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How To Buy Your Competitor, Using Its Cash Flow, To Improve Your Business

A proven and time-tested strategy to optimize your business is to buy your competitors.

I believe the information in this article will help you in your goal to build a more robust, faster growing and more profitable company. More importantly, I believe you will discover a growth system that will propel you through your entire business life.

There are multiple ways to grow your business. There is one strategy that can be implemented at a low cost and a minimum of risk when planned properly. It works for the “big boys” on a regular basis. It works just as well for smaller and medium sized businesses.

After each acquisition, I recommend that you implement a profit optimization system to maximize the long-term business potential and maximize profits and cash flow.

You CAN often afford to buy your competitor even if you appear to be the weaker competitor.

You can do this even if you think you can’t afford it. In this economic storm, many of your closest competitors will be more frightened than you are. They see the glass half empty… you see it’s half full. They fear the personal nightmare of losing their homes, pulling their kids out of college, pawning their jewelry just to make ends meet.

You are calm. You are prepared. You’ve done your homework. You’ve forecasted carefully, conservatively, and even worst-case. You know that when you combine companies, eliminate duplicate costs, make a few dozen other strategic and tactical changes, and negotiate the right arrangements, you will earn far more money than it will cost you to buy the business. You set up protections in the agreement that avoid risk to you. Payments for the competitor business are made only out of additional added profits and cash flow.

You can grow quickly, profitably and with a minimum of risk.

The techniques used by the “Big Boys” are not a secret and they are not complex. Since 1980, I have been working closely with very successful and profitable emerging companies. There are many simple methods for growing a business very quickly. However, there is one method that is far and away more successful than most.

My experience with these solid, fast-growing, leading-edge companies has led me to conclude that the best, fastest, most reliable way to build a rock-solid, fast growing, entrepreneurial company is to acquire your competitor’s business with a no-cash, or low-cash, out-of-pocket purchase.

After the purchase, implement a profit improvement system to maximize the combined business profit potential.

My strategy has succeeded with progressive entrepreneurs who followed this basic format:

  1. Locate a competitor who is a likely motived seller.
  2. Negotiate a deal that allows a monthly positive cash flow sufficient to pay off the monthly debt service on the purchase of the business.
  3. Purchase the competitor company and then you make one small, low-risk profit improvement change each week. This can increase the cash flow by 50% to 300%+ very quickly.

The potential benefits of making good, well-timed, strategic purchases of your competitors are:

  • Purchase for little, or no, cash up-front
  • Payments are made only out of new, add-on profits and cash flow
  • Realize immediate cash flow (often you can make more net profit than the current owner did)
  • Purchase at little or no risk to you
  • Immediate improvement in cash inflow
  • Immediate improvement in new earnings and profits
  • Possible income tax benefits
  • Better and stronger bank relationships
  • Improved relationships with customers and vendors
  • Build an expanded, rock-solid base while your competitor(s) are having tough times
  • A customer list that is active and may be open to new and bigger profit services
  • Compile a list of ex-customers that you may be able to reactivate with a new management team
  • Acquire inventory and other capital assets at a potentially deep discount
  • In some situations, you may want to sustain additional locations to expand market reach

Here are the “Big Picture” strategic steps that make this process work.

  • Buy a target business that has a positive operating cash flow after you implement your operational changes. The goal is that you will make more than adequate cash to cover all debt payments on the purchase of the target.
  • If the owner of the target company is retained to continue working for the buyer, their duties should primarily focus on making sure the former clients of the target company are satisfied customers. The former owner’s compensation should be tied to customer retention.
  • Prepare a detailed integration plan of how the combined companies will be operated together.
  • Eliminate duplication of costs, personnel and any unnecessary costs.
  • Prepare a detailed profitability analysis and develop a plan to increase the profits, decrease non-strategic costs and identify other business and strategic opportunities. A typical and reasonable goal is to double the profit achieved after elimination of duplicate costs.
  • Once the combined operations are stabilized and running smoothly, begin looking for the next target to acquire.

If you want to buy your competitor, what are the detailed steps in the process?

  1. Self-assessment – does the current management have the skills necessary to manage the people and process of a quickly expanding business?
  2. Determine the objective of buying a competitor (i.e., faster growth – buy the business cash flow to add to your existing business, or faster expansion into new markets -expanded products, services or geographic areas).
  3. Compile a list of possible targets.
  4. Make the contact with targets.
  5. Find an interested, motivated target and sign a confidentiality agreement.
  6. Request information from the target – financial statements, tax returns, business plans, lease agreements and other relevant documents.
  7. Determine if this is a transaction that appears to have good potential for the buyer.
  8. Review documents and prepare projected financial results of the combined companies.
  9. Determine the value to the buyer of target’s operations.
  10. Conduct interviews with the current management of the target.
  11. Prepare a letter of intent covering key provisions to be included in the purchase agreement.
  12. Develop a summary plan for the changes in the target’s operations after the sale is completed.
  13. Initiate a “due diligence” review.
  14. Draft a purchase agreement.
  15. Close.
  16. Tend to the post-closing transactions, duties, adjustments, etc.
  17. Update and expand the plan for the target’s operations.
  18. Make necessary changes to target’s operations.

After the purchase is complete, employees will be justifiably concerned about their jobs and what the change in ownership will mean to them. Try to be as open and honest with them, and give them as much insight into the future business plan, as is reasonably possible. It is often wise to make your changes slowly. Really get to know the operations and all of its subtleties rather than taking a meat clever to all the old systems, procedures and operating methods. Work the plan that you developed but be flexible in response to additional enhanced information. Many experienced business buyers require, as part of the purchase agreement, that the former owner remains on as a consultant for a period of time. Some former owners can offer valuable insight into the changes you are making. Others, of course, have little to offer.

The scope of this article does not allow for an detailed discussion regarding: 1) the many factors influencing the integration of the two, or more, companies, 2) methods of financing the purchase, 3) methods of reducing the risk in the transaction, 4) setting a value on the target company, 5) detail procedures for due diligence. Many of these items are covered in our free report identified below. Also, it should go without saying that competent advisors need to be employed for the tax and legal areas, and perhaps, advisors for merger and acquisition, valuation and other technical areas.

I believe the growth strategy of buy-your-competitor can help you dramatically build a more robust, faster growing and more profitable company. The “Big Boys” use it and so can you.

Considerations When Looking for Cheap Business Cards

Business cards are an integral part of any business. You cannot afford to not have these small, yet very effective, printed items in your wallet wherever you go.

The great news about cheap business cards is that they don’t have to look cheap. Paying careful attention to the design and quality of paper will ensure that the most affordable printed materials look expensive, adding credibility to your business.

Customers will quickly notice if you hand them a card which is thin and poorly designed, giving the impression you printed them at home on your home printer. Rather spend a little money and ensure you get high quality cards for an affordable price.

Paper quality is essential when choosing this type of item. The higher the paper number, the better quality you will receive. Ideally you want at least two hundred gram paper to provide you with a strong and durable card you can hand out with pride.

Quantity is as important as quality. What most people don’t realise is that printing a higher volume can result in cheap business cards printed to the highest quality. When printing smaller volumes, print shops will use their digital printers, which are slightly more expensive, but on higher volumes they turn to their litho printers, which are an affordable solution.

Ensure you check with your print shop regarding print prices on the quantity of cheap business cards they provide, in many cases you will be able to purchase five hundred cards for slightly more than one hundred, which is definitely more affordable and worthwhile in the long run.

Most print shops will also offer you a design service, but you can save money by creating your own design, if you are comfortable with the computer software. Creating your own design according to the specifications given to you enables you to email or drop off your design and they will print it for you.

When buying cheap business cards take the overall design into consideration. This may sound obvious, but you want your card to stand out and make a statement. A clever logo, slogan and clear writing make all the difference when handing a card out to customers.

Every cheap business card should have the company name with a logo or slogan which explains exactly what services or products your company provides. The card should also clearly state your name, position in the company and contact information. Always pay careful attention to the font you use when designing cheap business cards, ensuring your customers can read the contact information and won’t throw the card away because it’s impossible to read.

Don’t choose the first print shop you see that offers you an affordable printing solution. It’s advisable to do your homework, get to see what the company provides in terms of their services. Do they offer other printing solutions? What is their reputability like? What do their customers say about their services?

Another good idea is to ensure the company you choose offers urgent print jobs. There will be times when you suddenly realise you need cards in a hurry and you require their urgent services. Some companies will take a few days on a normal print run, but can push your job to the front of the queue so you can have it the next day.

Remember to always carry your printed items with you in your wallet or bag, this enables you to hand them out on a moment’s notice and is a great and affordable advertising opportunity for you and your business.

Finding The Best Home Based Business

The best home based business idea for one entrepreneur can be the worst for another. For anyone who wants to be a work from home entrepreneur or already has a successful home business, there is not a definitive list of ‘bests’.

The best home business to start for you as an individual depends on what that you enjoy doing or what you know how to do. If you begin at this point, you will probably already have some of the resources in place to help you start. Other considerations to make when deciding on your best home based business is knowing if there is a market ready to buy your product or service, how much competition there is and if you actually make any money from it.

Getting Started With Your Home Business Ideas.

If you try to set up a home business with something that you have absolutely no interest in, it is going to be very challenging to stay motivated. After all, it will mean spending many hours each week getting it off the ground and, as you are building a business, it will take time, money and resources.

You will also need to look at the skills and knowledge that already you have and compare them against the things that you like to do. When your skills match up with the things you enjoy it is a good indicator that you’ve found the best home based business type for you. So, for example, if you work in a restaurant kitchen and you enjoy cooking at home, there are many home based business opportunities for online recipes, cooking and baking products and so on. Of course, you will need to be willing to expand your business knowledge and training to grow your business with skills such as marketing and customer communications.

Your Best Home Based Business Check List.

Obviously, the best home based business needs to make you money. Here is a quick 7 point check list of items that you should have an answer for:

1. Who are you going to sell to?
2. Why will they buy from you?
3. Will they buy from you more than once?
4. Can you sell more than one product or service to the same customer?
5. Who is your competition?
6. What makes your business better than your competitors?
7. What will you charge for your products or services?

Deciding on what you charge for your products and services depends your business expenses and how much your competition charge. If your selling price is too high to make a profit after expenses and to remain competitive, you have to change the your target market or change your product and service.

The best home based business will include an element of residual income. This is when you sell a product or service once and then automatically receive payment every month for as long as the customer uses it.