mentioned in the first paragraph of this article – telecommunications, science, economics and politics. Nothing is likely to stop these changes because they are worldwide, interconnected and growing geometrically.

      These changes are bringing more power to each of us as individuals, no matter what else happens. A single individual can now be heard worldwide. That applies to our businesses as well.

      For the first time in human history, the whole world is linked by instant voice and visual communications. And, the most commonly shared language, lucky for us, is increasingly English! Whew! For example, did you know that there are more people in China who speak English than in the U.S.?

      Think about that for a moment. It’s scary and thrilling at the same time.

      This is just one example – albeit a major one – that predicts major economic change in our favor. From an entrepreneur’s point of view, new markets are forming!

      People from all over the globe – even though there may only be a few in any one physical location – can now get just about anything they want from an entrepreneur willing to supply their unique and special needs. Many small businesses – even very small ones – already serve worldwide specialty markets.

      That’s the power I’m talking about.

A Tipping Point?

Many people have read – or at least heard of – Malcolm Gladwell’s The Tipping Point, a well-reviewed book published in 2000. In it, he defines tipping points as “the levels at which momentum for change becomes unstoppable.” He says it’s a sociological term meaning “the moment of critical mass, the threshold, the boiling point.”

      In so many ways and in so many different fields, the changes we are witnessing are creating multiple and cascading tipping points. This is why it’s time for leaders in every field of endeavor to move forward.

      If it’s our time to sell, we should, by all means, move forward without hesitation. The buyers are there. The financing solutions are still there. The next chapter of our life beckons!

      If it’s our time to buy, the opportunities are everywhere.

      Because we now can talk to each other worldwide, maybe we can forge worldwide solutions that prevent the very large problems we seem to face.

      Because we are making unbelievable advances in biotechnology, maybe we can cure, heal and otherwise fix things we never before thought we could.

      In a world financial crisis, we may find our way to essential reform of the system.

      In our current national election, we may really get some long-needed changes.

      Not all change is good, of course. It never will be. But change is now coming faster and faster worldwide. We don’t have any choice about it.

      In the meantime, let us continue celebrate our American blessings by actively choosing to do something. We need to go ahead and take that next step now. It’s NOT time to hesitate. Opportunity is everywhere you look. It’s time to get going.

  This week Forbes magazine rated Lebanon first, Keene third, and Concord, NH seventh in the top ten of a list of United States cities “least vulnerable” to recession, in a region that is relatively insulated from the national economic crisis.  This region, and most of NH has maintained stability due to our low unemployment rate, strong banking sector, and relatively stable housing market .

 Forbes used August unemployment figures from the Bureau of Labor Statistics and 2007 Census data on median income, poverty, education levels and outstanding mortgage debt to measure the economic resilience of 141 communities with populations ranging from 65,000 to 188,000. 

Our local bankers did not pig out on sub prime mortgages, leaving that market to the mortgage brokers who are mostly gone now.  So our local bankers still have money to loan to credit worthy businesses and other customers.  They were often criticized as too conservative over the past few years, but now they are still there for us during the time most of the country is in a bad economic spasm. Credit is available!  While the media has created a real hysterical mood among the public that will hurt most of our businesses to some extent, we are still in relatively good shape in NH.

Customers who would like to own a business ought to take a look at our inventory.  If you have a down payment and a good credit rating you CAN buy a business NOW!

On WMUR on Sunday morning June 21st State Director Wit Jones of the SBA reflected the same opinion that we have been trying to get across. In NH if you have a good business to fund the local banks have the ability to finance you. He was on with Fred Kocher doing a business interview.

After outlining that there has been a big drop in SBA Guarantees this year he summarized at the end of his presentation that in New Hampshire the problem is not a real Credit Crunch but the “perception” of one that has folks not asking for loans.

Check out his comments at: http://www.wmur.com/video/16668751/index.html

It appears if you read the business news carefully that there are a few writers now starting to recognize that the economy is strong enough so that the Media and politicians trying to convince us that we are in a recession or even a depression, are wrong!

We have been saying right along now that it is a great time to buy a business. Loans are available at some of the best rates ever. Local banks have money and are eager to do business. Sellers are recognizing that the negative atmosphere means they have to price businesses realistically.

Get busy now, while the timid and meek are sitting on the sidelines. It is a great time to buy a business, and be in a great position when after the election the winning party, (either one) puts a positive spin on things and people shift back into a positive mode.

2007 WAS A BANNER YEAR FOR NEW HAMPSHIRE BUSINESS SALES, WITH CLOSE COMPETITION FOR ASSOCIATE OF THE YEAR

For 2007 the Associate of the year award for New Hampshire Business Sales goes to Stan Evans of Wolfeboro for the second year in a row.

Stan had his best year ever out of the 6 he has been with us, and came in with a 17% edge on runner up Ed Settino, who also had his best year since joining us 6 years ago, and who was our Associate of the year in 2004.

Stan has continued to capitalize on his extensive business background in commercial lending, sales, business development, ownership, and brokerage to achieve this status.

Stan had a wide variety of sales this past year, including convenience stores, an oil distribution company, a printing company, a wholesale garden center, a medical services company, and some commercial real estate. In addition to the sales he managed he has an impressive list of properties he is currently representing.

Stan represents us throughout the state, from his home office base in Wolfeboro. Interestingly our two top producers this year both live in Wolfeboro since Ed Settino moved back there this year.

Our company had the second best year in it’s recent history, and our commissions collected was only second to the high we hit in 2004.

We expect that 2008 will be a year “confused” by Presidential elections and all the fears of recession, but consider it a good time to buy a business, so we are looking forward to increased competition among our Associates for the Associate of the Year honors for 2008.

When I first got into this business over 20 years ago I was selling motels, B&B’s, other businesses, and land, and most of the time I was dealing with customers and clients that were of European/American backgrounds and were native English speakers like me.

My prior background involves work in other countries, international travel, and a couple of years living in East Africa, so I missed dealing with folks from other cultures.

It wasn’t long before we started dealing with significant numbers of people from other cultures buying convenience stores, motels, and dry cleaners. Our clients, the sellers, were still mostly Yankees of some variety. Often they would take the position that they wouldn’t sell to some of our ethnic groups of buyers. In every case we gave them the alternative to either accept all financially qualified customers or not do business with us.

Now in todays small business marketplace we have a rich mixture of customers from many different backgrounds and ethnic groups, and we are selling businesses for clients from a wide variety of ethnic backgrounds.

It is not unusual to have the children of some of our customers translate for their parents in conducting a sale. Sometimes we have to study the culture a customer comes from in order to figure out why they react so differently than we expect to the process of negotiating and complying with contracts.

The challenges combine to make our work more interesting, giving us all more chances to learn about other cultures, and adds a rich variety to our work. One of the “byproducts” of our work is a broad range of friends we make while we are doing business with them, and it is great that they now represent such a diverse group.