This current recession in 2008 and 2009 is marked by how low the economy has gone, the increase in unemployment, but most frustrating of all, how long it has taken before the “green shoots” appear. If your business is struggling and you think your only option is to close the door and hand the keys back to the landlord, here are some things to consider.

First, it’s rarely as simple as closing the door and handing the key back to the landlord. If your business has a lease you obviously need to discuss the situation with the landlord. If you have a good relationship and feel you can handle it on your own to save hiring help, take care as you handle the issue. Bear in mind the landlord is no different to you. They lease the real estate to make money. If you close the doors, they need to find a replacement for you which may take time to achieve. This can be a talking point with the landlord as you may be able to bring a tenant to replace you. If this is the case, make sure this is correct as the landlord may become frustrated if the person changes their mind. Similarly, the landlord is not required to accept the person you bring so be aware the landlord has options.
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Gilmore Bank in Los Angeles, CA just released the following information about great news on upcoming changes to the SBA:

On October 21, 2009, President Obama announced steps that the administration is taking to expand access to capital for small businesses. Senate Bill 1832 was introduced by Senator Mary Landrieu to implement the administration’s initiatives.

HIGHLIGHTS OF THE PROPOSED LEGISLATION INCLUDE:
• Increasing maximum 7(a) loan size to $5 million
• Increasing maximum 504 sizes to $5 million (non-mfg) and $5.5 million (mfg)
• Increasing maximum guarantee dollars to one applicant/affiliates to $4.5 million
• Extending 90% maximum 7(a) guarantee percentage through 10/1/2010
• Extending ARC Loan relief to existing SBA loans
• Increasing the maximum microloan loan size from $35,000 to $50,000
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The number one reason most transactions don’t close after a buyer and seller have “negotiated” a deal is that the landlord cannot come to terms with the seller and/or buyer.

The number two reason is that finance is not available.

For obvious reasons, a seller prefers cash. Tom West of Business Brokerage Press is a writer and analyst on small business transactions. According to West, his research has shown that sellers receive a significantly higher purchase price if they decide to accept terms or carry a seller’s note and that, on average, a seller who sells for all cash receives 69.9 percent of the asking price whereas if the seller is willing to carry some of the finance, the selling price will increase by 15.8%. For example, if a business is listed for $150,000, and the seller who is willing to carry some finance, they will receive approximately $24,000 more than the seller who is asking for all cash.

Applying the above but instead of looking at selling price but gross sales, West has found that a seller who asks for cash receives, on average, a purchase price of 36 percent of annual sales; compared to the seller accepting terms, who receives an average of 42 percent of annual sales.
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Selling a business comes with many challenges. The number one reason most transactions don’t close after a buyer and seller have “negotiated” a deal is that the landlord cannot come to terms with the seller and/or buyer.

The number two reason is that finance is not available.

For obvious reasons, a seller prefers cash. Based on analysis provided by Tom West of Business Brokerage Press, statistics show that sellers receive a significantly higher purchase price if they decide to accept terms. On average, a seller who sells for all cash receives 69.9 percent of the asking price. This adds up to a 15.8 percent difference on a business listed for $150,000, meaning that the seller who is willing to accept terms will receive approximately $24,000 more than the seller who is asking for all cash. The seller who asks for cash receives, on average, a purchase price of 36 percent of annual sales; compared to the seller accepting terms, who receives an average of 42 percent of annual sales.
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