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How to Get The Best Accounting Software For Your Small Business
Buying accounting software is a major investment. It's an important decision and you need to be sure of all the facts before you buy. You certainly wouldn't want to get accounting software and then find a few months later that the software can't...
How To Kick Start Your Business And Skyrocket Your Success
This will make some people angry as hell, but it's time to debunk the myth of 'Time Management' while sharing the real secret of the super successful.
Let's face it, many so called "business gurus" tell us to 'manage time better' or to become...
SELLING YOUR BUSINESS FOR THE BEST PRICE
If you are considering selling your business this article will help you evaluate your company as a strategic acquirer might. From that perspective it pays to focus on ten critical areas of value creation. The better your performance in these areas,...
Ten Ways to Manage a Rapidly Growing Business
While some new business owners face the issue of not enough customers, others face the issue of too many customers/clients. Both are serious issues and must be dealt with carefully. There are many lists on how to find new customers/clients. Here...
Three Big Mistakes that Cost You, and Your One Person Business, Big Money!
Most one-person businesses don't flounder because their products or services are below par. They struggle because their owner's lack of business skills or business practices gets in the way of being profitable. Are you making these big mistakes? ...
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Eight Key Steps to Selling Your Business and Cashing In!
This year, some 700,000 American businesses will be sold. Most will be small and mid-sized businesses like yours. If you, too, are thinking of selling, consider these practical steps for making the process go smoothly.
1. Determine a Realistic Price Range
2. Understand the Tax Consequences
3. Prepare for a Sale
4. Seek Potential Buyers
5. Negotiate Your Deal
6. Sign a Sales Agreement
7. Plan for the Closing
8. File Paperwork With the IRS
Now for the GOOD STUFF!
Getting the Cash Out of your Business Note
Business notes, known more specifically as seller carryback business notes, are created when the buyer of a business can not or will not pay all cash. Frequently, banks and similar lending institutions are hesitant to loan money to new business owners who have minimal track records and where hard assets make up a small percentage of the total purchase price.
In the case where a buyer cannot obtain a loan, the seller is left with two choices (1) hold off until he/she find a buyer who can pay all cash or (2) carry back a note in order to collect future payments. The first option is often not realistic. In the second case, the seller is hopefully able to at least extract a large down payment to make extra sure that the buyer has some "skin in the game". However, even then the seller is usually in a position that he
prefers not to be in – he has no lump sum of money to either invest in other opportunities or to retire. Unlike a real estate note, where is there is a hard asset that is fairly easy to appraise; the business note is relatively risky to hold.
So, what is a business seller to do when he didn’t want to be in the lending business to start with and now has a need for immediate cash? What many people don’t realize is that the business note can be sold. The former owner can sell all or part of the note to get a lump sum of cash. In this way, both the goals of selling the business and getting the cash out of it are met.
In summary, selling a business note is an excellent way for the former owner of a business to get his cash out of the business. Whether the reason for selling the note is that the seller would have preferred all cash all along, that he now has large debts to pay, or that he has the opportunity to pursue other investments, the sale of a business note is a tool of which you should always be aware.
About the Author
Afra AmirSanjari is the Principal for Peacock Capital. Peacock Capital specializes in solving the cash flow challenges of Small/Medium Businesses, Government Vendors and Individuals with innovative financial solutions by providing a network for securing operating capital.
http://www.peacockcapital.com
info@peacockcapital.com
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