However the issue of whether or not you should buy a gas station is a bit more complex than it might initially seem.  In this article, we will explore some of the ups and downs that go along with grabbing that “Gas Station for Sale” sign and putting your name on the dotted line.  Gas stations for sale can be quite lucrative, but is this truly the right business for you?

Are You Comfortable Turning Over the Reigns to Someone Else?

When you see a business for sale, it is important to question whether or not that business is a good fit for you.  Can you envision yourself owning and perhaps also operating that particular business?  Many who own gas stations actually turn over that operation to other employees instead of operating it themselves.  If this is something that you are comfortable with doing, then a gas station might be one of the businesses for sale that you will want to consider.  However, if this idea makes you uncomfortable, then you might want to gear your search elsewhere.

The practicalities of who will operate your company are more relevant with a gas station than many other businesses.  If, for example, you buy a store that sell picture frames and does custom frames, you don’t have to necessarily stay open long hours.  However, this is typically not the case with gas stations.  Instead gas stations are usually open long hours and sometimes even 24 hours a day.  That means that an owner-operator is not likely to be present most of the time.  This is an important concern and one that any prospective owner should consider before buying a gas station for sale.

The Need for Gas is a Big Plus

Even if fuel efficiency goes up, it is also very likely that the price of gasoline will also rise as well.  The likelihood of this occurring is only amplified by the ever-growing need for gasoline, thanks in part to the industrialization of nations like China and India.

Thus, when you buy a gas station, you are likely investing in an aspect of the transportation industry that will be healthy for years, if not decades, to come.  There are alternative technologies and approaches on the horizon, but it will likely be quite some time before we see them.  These factors definitely make gas stations attractive in the array of businesses for sale.  Further, it is also quite possible that the existing infrastructure of gas stations will in some fashion be incorporated into any major “switch over” if one does actually occur.

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Skin in the Game. Let us assume that the buyer while is very interested in buying the business, he cannot finance it entirely from his pocket. While that is totally understandable, any investor or lender is going to feel much better about his investment or loan, if the buyer has a skin in the game. Obviously, the more the skin the better. What is the minimum amount a buyer should have invested before others would want to step in? Now that varies a lot. However, my recommendation is that it is at least 20% of the purchase price, but closer to 50% would certainly be better.

My Family Loves Me. My friend once told me, if you ever want to test if your family really loves you, ask to borrow some money! Now, I don’t think that is quite true. However, it is true that investing in you relatives business is not recommended for any one even if they are related by blood, unless they understand the business proposition, value and risk. What happens often is people invest in a relatives business because they like them and not because it is a sound investment. Having said that, it can be an excellent option for many people, especially in this economy. However, the borrower should clearly draw up the terms and explain the business model and risks involved before taking the money.

How Good Is My Venture? You can explain your business model to your uncle or grandmother across the dinner table over a pizza. But if you are going to approach a Venture Capital firm or Private Equity firm, you better have a business plan. A business plan can be a simple 6 slide PowerPoint presentation or a 100 page document bound in colorful vinyl. Regardless, the numbers have to be in black and white. The entrepreneur should have a clear idea of things such as revenues, cash flows, assets and liabilities and be able to answer any question the would be investor is willing to throw at them. You should be able to demonstrate to the investor why he or she is going to make 10 times their investment in a short time. VCs and PE firms want return on their investment, a lot of return. Maybe your business will qualify for investment or maybe not, some businesses for sale are not suited for VC and PE investment.

Angels & Demons. Angel Investors are still around just a bit more careful may be. But in fact the shaky stock market is turning off a lot of private investors and the more daring ones are looking to invest in a good business. The reason they are called Angels is because they smile on you when others have been demonic! There are a lot of sources on the net where you can look for an Angel investor, so definitely worth a try. You will usually get a boatload of business advice, which can be valuable for a new business owner.

Banks & SBA. I have made this option be in the end, because borrowers know that if this is an option then the other options are not needed. But borrowers should pursue a traditional loan or an SBA loan if they might qualify for it. The banks have gotten a lot stricter about lending to small businesses, but they do lend.

In summary, there are still quite a few options for a business buyer to find financing, but they have to be more diligent and persistent in this uncertain economy.

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There are several unique aspects to valuing a technology company. The factors typically present in a traditional valuation are either not present or provide very little insight in a technology company valuation. Typical valuation methodology looks to assets and/or income for value and involves income, assets and cost approaches. Operating businesses are usually valued based on an expectation developed from their historical performance. On the contrary, technology companies many times have limited revenues, no history to speak of, and a track record of financial losses.

Often the technology company will represent the first of its kind of business. Therefore, it is difficult to find a peer group or competitors to benchmark performance. So, investors in technology companies usually look toward the future with an expectation of explosive growth. Here are some other factors that impact the process of valuing a technology company vs. a traditional business opportunities:

Lack of Fixed Assets and Inventory – Technology companies do not invest significant dollars into land, buildings, or other fixed assets and derive most of their value from intellectual property. Since the products or services produced by the company are electronic bits & bytes, there is no inventory to speak of.

Projections are Key – The valuation of an emerging technology company is based on the projected future stream of income from its intellectual property. Projections include assumptions regarding demand for the product or service, revenue growth, competition, alternative technologies, the economy and many other factors. However, such assumptions, if based on market research, known facts and sound logic can be a basis for value.

Cost Of Capital – Another difficulty in the valuation of technology companies is determining the cost of capital. Many technology companies are dependent upon equity financing causing the cost of capital to approximate the cost of equity. Some technology companies issue hybrid securities, such as convertible bonds. Technology companies may have bank debt, making it hard to rate. In general, estimating the cost of capital from historical data is more difficult with technology companies that have short histories.

Management Strength – Investors often have their own methodologies for valuing technology companies. Some may evaluate certain factors and assign values to them. While a good idea may have value, without good management it may not be successful. Strong management may be worth more than any other characteristic. Industry contacts and relationships are important factors. Demand and an analysis of the marketplace must be evaluated. Finally, the feasibility of the product itself must be considered.

Intellectual Property – Most of the use of capital in a technology company goes to building up the company’s intellectual property. So the appraiser has to pay close attention to the built up intellectual property in order to assign value to it. Unless there is a proven track record of revenue, the appraiser has to research the market and evaluate the potential for the product before assigning value.

Given these challenges, it is clear that the valuation of technology businesses for sale should be performed by an appraiser familiar with current trends, data sources, market transactions and market participants.

BuyTradeBiz.Com is the Internet’s newest business for sale and franchises for sale listing website. This is the site if you are looking to sell a business or buy a business or buy a franchise.

No one we know of has the crystal ball to tell us precisely when the economy is going to bounce back for business owners and consumers. Times like these lead many people to take matters into their own hands, and the good news is that there are business opportunities out there and a consumer base to go with it.

 If you want to hit the ground fast and hard you might want to go in the direction of buying an established business, one with a proven track record of course. Less risk is typically involved in buying a business that already exists. Reasons for this are: a profit-loss sheet is already active, live and present and it should clearly show positive cash flow and profits; customers and prospects exist and perceptions are in place; trained employees are familiar with day-to-day procedures and likely ready to help. If working, trusted employees and a working system are already in place you are good to go. There certainly may be some initial tweaks and changes in that you have your own way of doing things, are familiar with the concept and can bring new ideas, and may want to add a right-hand person(s) that you have worked with in the past.

 Different types of business models carry different commitment levels. We will overview two— websites for sale, restaurants for sale—going from less commitment to more commitment:

 Buying a website business can be rewarding if you are in the right market for you, your passion, your background in management and understanding of technology and distribution models. Almost any business, either selling a product or service or combination, can go online. But here we are talking about an established or premium website (both with vastly different cost and time commitments). If you are interested in primarily being the principal/owner of the business who is more savvy with financials and marketing, then you will need to find the technology expertise and hire that person on your team right away. When you’re ready to buy the web business, you need to communicate with the seller and get the business plan for the site, including how they attain leads, customer traffic numbers, partnering opportunities, advertising models, proof of income/revenues (monthly/yearly); ask and get answers to questions that are not in the plan. 

 If you are buying a restaurant, be sure you are ready to commit big to the love of food, people and service on all fronts, from back-of-the-house operations to front-of-the-house cosmetics and ambience. This can be a fun family commitment if other familial partners are interested, qualified and involved. Business valuation, again, and its potential down the road, is the first step to saying “yes”. In the restaurant space, you have no shortage of choices, including independents, fine dining, family/casual, quick-service, bakery/cafés, simple hot dog stands and pizza places, among others. You can also collaborate to create a website and printed catalog that offers your most famous restaurant items and merchandise that can safely be shipped to your growing customer base.

1. First year profitable businesses can depreciate cost of business property and equipment purchased in 2009 up to $250,000
2. First year non-profitable businesses can depreciate 50% of their office related property
3. General business credit limit has been raised for non-profitable businesses
4. Work opportunity tax credit is available to small businesses who have hired employees that fall into “target groups who have consistently faced significant barriers to employment”
5. NOLs carry back allows small businesses to carry back net operating losses for five years instead of the previous two years.

Be sure to contact your accountant and ask about all the tax breaks your small business qualifies for.

In the second quarter, the lending program processed 16,558 loans, more than doubling the loans offered in the same time period in 2009.  Overall in 2010 the SBA has lent out $3.7 billion.

For those considering starting a business or buying a business for sale, now is the time!

State unemployment insurance taxes are paid throughout the year, as owners pay their other payroll taxes.  States typically have a base unemployment tax, which owners will pay according to the size of their payroll.  But as a company lays off employees, it develops a negative “experience rating” that can boost that tax.

According to a survey conducted by the National Association of State Workforce Agencies numerous states are running out of funds to pay for thier out-of-work populations.  With jobless claims swelling and coffers depleting, at least 35 or the 50 states are hiking unemployment tax rates this year.

“The business that has laid off folks gets hit proportionately higher because while they pay less in total wages, and therefore less in employment taxes, their experience rating will go up and it takes numerous quarters of no layorrs to get that experience rating back down.” says Henry Paula, a tax principal at Reznick Group PC.

Franchisers are offering incredible deals, some are even waiving fees completely.  many franchisers are offering unprecendented levels of franchisee assistance.  Some are making loans themselves, while others are discounting franchise fees or leetting new franchisees pay their fees over time, says business-acquisition specialist Ted Leverette of Parter On-Call Network in Florida.

To take advantage of the deals to be sure to choose a franchisers who’s willing to share the risk with you.

Now let us look at the few methods of business valuation that are out there.  One of the common approaches to valuing a business is the income approach.  Under this approach the valuation is based on future discounted income of the company.  This method relies on the accuracy of cash flow projections and will depend on the market conditions that will prevail.  While a financial investor can feel good about knowing the returns the business will provide, in some industries this can be hard to predict.  How many of us would have predicted the current financial meltdown we are experiencing and its impact on income & cash flows?

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Now that we have agreed that recessions are unavoidable, let us see how a business owner can handle his or her exit in a recession.  I am sure some readers are thinking, why, should any owner sell a business during a recession, why not simply ride out the recession, wait for the economy to grow again and then sell the business.  Good point, but experience tells me it is not always that simple.  There are a lot of reasons, I can think of, but let me just cite a couple of them.

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