Author Archive

How Northstar Advisory Group Provides Value to Business Buyers

Written by Gene Wright. Posted in Buying a Business

Before you start looking at possible businesses to buy, it’s essential that we help you think through key personal and market factors. These are the key factors that should drive your selection process and define the types of businesses that you will evaluate and acquire. Finding the right business for you will be the single biggest factor in your success as a new business owner. Getting it wrong can quickly turn your dream of owning your own business into a nightmare.

We’ve outlined below 4 critical elements to success in buying a business we’ve observed over the years in working with business buyers and sellers.  

  1. Personal Interests

Since you will be investing a significant amount of time in your new business, your search should focus on an industry that is in sync with your desired lifestyle. It’s not uncommon for business owners to build a business around a personal hobby or passion. As a business buyer, you may not have that luxury, but the business you acquire must be situated in an industry that you can immerse yourself in for an extended time period and be content doing the type of work that is required of a business owner in that field. One of the key drivers of success is enjoying and being interested in what you do!

  • Skills, Talents, and Experience

Passion alone won’t guarantee your success as a small business owner–you need to be honest about your skills and experience. For example, if you have never worked in the food service industry before, it’s unlikely that you will be a successful restaurant owner until you have accumulated experience in the field.

  • Capital Requirements

You will also need to consider your capital position since some industries require higher levels of investment than others. For example, manufacturing operations usually require much more capital to acquire than small consulting firms or businesses with fewer assets. It’s critical to make sure you have enough available capital to seriously pursue an acquisition in your chosen industry. Although seller financing may be possible for a portion of the purchase price, a thorough evaluation of your current capital position can help narrow your search to the business opportunities that align with your financial means.

  • Market Research

Market research, including an evaluation of short- and long-term industry forecasts, is essential in selecting potential business acquisitions. It’s important to identify an industry with the potential to increase the value of your investment. Additionally, you will need to examine the market in your geographic area to determine whether it is already saturated or if there is room for you to compete and grow your company. We can help in evaluating the condition of the regional marketplace as well as local trends that could impact your success.

There are four ways we add value to your search for the right business.

Develop Acquisition Criteria. We work with you to help you identify acquisition criteria to save you time, effort and money.

Comprehensive Due Diligence. We assist you in developing a comprehensive due diligence approach.

Create Pricing Models. Once we identify and evaluate target companies, we focus on pricing for each acquisition target. Our comprehensive approach includes tangible and intangible assets and enables judicious evaluation of target company attractiveness.

Post-Acquisition Advisory Services. If needed, we can provide post-purchase advisory services to assist in a smooth transition to the new owners.

Finding the right small business to buy is challenging. But the rewards of owning a business can far outweigh the costs–especially if you allow us to augment your search with your personal interests and professional capabilities

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How Buyers Acquire Small Business Financing

Written by Gene Wright. Posted in Small Business Funding

A buyer with 100% cash is rare. Some sort of financing will most always be needed to close the deal. There are various options for financing covered below with the understanding that buyer qualification is the key element. The ability to finance a buyer purchase is often the make or break point to closing.

Let us dispel one myth; the misconception that the owner HAS TO hold a note or mortgage on the business to get a deal closed. This is not true, and it totally rests with each owner’s preference. While we contend that selling a business with some amount of owner financing makes it slightly easier to sell, we always advise owners to speak with an accountant about the pros and cons to holding a loan on their business.

Three types of financing…

  1. Owner-held financing. There may be some tax benefits using this approach.
  2. Local bank loans. Bank financing is very difficult for a buyer to secure in the small environment, since banks are risk averse. Bank lending is the primary reason for the misconception that lender financing is difficult.
  3. SBA financing through third party lending sources. This is the primary lending source used to fund buyers of small businesses. These lenders are specifically in business for small business lending. Most business buyers do not know of these types of lenders have the contacts to use them successfully.

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Why Did Home Depot Go To Silicon Valley?

Written by Gene Wright. Posted in Gene Wright

Thanks to shows like Shark Tank, the concept of publicly pairing entrepreneurs to investors is now a mainstream concept, piquing the interest of many Americans.

At one time, pitching a new business idea to a group of investors was an alternate option to traditional funding that made raising capital possible for the average entrepreneur. Today, thanks to the democratic nature of the Internet, there are more options and fewer barriers than ever before.

Three Steps Georgia Must Take To Encourage Non-Accredited Investors

Written by Gene Wright. Posted in COVID 19 Get Help for Small Businesses

Now that the legal barriers have been removed to allow non-accredited investors to participate in equity crowdfunding initiatives in Georgia, we should address the practical roadblocks that are keeping people out of the market. A recent article in the Harvard Business Review addressed some of these areas and ways to prevent financing bottlenecks.

When You’re Finished Raising Money, Don’t Forget to Do This

Written by Gene Wright. Posted in Funding/Lending

Plenty of small business owners invest months leading up to the launch of an equity crowdfunding campaign. But the work does not end with a successful raise: Maintaining effective ongoing communication with investors, customers and stakeholders long after the campaign has ended can not only prevent legal headaches, but can also become a competitive advantage.

The Success or Failure of Your Equity Raise Depends (Mostly) on How Well You Do This

Written by Gene Wright. Posted in Funding/Lending

Want to know whether or not a proposed business investment is sound? Look no further than its Value Proposition. A VP is the starting point for potential issuers in developing equity crowdfunding campaigns that has a significant influence on their success or failure. Simply put, if the VP isn’t clear and compelling enough, investors will look elsewhere for better returns for their dollars.

Rebuilding the American Dream: Small Business by the Numbers

Written by Gene Wright. Posted in COVID 19 Get Help for Small Businesses

Former President Ronald Reagan called them the “forgotten heroes of America”: small business owners who make up a startling majority of job creators, employers and exporters. But these local, home-grown companies often meet huge financial challenges as they try to get their businesses off the ground. From legal advice to proper underwriting, entrepreneurs are facing many challenges raising the equity they need to make their American dream come true. That’s where crowdfunding may help. Simply put, the promise of crowdfunding can help small business, and small business drives the American economy.

Intrastate Funding – Why Are So Many States Introducing It?

Written by Gene Wright. Posted in Crowdfunding

Georgia and Kansas may have led the way in Crowdfunding and Securities Exemptions (CASE) legislation, but many other states are quickly seeing the advantages and passing similar legislation of their own.

After all, crowdfunding promises job creation and economic improvement at the state level. And because any astute politician can see the logic in keeping jobs and business taxes in state.