21 Feb Around the Web: A Week in Summary
The following information has been sourced by Business Brokerage Press for the benefit of the business brokerage community. The views of these articles do not necessarily represent the views of Business Brokerage Press. We hope you find this information helpful.
A recent article from Forbes entitled “Do I Buy A Business Or Start My Own?” discusses the dilemma entrepreneurs face when deciding whether to buy an existing business or start one from scratch. There are advantages and disadvantages to consider with both options.
Buying a business provides instant market access, tangible assets, risk mitigation through historical data, and an established reputation. However, it requires a significant initial investment, cultural integration challenges, potential liabilities, and may face resistance to innovation.
Starting a business from scratch allows for pure creativity, personal branding, lean operations, and passion-driven momentum. However, it also involves navigating an unknown market, resource constraints, slow customer acquisition, and the need for resilience against early failures.
Ultimately, the decision depends on the personal preferences of the entrepreneur, market realities, and financial considerations. Consulting with industry experts can help entrepreneurs make a thoughtful and well-informed decision.
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A recent article from Business News Daily entitled “Ultimate Guide to Business Franchising” offers an in-depth exploration of franchising, serving as a comprehensive guide for prospective franchise entrepreneurs, or franchisees.
A franchise is a business owned by one or more individuals who provide products or services under the branding and operational guidelines established by a parent corporation. In this business model, the franchisee pays fees to the parent corporation in exchange for the right to operate under its established brand name and business system. The parent corporation typically offers support to franchisees in areas such as marketing, inventory management, and training.
There are various types of franchises, including job franchises, product franchises, business-format franchises, investment franchises, and conversion franchises. Each comes with its own unique opportunities and considerations.
When opening any franchise, it’s important to understand the structure of the ownership, financing, operational costs, and profitability. The steps to buying a franchise starts include applying, setting up a location, obtaining financing for the business, and undergoing training and support. There are several financial aspects of franchise ownership to consider as well, including the initial investment costs and franchise fees.There are franchise attorneys who are experienced in navigating the legal intricacies of franchise agreements. To ensure informed decision-making and a smooth process, entrepreneurs should consult with a franchise attorney throughout this journey.
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A recent article from The Berkshire Eagle entitled “Buying a business? Here’s how ‘goodwill’ can offset high interest rates” discusses the challenges and opportunities in business acquisitions amidst the current high-interest-rate environment.
Currently, IRS Code Section 197 is helping make acquisition deals more affordable by allowing for tax deductions on intangible assets such as goodwill. Goodwill in business sales refers to an intangible asset that arises when one company acquires another. It represents the difference between the purchase price paid for the company and the fair market value of its tangible assets, such as physical property and equipment.
Goodwill encompasses elements like the company’s reputation, customer relationships, brand value, and proprietary technology, which contribute to its overall value beyond its physical assets. However, goodwill is not based on the seller’s subjective valuation or emotional attachment to the business. It is instead recognized as an amortizable intangible asset when ownership of the business changes hands.
With strategic tax planning and a thorough understanding of relevant regulations, entrepreneurs can take goodwill into account to navigate the complexities of business acquisitions more effectively and capitalize on growth opportunities.
