Business and Finance

Question: I am tired of running my restaurant franchise. How do I sell it?

Answer: Many franchisors face this same predicament. Not only are restaurant franchises resold every day, but it is very common to see all types of franchises for sale on the resale market.

The absolute first thing that you must do is to contact your franchisor. Do not be embarrassed! Franchisors expect that a certain percentage of their franchisees will someday want to sell their franchise. It is normal. There are many reasons for a franchisee to want to sell a franchise. Your reason for wanting to sell is probably a legitimate reason, something that the franchisor has probably heard many times before.

But probably the biggest reason that you need to contact your franchisor is that many franchisors will impose restrictions on franchise re-sales. For the most part these restrictions will follow closely with their existing guidelines used for recruiting a new franchisee. They just want the ability to approve any new franchisee.

Are you prepared to sell your franchise? Do you know what your franchise is worth? Will you need to carry financing? Is your financial information up to date? Have you talked with your attorney about the correct from of structure for a sale (asset based vs. stock based)? Are there property lease considerations? Will your landlord allow an assumption of your lease?

You have got to know the answers to these questions. Make sure that you are properly prepared to sell your franchise. You will need to research the marketplace in order to establish a price point. You may wish to talk to a Business Broker or other informed expert for guidance. Check with your accountant. He or she has probably seen a business or two that has been sold over the years. Lean on those around you for good quality advice.

Looking at many franchisor web sites over the last few months, many sites include a section on their web site for franchise re-sales. Consequently, your franchisor may be able to help you market your franchise for sale to others. There are other ways to sell an existing franchise. A good old fashioned newspaper ad can work. A more progressive way is to advertise your franchise for sale online with a web site that is designed to market your franchise. An example would be The Business Market which has a number of existing franchises for sale.

So don’t be embarrassed… be proactive! You can do it!

When setting up a business, even the best prepared among us will struggle to do everything and remember everything. It is very unlikely that we will understand all of the financial and legal ramifications of a new business, especially when we need to concentrate on getting that elusive first sale or completing the first contract. It isn’t always feasible to employ an accountant and a solicitor as well as a secretary, a salesperson and any other workers needed in the daily running of the business. So, we need to be able to diversify when setting up a new business and the best piece of advice anyone can give you to help is to make the most of the widely available business tools on the market.

Financial Documents and Tools

An accountant is a very expensive commodity that many new businesses can afford full-time. It is down to us to undertake as much of the financial side of things as possible; a daunting task indeed. There is help at hand in the form of business tools.

Spreadsheets have become immensely powerful and can do much of the financial work that any business needs, even invoicing. The Internet is awash with free standard documents for almost any occasions; if you aren’t proficient at doing this yourself, you can find balance sheets, daily cash sheets and almost anything you could need.

The Legal Minefield

Mention legal documents to a new business owner and most will curse you. Again, paying for a lawyer to create all your contracts and other legal documents is a cost that new businesses may not be able to afford. Look at other contracts, get ideas off the internet and take a look at the standard contract and terms and conditions guidelines and when you’re ready, book a session with an affordable attorney and let them look over everything. This way you will only pay once and get all the information you need for an affordable price.

It is important that you get any legal documents checked at least once. A poorly written contract can cost you a lot more than the lawyer’s fees.

Human Resources

Human Resources, or personnel as it was once known, will become very important when you start to employ staff. There are a lot of rules and regulations to abide by as well as a lot of extra information to store that is both important and
confidential.

You can get time and attendance software, standard contracts, standard terms and conditions and software to look after your payroll details.

These are just a few tools available to new business owners. To do a job right requires the right tools. It is better to spend time researching your options first to find the right tools, than to get yourself into a real bind attempting to do the job with the wrong (or no) tools. You will find that the time it takes to get the right tools will pay off time and time again.

Business merchant accounts are critical to have if you want to accept credit cards. Business merchant accounts are not limited to those computer consultants reselling products either. They are a good idea for any sale, especially when you are selling to new clients.

If you have a business merchant account you will not have to chase down outstanding debt. The cost is not that high and you don’t have to buy traditional credit card processing equipment. Now they have what is called a lab terminal, which allows you to use your web browser to manage the transactions. The systems are completely secure and most business merchant account providers team up with larger companies that offer great advantages.

Costco’s Business Merchant Account
One of the biggest secrets we learned about business merchant accounts is that Costco provides a fantastic deal on credit card processing through Nova Systems. It’s such a great deal it can actually pay for your entire Costco membership. Here are some particulars:
All of the monthly statement and gateway fees are waived – savings of $25 – $50 per month
Very competitive discount rates on Visa and MasterCard.
You can add on processing for American Express and Discover – you will find that even though American Express transaction fees are higher, it is a very popular card with small businesses.
The charges billed are transferred quickly and directly into your business bank account – this is a lot faster than doing your billing or invoicing once a week or so.

Paypal

Paypal is a popular alternative to traditional business merchant accounts. Paypal is very easy to set up and the set up is free. There are restrictions though on what you can do and how you can withdraw your money. The largest drawback is the negative connotation of being an ebay related service where people sell garage sale stuff as a hobby.

The Bottom Line on Business Merchant Accounts

Business merchant accounts will help you get paid faster. There are fees involved but the customer convenience and no hassle approach to receiving your money make it worthwhile. There are different business merchant accounts available so do your homework and choose the one that makes the best sense for you.

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A web site is a crucial ingredient of your marketing strategy because it can widen your target market to include anyone who has access to a computer and the internet. Almost 60% of Canadians had access to the internet at home in 2003, and around 8 million had regular access to the internet from somewhere, either at home, at work or at school.

And that’s just in Canada. Ecommerce sales from Canada were $7.2 billion, and we only captured 4% of the global ecommerce market! So, how can you reach some of those internet surfers, and how can you capture some of that $7.2 billion spent in ecommerce?

First, you build it
The first step is designing your website. If your company already has business cards and letterhead, it’s best to design your website around them. A matching corporate identity and website helps with branding.

I like uncomplicated websites, with a simple layout and easy navigation. A nice, simple layout, with good graphics, balanced look and good color combinations is my #1 goal when designing a small business web site. Remember to use graphics sparingly and to optimize them for your website because internet surfers are impatient. If your page loads too slowly, they’ll leave.

Navigation should be easy to find and to use, and it should be consistent from page to page. I’ve left more than one site frustrated because I couldn’t easily find their navigation.

Small business web sites aren’t static. They evolve. You need to start somewhere, and starting with an introductory web site is probably easiest. All you really need to start is five pages. You can always add pages later. The important thing is to just do it-take the plunge and get it out there.

Your five pages could include an index, or home page, about us, services, contact and a sitemap. The index page is your landing page. Typically its design is a little more detailed than the others, but it doesn’t have to be that way.

I like to use CSS (cascading style sheets) for designing because it’s simply easier to build a web site and to edit its layout with CSS rather than just HTML (hypertext markup language) alone. A change on a CSS sheet changes all the pages on your site at once.

Content is king
Once your site is designed, you’ll want to start thinking about content. Design is very important, but it does little good to have a beautiful site without high-quality content.

Your small business home page introduces you and your company-who you are and what you do. The about us page is usually used to give more detail than the home page about who you are, and your services page gives more detail about what you do. You might wonder why you’d “waste” a page on a sitemap since you only have 5 pages, but sitemaps help search engines find all the pages in your site.

As far as content goes, more is better, up to a point. Your pages should be content rich and informative, but they also need to be relevant to your small business. If your visitor can’t figure out what your web site is about in just a few seconds, they may leave.

The internet was at first strictly informational, and that’s how it remains today. Several times people have tried experiments using copywriting similar to direct mail sales letters, but they’ve all failed. It seems as if people surf the internet more for information than anything else. Knowing this will help you write pages people will want to read.

Attracting visitors
You could follow your instinct and just start writing, but wait. There’s research you must do first, or your web site simply won’t be high enough in searches to be found. Search engine optimization is far too big a subject to cover in this short article, but among other things, search engines find your pages based on keywords.

So, pretend for a moment that you’re on the other side of the desk. If you were a customer of your own business, what words or phrases would you use to search for your product or service? Ask friends and neighbors how they’d search for your product or services.

When you’ve come up with a few, check them out on a keyword suggestions tool. You can also use that tool to suggest similar words and phrases. Then find out how many results there would be if you searched for that term. What you want to do next is narrow down your choices to the words or phrases that are searched for the most, but have the fewest results.

Remember that people generally don’t look beyond the first three pages for any search term, so if you’re not in the top three pages, your business is not likely to be found at all. If there are millions of results for your phrase, you might simply need to make it more specific.

For example, let’s say you have a small business consulting company that specializes in communication for small business. Using “communication” as a search term is nearly pointless because there are almost 2 billion results for that word. But, there are only 974 results for “small business communication”.

Much better, but how often is that searched for? According to WordTracker, it’s searched for 10 times a day. Not bad, but I think we can do better. How about “small business consulting”? That’s searched for 261 times a day, and there are 373,000 results. That could be the best primary phrase for a small business communication consulting company.

What you want to do, is write your content around those words and phrases. You don’t want or need very many-three or four are plenty.

Getting them to come back again and again
Getting visitors to come back to your site again and again is relatively simple. Keep your content fresh and lively, make sure it’s informative, and add to it often.

I hope you decide your small business needs a web site. It’s the best way I know how to reach a wider target audience with a relatively small investment.

How much is your time and expertise worth? Its the age old challenge for consultants: how much do I bill my clients? Sadly, there is no set in stone answer, however, here are some tips that will help you establish your rates.

First, lets look at your client’s needs. Why are they hiring an outside consultant, when they have employees? There are several reasons why your client is interested in hiring you as a consultant:

a) third party opinion – employees know where their bread is buttered, so they are less inclined to go against the current direction of the company. As an outsider, there is no concern with offering a different opinion. Your independent opinion can provide a much needed, focused perspective your client’s company needs.

b) you are cheaper – this is what is normally the hardest for new consultants to understand. How can you command $75/hr when your client has reps working for $20/hr. It normally ends up with the consultant charging a lower rates. No more!

The employee:
$20.00 Hourly rate
$ 7.00 Fringe Benefits @ 35%
$10.00 Overhead rate at 50% (computers, office space etc)
$37.00 Total effective pay rate

Hours per year: 2080… Annual salary $76960

The contractor:
$75.00 Hourly rate

Hours per year: 480 (12 weeks, 3 months worth of work)…. Cost of completing the project: $36000

Your client gets the project completed quicker, and you end up saving them over 50%.

c) expertise in a specific area – you clearly can bring something that no other person on their team can. That’s why they called you. As the expert in your chosen field, you can meet your clients needs with quickness and efficiency.

d) motivated to get job done on time, and likely, on budget – your work becomes your reputation. If you take too long, or go over budget, you wont see any future business from your client. However, provide the customer with what they need, under promise and over deliver, and not only will you retain your client for future business, you will get referrals. That’s motivation that no employee has.

Now that you know what is motivating your client, you have the groundwork to start to establish your rates. As show in the second reason for hiring a consultant, while your hourly rate may appear to be more than their employees, it actually works out to be less expensive. Any fears or unease that you have in commanding a hire rate than their employees should now be eased. However, how much more can you charge?

Who is your competition?
Establish what their rates are, and then confirm what can they offer. Can you honestly provide more services, better customer service and come under budget or on time? If your competitors can provide more than you, you’ll find that you may only be able to compete with a lower rate. However, if you can offer more, and have the proven results to back up that claim, you can justify a higher rate.

One key factor to remember is that if you charge a lower rate than your customer, you open yourself up to clients who will demand more of your time (it doesn’t cost them as much as your competition). This may lead to finishing projects past due and scheduling conflicts with other clients. So while you may be able to charge an extra $40 per hour for example, you may end up losing clients, and worse, having client demands cut into your personal time.

If you bill a higher rate, you may surprisingly find that you get better clients, and more referrals. If you can justify a higher rate, your clients will be very specific with you in terms of what their needs are (saving you time). Clients who are willing to pay a higher rate, will referral other clients who are willing to pay a higher rate.

Your rate will impact the amount of business you receive. One term successful consultants learn very early is to understand the concept of value billing. Instead of billing by the hour (which many of your clients will be leery of), consider billing by the project.

By negotiating an amount the client will pay based on the project, you can establish milestones at which payments will be made, and provide added motivation to get the job done and the client signed off quicker. If the project is going to take you 10 hours, consider negotiating an amount for 1.5 to 2x your normal hourly rate. If you get the job done in 5 hours, you get paid the full amount, not for 5 hours. The client is happy because they know what the cost ceiling is, and most importantly, the project is delivered early.

Another benefit of value billing is that you can set up milestones whereby you can get paid. If you advise your client that the project will be completed in say, 6 weeks, and comprise of 3 phases, you can receive payment from them when each phase is complete. Finish early, you get paid early and your client is happy. Finish behind schedule and your client isnt paying for work that isn’t complete yet.

This method helps to improve your cash flow. This is key for any self employed consultant.

So, how much are you worth now?

Factoring is becoming a popular yet not so well known tool in the arena of small business. It is an important way of keeping cash flowing through the business when invoices are delayed or accounts receivable are higher than the money in hand. Basically factoring helps you get cash for your business without having that time delay from the time you issue an invoice. They also provide you with collection services and sales ledgers that can be helpful as well. If you are a small business owner, then you should consider this guide to small business factoring as a way to fund your business month to month.

How does factoring work? It is easy and yet complicated all at the same time. The factor will generally manage your sales ledger for you while also providing you with colletion services for all outstanding invoices. Typically you will be loaned 80% to 90% of the total amount of the invoice. You will generally receive the money within 24 hours of agreeing to the services of the factor.

Factoring for a small business does cost money, though. Usually there are a couple of different costs you have to consider. A service chare will usually cover the management of your sales and collections. The other charge is a percentage of sales factored as well as an interest charge of some sort on the cash advance the factor is giving you. The interest rates, obviously, will depend on your company’s credit, the credit of the invoiced companies, and the institution you factor through.

No guide to small business factoring would be complete without telling you want to look for in a factoring company. Obviously you should look for a stable financial institution that will be able to support the business. You should also look for good terms and a company you are comfortable working with since there will be plenty of interaction. Finally, you may want to consider a company that will give you internet access to your accounts. You can easily track the ledger, sales, collections, and your factored amounts that way.

It is also important to understand that no two factoring companies are completely alike. While much of what this guide to small business factoring has explained is typical, there are exceptions to most every situation. The best thing you can do for your business with regards to factoring is research the companies you are considering. Think about what you need and what you want and what everyone is offering you.

A guide to small business factoring can never be complete. There are too many ins and outs when it comes to almost any financial transaction. There are also a number of variables involved like current interest rates, your credit rating, reliability of your invoiced companies, and many other things as well. Before you ever agree to a factoring relationship, make sure you understand all terms as well as how long the contract is for and what renewal terms are. Protect yourself and do your homework and you can use factoring as a way to keep your cash flowing.