Top 3 Issues Involved When Buying or Selling a Business

By William Bruce

America is a nation of small business owners.  In fact, there are over 22 million of us.

Why do people want to go into business for themselves?  In surveys done several years ago, the number one response was the potential for higher income.  But now in the most recent survey, the top reason was “control of one’s own destiny.”  The change is most likely a reaction to the recent economic times.

More and more individuals are now viewing small business ownership as a viable alternative to the vagaries of corporate America.  As the founder of Sunbelt Business Brokers said recently, “There is no more job security.  The only job security you’ve got nowadays is the person looking at you in the mirror.”

As a business broker, I’m often asked about the issues involved in buying or selling an existing  business.  In my opinion, these are the top three issues:

1. Confidentiality

Confidentiality is critical to the successful transfer of a business.  If word gets out that a business is for sale, several things start happening and none of them are good for the seller or buyer of the business.  First, key employees start looking for other jobs, fearing that a new owner may not retain them.  In the uncertainty, customers may begin shopping elsewhere.  Suppliers get nervous.  Competitors can take advantage of the situation.

This is why a prospective business buyer will be asked to sign a non-disclosure confidentiality agreement early in the process of looking at a possible business acquisition. In this agreement, the potential buyer confirms that he/she will not disclose the fact that the business is for sale except to professional advisors.

If you show that you take the need for confidentiality seriously, you will be regarded as the professional that you are.

2. Valuation

Nothing causes the buyers and sellers of businesses more anxiety than the problem of valuation. The question of selling price haunts both parties. The seller doesn’t want to price his business too low and “leave money on the table.”  On the other hand, the buyer of the business is afraid he’ll pay too much and not get the best possible price.

Formal, fully documented business appraisals are now readily available.  In addition, there are rule of thumb guidelines that can be used to quickly estimate the value of a business.  As just one example, we know that a full service restaurant with liquor license is worth about 30% of its annual gross revenue as an ongoing business.  This assumes – big assumption – that the business is earning the average bottom line profit for its peer group.

There are rule of thumb guidelines for almost all categories of business from ice cream stands to manufacturing plants.  But again, these guidelines provide only quick estimates.  And written, fully documented business appraisals are now done by several respected national firms at a cost similar to real estate appraisals.

3. Financing

The toughest problem facing business buyers and sellers for the past several years has been financing.  No question about it.

These are five possible sources for business acquisition loans:

BANKS – Although most people seeking a loan to buy a business will think first of a traditional bank loan, I can tell you from years of business brokerage experience that banks generally do not make business acquisition loans.  There are exceptions but this is more true than ever in today’s economy.

SBA – The SBA, through its approved lenders, provides business acquisition loans.  The SBA does not make direct loans, but rather guarantees a portion of the loan that is made by the approved lender.   It’s known as the SBA 7(a) program.  Wells Fargo Bank is currently the top volume SBA lender nationally.

The SBA route for a business acquisition loan is sometimes frustrating because of the time and detail that is involved.  However, keep in mind that the SBA will approve loans that others have turned down and will usually approve them with a smaller down payment.  In most cases, it’s worth the wait.

FAMILY – Many times the older generation in a family will loan the down payment or the entire amount needed to a promising member of the family’s younger generation.  If your family is willing to loan you the money, one word of advice is in order.  Have a very clear understanding as to how the debt is to be handled and put it in writing in the form of a legal note.

THE SELLER – In the majority of the business transfers that I handle as a business broker, the owner of the business finances a portion of the purchase price for the buyer.  Some sellers cannot offer owner financing for a variety of reasons, but when they can, it conveniently solves the problem of financing.

The fact that the business owner is willing to finance the sale of his company provides more than a convenient finance plan.  More importantly, it provides a strong validation of the owner’s belief that the business will support the owner and earn enough cash to pay back the loan.  You can’t get any better recommendation on the business than this.

The normal down payment for owner financing ranges generally from around 30% to 50% of the purchase price of the business.  Interest rates are generally market driven but there is more flexibility here than in other forms of financing.

401(K) FUNDS AND IRA ACCOUNTS – The use of these funds to buy a business, without tax penalty, is a fairly recent development.  Several national CPA and attorney groups have developed a plan, approved by the IRS, which allows you to use your funds for business acquisition.  There are legal and accounting fees involved, but they are a small fraction of the tax penalty that would be assessed for cashing in these accounts early.

The above ­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­five sources of financing are not exclusive to each other.  I recently handled a transaction in which three of the five sources were used to buy the business.

It’s called creativity!

For further reading, here are additional related articles:

And now for the ad.  (Hey, you don’t mind a promotional item stuck in here, do you?)  You can take a look at the businesses I have listed for sale at

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William Bruce is an Accredited Business Broker and Appraiser assisting buyers and sellers of privately held businesses in the transfer of ownership.  His practice includes consulting services nationally on issues of business valuation and transfer.  He may be reached at (251) 990-5934 or by email at  His business brokerage website may be viewed at
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What Business Books Have Inspired You?

business booksAs small business owners, we often turn to experts for advice on how to start our businesses, market them, and grow them. Likely you’ve read a few business books to expand your knowledge.

I invite you to nominate the best business books you read last year in the 2014 Small Business Book Awards. It’s a great way to show your appreciation to the authors who have helped you shape your successful business.

As one of the Judges for this year’s Book Awards, I like seeing good books nominated. It’s a true testament to the authors who do such a great job of sharpening our business skills.

This is the sixth year for the Book Awards, put on by Small Business Trends. Right now, you can nominate as many books as you like (as long as they were published in 2013). Nominations close April 30, and then you can vote for your favorites in May.

So please let us have your favorites. Go nominate those business books that make you a smarter business owner.

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William Bruce is a business broker, an Accredited Business Intermediary and a business appraiser.  He currently serves as president of the American Business Brokers Association.  His practice includes consultations nationally on matters involving business valuations and transfers.  He may be reached at (251) 990-5934 or by email  His business brokerage website may be viewed at
Posted in Buying or Selling a Business, Other | Tagged , , | 1 Comment

My 10 Favorite Apps

smartphone apps

By William Bruce

It wasn’t too long ago that an app was something an insurance salesman whipped out of his briefcase to close the sale.  But alas, the times they are a-changing.  And now in 2014, I offer my 10 favorite smartphone  apps.

Flipboard.  After stumbling over the carcass of our formerly daily newspaper, I looked around for a quality source of online news.  There are several good apps in this space, but my favorite is Flipboard.  You can select the subject areas you’d like for the app to gather and Flipboard does a great job of selecting quality articles – versus junk – from across the news spectrum.  And the material is presented in a pleasing manner that you flip through, hence the name.

Evernote.  This neat little piece of software is designed for note taking and archiving.  A “note” can be a piece of text, a full or partial webpage, a photograph, a voice memo, or a handwritten “ink” note.  Notes can also have file attachments.  Notes can be sorted into folders, then tagged, annotated, edited, given comments, searched and exported as part of a notebook.  Evernote Web Clipper allows you to save anything you see online—including text, links and images—into your Evernote account with a single click.  I use it for clipping online articles that I want to use in my monthly newsletters.

Dropbox.  This app has taken the place of “My Documents” on my desktop, laptop, tablet and iPhone.  Dropbox is a file hosting service that offers cloud storage and file synchronization.  Your files are always synchronized and available on any device.  The company is financially sound and uses cutting edge security, thereby ameliorating concerns about loosing your stuff.  It’s also the most convenient way to email attachments from your smartphone.

TurboScan.  This high quality app turns your smartphone into a multipage scanner for documents, receipts, notes and other text. With TurboScan, you can quickly scan your documents and store or email them as multipage PDF or JPEG files.

ScanBizCards.  And speaking of scanning, ScanBizCards is, in my opinion, the best business card scanner.  You scan the card and the app magically extracts the person’s name, company and all contact information and automatically stores it along with any notes you want to make as a new contact in your contacts program.

Waze.  My next door neighbor, a rather tech savvy lady, recommended this app.  It’s a full featured GPS with voice directions.  A neat feature is that the displayed map automatically moves to a close up view of the streets when you slow down, which certainly helps if you’re looking for where to turn.  But the real advantage of this app versus many other GPS programs is that you get real time traffic updates, road conditions, closures, gas prices and the position of any law enforcement vehicles.  (Not that I ever drive over the speed limit, you understand.)

RadarScope.  For full color weather radar, this is the best app.  You can select the location you want from any radar site in the U.S.  You can even set it to follow you on the highway, showing the weather ahead.

Alarmed.  I’ve found Alarmed to be the best intra day reminder service.  As someone who has been forgetful since childhood, it’s nice to be able to set reminders during the day of appointments, meetings and phone calls.  (Happy Hour, though, is something that I never forget.  Odd how that works.)

Grocery IQ.  And speaking of being forgetful, I can never remember what I need when I run in the supermarket.  Besides the bachelor staples of orange juice, beer and pork skins, I just can’t seem to get it together.  Grocery IQ is a neat little platform on your smartphone that allows you to compile a list at odd times when things pop into your mind.  And the app groups the items by department for easier shopping when you’re in the store and offers up any available discount coupons for the items.

Rapportive.  And finally, my favorite app of all is Rapportive.  But unfortunately, it’s only available for Google’s gmail users.  Rapportive replaces the column of ads down the right side of your gmail in box with information on the person you’re sending an email to or receiving an email from.  You can immediately see what people look like, where they’re based, and what they do, plus links to all of their social media accounts.  If you’re not already using gmail, this might be a good reason to switch.

So there you have it.  My favorite 10 apps — for what it’s worth.

What are yours?

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William Bruce is a business broker, an Accredited Business Intermediary and a business appraiser.  He currently serves as president of the American Business Brokers Association.  His practice includes consultations nationally on matters involving business valuations and transfers.  He may be reached at (251) 990-5934 or by email  His business brokerage website may be viewed at

(C) Copyright 2014 William Bruce.  All rights reserved.

Posted in Buying or Selling a Business | Tagged , , , , , , , , , , , | 1 Comment

Ranking of states by dollar amount of incentives used to recruit industry.

groundbreaking ceremonyIt’s ironic that New York, with one of the greatest net outflows of industry, is first by a mile ranked by incentives granted to companies to locate within the state.

The Washington, D.C.-based non-profit, Subsidy Tracker, recently released a report ranking all states by dollar amount of incentives used to attract industry over the past 10 years ending December 31, 2013.

According to their report, these are the top 10 states for the last 10 years:

State Subsidy Valuesort icon Number of Subsidies
New York $20,932,681,224 68,947
Washington $13,036,329,150 12,788
Michigan $9,988,504,162 15,025
Louisiana $7,663,729,147 5,258
Kentucky $7,356,032,306 3,983
Texas $6,314,830,245 3,942
Indiana $5,875,569,695 6,314
Missouri $4,709,727,204 3,407
Pennsylvania $4,468,568,047 7,804
Oregon $4,212,928,624 10,085

It’s no surprise that Texas made the list, but Louisiana caught my eye at number four nationally.  And Michigan at number three appears to be valiantly trying to stem the net outflow of industry from that state.

My home state of Alabama ranked number 19 on the list.  To see where your state ranks, the full list can be accessed here.

The five states with the lowest incentives used were:

North Dakota $85,425,911 617
Montana $32,056,820 107
New Hampshire $5,958,629 540
Hawaii $516,310 1,415
Wyoming $508,787 9

Boeing was one of the top companies receiving government incentives.  The aerospace giant took over $13 billion from various states over the last 10 years.  This is amusing in light of Boeing’s recent complaint lodged against Airbus for locating an aircraft plant in the U.S.  Boeing’s complaint, ironically, alleged that Airbus had received too much by way of subsidies from European governments.

It seems that all is fair in love, war and industrial recruitment.

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William Bruce is a business broker and appraiser.  He currently serves as president of the American Business Brokers Association.  His practice includes consultations nationally on matters involving business valuations and transfers.  He may be reached at (251) 990-5934 or by email  His business brokerage website may be viewed
Posted in Gulf Coast Regional & National Economy | Tagged , , | Leave a comment

Income inequality is NOT a crime

Kenneth Dewitt

Kenneth DeWitt

For this article we are indebted to Kenneth DeWitt from Tuscaloosa, Alabama.  DeWitt is founder of DeWitt LLC, an Alabama-based business strategy execution and coaching firm.

DeWitt is a life-long entrepreneur, having been a founding member of two accounting firms, as well as having partnership in other businesses in several sectors.  He specializes in helping entrepreneurs and CEOs create highly profitable businesses that serve and enrich their lives rather than control them.

DeWitt is a published author of two books and over 300 articles on financial and business matters.  He has a combined 14 years’ experience as a regular columnist for several publications.  His website is

Presented in its entirety, this is his article without edit entitled Income inequality is NOT a crime:

I am confused.  With all the studies and articles going on in the American Business Journals press about income inequality”, I get the distinct impression that somehow, earning a high income is either (a) a right for all or (b) a crime.  It is neither.

The words we choose are powerful.  Instead of income inequality, I’d rather we focused a series on “How to Achieve a High Income”.  Achieving high income is the result of many things:  education, yes, but also personal ambition, discipline, smart choices, family teaching, outside mentorship, and just plain, old-fashioned willingness to work for it.

It is a privilege to live where we ALL have a chance to achieve a high income.  It is not a right to get one, nor a crime if you do.   The “pursuit of happiness” is in our Declaration of Independence, not happiness itself.

The online American Business Daily story “Income inequality is a problem everywhere, but especially in the South”, by G. Scott Thomas published January 31, 2014 attempts to shed light on this “problem”, but without stating exactly what the problem is.  Further, the Birmingham Business Journal’s companion piece called “Solving the Inequality Equation” points out that, “The top one-fifth of Birmingham’s households control more than half the area’s total income (50.8%).”  The word “control” here seems to be used in such a way as to indicate that this one-fifth holds sway over something that ought to belong to someone else; as though they are controlling an income they aren’t earning through their own hard work.

I know these articles are well-intentioned, but I’m afraid slightly off the mark.

Income inequality is a simple fact of life, not a crime.

So are weight inequality, intelligence inequality, luck inequality, beauty inequality, and ambition inequality.  But with each of these so-called inequalities, the person suffering from it has the power to do something about it if they only will.

I have achieved a high income.  I came from poverty, having been born into a family of eight residing in the Valley Creek Homes housing project in Selma, AL in 1959.  I was one of many who did not know how poor I was until I was among others who weren’t poor.  I was lucky enough to have a father who sacrificed his health and ultimately his life so that his eight children could get a college education.  But it was up to each of us to choose to complete the education or not.  Each chose his/her own major and followed his/her own career plan.

At some point in my high school years, when I noticed that others had better cars, traveled to more places, and had more disposable cash, I developed an intense dislike of “rich people”.  I could have allowed that to fester and become a cancer in my thinking, but instead, I allowed it to become the fuel for my ambitions, and I got to work on achieving my own destiny.

This discussion could not come at a more appropriate time for me, personally.  I have achieved a great income that my late father would find amazing.  And now, my daughter is about a year out from graduating high school.  She is very lucky to have the parents she has, but from here on out, it is up to her as to whether she has a good income – high or average or low.

She has not had the burning feeling of poverty to drive her ambition.  What she has had are parents that tell her the truth:  if you want happiness as well as a reasonable income, you have to become a high achiever.

Not everyone is a high achiever.

Alabama Coach Nick Saban hit the nail on the head when he pointed out on his CBS “60 Minutes” interview, “High achievers don’t like mediocre people, and mediocre people don’t like high achievers”.  And he ought to know.  He was born into a low income life in a West Virginia coal mining town, but instead of complaining about inequality, he worked to escape that life, and he succeeded to the point that he’s disliked by many simply because he is successful.

I do have a heart for the less fortunate, and I will help as many of them as I can.  I openly share my “secrets” to success on my blog, and it is free to anyone.  I champion entrepreneurship as a vehicle to bring growth – and higher incomes – to the State of Alabama.  I will speak to any group who wants to listen to my message about how to create a great company that is profitable for its entire workforce.

My message to my daughter, and to any young person considering their future after high school, is simply this:  you can have anything in life you really want to work for.  Anything.  Just not everything, and not all at once.  The choice is yours.

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Posted in Gulf Coast Regional & National Economy, Other | Tagged , , , , , | 1 Comment

Best and Worst Online Retailers Listed for Password Security Risk


by William Bruce

Dashlane, a website password security company, has surveyed the top 100 American online retailers to assess their password security policies. The survey produced surprising results.

Apple received the highest rating and was the only retailer to receive a perfect score, while Newegg, Microsoft, Chegg and Target, surprisingly, rounded out the other highest scoring online retailers., Karmaloop and Dick’s Sporting Goods received the lowest scores. Amazon, Walmart, Victoria’s Secret and Toys “R” Us were also among the lowest ranked sites.

Some key findings:

  • 55 percent of online retailers still accept notoriously weak passwords such as “123456″ or “password.”
  • 51 percent make no attempt to block entry after 10 incorrect password entries including Amazon, Dell, Best Buy, Macy’s and Williams-Sonoma.
  • 61 percent to do not provide any advice on how to create a strong password during sign up, and 93 percent do not provide an on-screen password strength assessment.
  • Eight sites including Toys “R” Us, J.Crew and send passwords in plain text via email.

Listed below from best to worst are the rankings of America’s top 100 online retailers:

  1. Apple
  2. Microsoft
  3. Chegg
  4. Newegg
  5. Target
  6. Williams-Sonoma
  7. CDW
  8. Amway
  9. Musician’s Friend
  10. Nike
  11. Best Buy
  12. WW Grainger
  13. Walgreens
  14. Express
  15. Sony
  16. Abercombie & Fitch
  17. Bass Pro Outdoor
  18. CVS
  19. MSC Industrial Supply
  20. Hayneedle
  21. Oriental Trading Co.
  22. The Children’s Place Retail Stores
  23. OfficeMax
  24. Nordstrom
  25. Deluxe Corp.
  26. Crate and Barrel
  27. American Eagle
  28. Ann Inc.
  29. Sears
  30. Dell
  31. Neiman Marcus
  32. Saks
  33. Lowe’s
  34. LL Bean
  35. Avon Products
  36. DSW
  37. JC Penny
  38. Foot Locker
  39. Costco
  40. Gap
  41. Green Mountain Coffee
  42.  GameStop
  43. Chico’s FAS
  44. Gilt Groupe
  45. Estee Lauder
  46. PC Connection
  47. HSN
  48. Etsy
  49. The Home Depot
  50. Staples
  51. Barnes and Noble
  52. ShopNBC
  53. CafePress
  54. Office Depot
  55. Macy’s
  56. HP Home/Office Store
  57. Rakuten
  58. Cabela’s
  59. Ralph Lauren
  60. Build
  61. Sierra Trading Post
  62. Northern Tool
  63. Amazon
  64. Walmart
  65. Kohl’s
  66. Fingerhut (Bluestern Brands)
  67. Scholastic Inc.
  68.  Eddie Bauer
  69. 1 Sale a Day
  70. Victoria’s Secret
  71. Overstock
  72. Vistaprint
  73. Fanatics
  74. Urban Outfitters
  75. Shutterfly
  76. Wayfair
  77. PCM
  78. Groupon
  79. REI
  80. Blue Nile
  81. Fresh Direct
  82. RueLaLa
  83. Zulily
  84.  1-800 Contacts
  85. Disney Store
  86. Net-A-Porter
  87. Hulu
  88. Shoebuy
  89. Edible Arrangement
  90. Restoration Hardware
  91. 1-800 Flowers
  92. Vitacost
  93. Nutrisystem
  94. American Girl
  95. J. Crew
  96. Toys R Us
  97. Aeropostale
  98. Dick’s Sporting Goods
  99. Karmaloop
  100. MLB

To review the full study results, please click here.

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Optimism Among Small Business Owners at 5 Year High

A recent survey shows that small business owners are currently more optimistic than any time since the depths of the Great Recession.

According to the latest Wells Fargo/Gallup Small Business Index measure of small business optimism which was conducted January 6-10, the overall Small Business Index score increased to a positive 45 in January, up from a positive 24 in October. That’s a jump of 21 points, and the index score is the highest it has been since the third quarter of 2008.

Small business optimism

“Several factors contributed to this quarter’s increase in optimism among small business owners,” explained Doug Case of Wells Fargo, “including higher scores for their current situations and future expectations about cash flow, less difficulty obtaining credit, and expected increases in revenue and hiring.

“There’s a lot for business owners to be hopeful about,” Case continued. “We’re coming off a record year in the stock market as the S&P 500 Index rose by its highest percentage since 1997. Congress avoided a government shutdown by approving a federal budget deal. We also have seen instances of growth in capital spending, another encouraging sign.”

Digging into the survey, we find the following details:

  • Improved cash flow: In the January survey, more small business owners said they had good cash flow over the past 12 months than they did last quarter (52% compared to 46%). A larger majority of business owners also expect to have good cash flow in 2014 (57% compared to 52%).
  • Increasing hiring: More small business owners said they expect to increase hiring in the next 12 months than in last quarter’s survey (22% compared to 16%).
  • Increasing revenue: A larger percentage of small business owners expect their revenue over the next 12 months to increase (48% compared to 44%).
  • Accessing credit: Fewer small business owners in the current survey reported having difficulty obtaining credit than did so last quarter (23% compared to 27%).

Interestingly, in the January survey, a majority of small business owners (55%) said if money were no object they would opt to continue working full or part-time, while 26% said they would retire completely, 13% would start another business and only 4% would choose to work for someone else.

You can click here to download the full report.

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William Bruce is an Accredited Business Intermediary and Appraiser assisting buyers and sellers of privately held businesses in the transfer of ownership.  He currently serves as president of the American Business Brokers Association.  His practice includes consulting services nationally on issues of business valuation and transfer.  He may be reached at (251) 990-5934 or by email at  His business brokerage website may be viewed at

Posted in Business Valuation & Appraisal, Gulf Coast Regional & National Economy | Tagged , , | 1 Comment

Types of Businesses Most and Least Likely to Receive SBA Loans

George Heaslip, "The Loan Professor"

George Heaslip, “The Loan Professor”

It’s no secret that some categories of small to medium size businesses are more likely to receive SBA loans than others.

We are indebted to George Heaslip, “The Loan Professor” for the following ranking.  George is a SBA loan originator of many years experience.  He is based in South Florida and can be reached at (561) 329-1315 or by email at

Based on his experience and opinion, George periodically issues a ranking of business types most and least likely to receive SBA loan application approval.  It’s a star rating method with five stars being the most likely to receive loan approval.

This is his latest ranking:

***               A/C and Heating

**                 Advertising/Promotion

zero              Adult Merchandise

***               Agricultural (sod, seeds, equipment)

**                Aircraft Maintenance

*                  Air Duct Cleaning

**                Alarm Companies, Residential and Industrial

**                Amusement/Theme Parks established, with real estate

****             Animal Care and Grooming Facilities, with real estate (Cats, dogs, horses)

**1/2           Animal Grooming, no real estate
** Antiques Dealer

zero              Apartment Houses and centers (investment properties)

***               Appliance Sales/Repairs

**                 Art Gallery

**                 Arts & Crafts

**                 Art Framing

****             Assisted Living Facilities With R/E (Dropped from 5-stars based on the                                                   economy)

****           Auto Body Shop with Real Estate

***               Auto Body Shop, leased facility

****           Auto Car Wash with real estate

***               Auto Dealership (new, larger facility)

zero             Auto Delivery

**                 Auto Glass

zero             Automobiles/Rental

****           Auto Parts Shops with real estate (including tires)

***              Auto Painting with real estate, otherwise **

***              Auto Parts/Accessories, leased facility

**                 Auto Repair Shops with Real Estate (Might be environmentally clean today,                                             but not tomorrow)

**1/2           Auto Sales Centers with real estate Auto Salvage
Aviation (service centers)

*                   Awards/Prizes/Engraving

**1/2           Bagel Restaurant

**                 Barber Shop

***1/2         Bakery, with real estate, in business for several years.

**                 Barges (sea transport)

***1/2         Bar/Restaurant, with real estate, in business for several years.                              Otherwise **

*                  Beauty Salons/Tanning Salons

***              Bed & Breakfast, established, and with real estate

*                   Billiard Parlor

***              Boat Storage Facilities, with real estate

zero             Boat Tours

*                  Book Store

*1/2             Bookkeeping Services

*1/2            Boutiques

***1/2         Bowling Alley/Lounge/Restaurant, with real estate

**                 Bridal/Baby Shops

**                 Building Materials

**1/2           Building Renovations

*1/2            Business Brokerage Franchise Offices

zero             Cards, Greeting

**                Carpet Cleaning

****            Car Wash, established, with real estate

*1/2             Cartridges Refill (Printer)

zero             Casino

***              Catering Facilities with real estate, established

***              Cement Products Manufacturer With Real Estate, otherwise

****            Child Care Centers (Favorite by banks, if land and building are included)

**                Child Care Center, no real estate

****           Children Party Facility, with real estate

*1/2             Chiropractic

zero             Churches

zero             Cigar Store

**                Cleaning/Clothing

***              Cleaning & Janitorial

***              Closet Interior Manufacturers

**                Clothing

***              Coin Laundry

zero             Collection Agency

*****           Commercial Building For Business Expansion

*                  Computer Supplies (since they can be ordered on-line)

**                Construction/General Contractor

****           Consulting Companies with fine tax returns (Legal,                                                                                 Accounting, Insurance , Immigration Related)

***              Consignment Shops

***              Contractor, established

*                  Convenience Stores (** If with real estate)

***               Crane Services – Construction/Equipment Install

**                Damage Restoration

zero              Data Management

***              Delis with real estate

**                Delivery Services

*****           Dentists/Dental Practices (If a new center is to be purchased, this is an easy                                       one)

****           Distribution Centers, with real estate, otherwise ***

*****          Doctors (Very easy deals!)

****           Doctors with a patented product ready for production and                         sales

**                Document Shredding

****           Dog and Cat Kennels with real estate

***              Dry Cleaners and Laundromats without real estate

**               Dry Cleaners with real estate

**                Educational/Schools

**                Embroidery Services with commercial accounts

***              Electrical Contractors

**1/2           Employment Placement Companies

***              Environmental Cleanup

*                  Electronics/Computers

**                Equipment Sales, Services & Rentals

***              Above, If  established and with real estate

****           Equipment Suppliers/Installers

*                  Event Planning

****            Export Products Manufacturers

****           Exterminating Companies

****           Fabrication Factories, with real estate.

*****           Factories (Manufacturing)

***              Farm Equipment Sales and Servicing

****            Fast Food Franchises, with real estate, and on the Franchise Registry

*                  Financial Related

**                Firearms

***1/2         Fireplace and Furniture Manufacturers

**                Fish Farm (Example: Tilapia)

zero             Fishing Vessels

***              Fitness Health Club (Expansion to new facility, not leased)

***              Flooring Contractor

**                Floral Centers

**                Food Business Retail

**                Flowers

*****           Franchises (With 100 or more locations, and on the SBA Franchise Registry –                               Example: Taco Bell and Subway).

****             Franchises – Subway, suddenly down from 5 stars due to no profit promotions.

zero              New Franchises

***               Freight Forwarding, with real estate

zero             Fund Raising Services

*****           Funeral Homes with Real Estate

***              Furniture Retail, if real estate is included

zero             Game Room

***1/2         Garden Centers, Indoor and outdoor, established, growing sales

**                Gas Station/Truck Stop, if real estate is included

*                  Gas Stations with Convenience Stores

zero             Gift Shop

***              Glass Company

**1/2          Golf Courses, with real estate, solid 3-year growth records

*                  Golf Store (number of golfers per year is dropping!)

*                  Gourmet Catering

***1/2         Gravel Pits & Dredge Companies

***               Grocery Store With Real Estate, otherwise * *

*                  Group Transportation

**                Guard Company, security

*                  Guided Tours

*                  Gyms

zero              Hair Salon

*****           Hardware Stores With Real Estate (If no competition from Home Depot or                                                Lowes. Ace is a good example)

***              Health Products Store

*                  Hobby Shops

****            Home Health Care Services

****            Hostels with growing rent rolls, and with real estate

****            Hotels/Flagship, otherwise **

**                Hotels and Motels/Non Flagship (Forget about these!)

*                  Ice Cream/Yogurt/Ice

zero             Import Companies

zero              Income/Investment Properties, like strip malls, apartment                                                                    houses

****             Industrial Buildings/Condos & Warehouses, 51% Owner Occupied

**                Insurance Agencies (franchise)

****            Interior/Exterior Design Units Manufacturers (Closets,                                                                          Fireplaces, BBQ Patios)

*                  Internet Related

***              Janitorial

****             Janitorial Services Companies (including parking lots maintenance)

zero             Jet Ski Rental

**                Jewelry/Retail

**                 Land, only if 51% owner occupied construction in 6 to 8 months

***1/2         Landscaping with commercial accounts. Otherwise * 1/2

**                 Landscape Companies with legal employees

****           Law Firm

zero            Limo Business

***              Liquor Package Store with real estate, otherwise **

**                Locksmith

***              Lounge/Liquor with real estate, otherwise *

****           Machine Shop, with real estate, otherwise ***

*                   Maid Services

**                 Mail Package Services

*****           Manufacturing Facilities with Real Estate (Lenders love these deals).

*****           Manufacturing Facilities that export

****             Manufacturing Facilities without real estate

***              Marinas with real estate

***1/2         Marinas with established restaurant and real estate

**                 Marine Related

*                   Marketing Company

*                   Massage

*****           Medical Related, except chiropractic 
Home Health Care
Doctors, Dentist and                                                Vets
MRI/CT/PET Scan Facilities (with real estate)

zero              Medical Software

*****           Medical Product Distribution Centers with real estate

****           Medical/Supplies Distribution Businesses, leased facility

***1/2         Metal Fabricators, with real estate, track record of business growth

zero             Micro Breweries

***1/2         Millwrights

zero             Mobile Homes

*****           Motel/Flagship with real estate, otherwise **

**                 Movers

*                   Movie Theaters (Attendance is down over 18%)

*                   Music

*****           New Building or Upgrade/Expansion (Not a problem for expanding businesses                            that have tax returns showing net profit growth over the last three years.)

zero             Not For Profit Organizations

zero             Nail Salon

**                Nursery/Plants

****1/2       Nursing Home, with real estate

***              Nursing Homes without real estate

**                Nutritional Stores, if a franchise on the registry

zero             Office Building, not 51% applicant occupied

*****           Office Building 51% applicant occupied

**                Painters

zero              Parasailing

**1/2          Parking Lot Cleaning and Maintenance Companies

*                  Party Goods

****           Pawn Shops (If in a freestanding building, otherwise ** stars)

**                Personal Services

zero            Personnel and Staffing

**                Pest Control Companies

****           Pet Centers with real estate

****           Pharmacies

*****          Pharmacies that do compounding

*                  Pizza Shop

zero            Pressure Cleaning

zero             Phone Sales

****             Pre-School With Real Estate, otherwise **1/2

*                  Printer cartridge refill stores

*                 Printing and Typesetting

****             Professional Service Companies (Accounting, Legal) that want to move to a                                        larger location or eliminate high interest loans

***              Plumbing Supply Companies

**1/2           Pool and Spa

*                   Residential Realtors

Pet Kennels (See Dog above)

*****           Recycling Facilities, established, with real estate

*                   Rental Businesses

**                 Repair Services, if licensed

****1/2       Restaurants, free standing building, in business many years

***               Restaurants (That are franchises, and have excellent financial statements)

**                 Restaurants, other

***               Retail Miscellaneous, free standing business, in business many years

****             Retail Businesses (With three years of fine historical cash flow)

***               Roofing Contractor

****           Roofing Maintenance Companies

*                   Routes

zero             Satellite Dishes

**                 Security Systems

*****           Self Storage Facilities

**                 Sign Companies

**                 Site Preparation

zero             Skin & Massage

**1/2           Recreational Facilities and Clubs

*                   Security Related

*                   Shoes/Shoe Repairs

**                 Skating Rinks with real estate

**                 Sod Distribution

***              Software Services Companies (With 3 years of steady growth)

***              Sports Bar, established, with real estate

**                 Sports Related

*                   Start Up Businesses (difficult, requires 30% down, heavy collateral backup)

zero             Strip Malls

**                 Sub Shop (Sandwiches)

***               Supermarkets (Flag)

*                   Surf/Activewear Shop

*                   Tailoring

*                   Tax Preparation

zero             Taxi Business

*                   Teeth Whitening (non-Dentist location)

zero             Telemarketing

*                   Telephone Related

*****           Therapy Centers, and Therapy In-Home Services

*                   Tobacco Related

***               Towing Services

***               Trade Contractors

****           Training Schools (established and for-profit) with Real Estate,                                                                        otherwise **

**                 Transportation

zero             Travel Agencies

**1.2           Tree Farm

***               Truck Repairs (with real estate, otherwise **)

****             Truck (and Car) Washes with real estate

****1/2       Truck Fleet Services (Towing and Repair), with real estate

*                   Tutoring

zero             Vacant Commercial Land

***               Vacant Commercial Land with permits to build 51% owner occupied in 9                                               months

zero             Valet Parking

**                 Variety Store non franchise

***               Variety Store, franchise with real estate

zero             Vending Machine Routes

zero             Video Related

****           Uniforms Manufacturing, with real estate

zero             Used Car Dealerships/Lots

****             Warehouses, where the buyer occupies 51% or more of the floor space

**                  Water/Damage Repair

**                 Water Purification

*                   Web Hosting

*                   Wedding Gowns

**                 Well Drilling

***1/2         Wholesale Distribution, with real estate, otherwise **

**                 Yogurt Store

If you have any questions about this list, or are interested in submitting a SBA loan application, contact George Heaslip  at (561) 329-1315 or by email at

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William Bruce is an Accredited Business Broker and Appraiser assisting buyers and sellers of privately held businesses in the transfer of ownership.  He currently serves as president of the American Business Brokers Association.  His practice includes consulting services nationally on issues of business valuation and transfer.  He may be reached at (251) 990-5934 or by email at  His business brokerage website may be viewed at
Posted in Business Valuation & Appraisal, Buying or Selling a Business, Franchises | Tagged , , , | 2 Comments