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How Does Real Estate Compare to Other Investments

With all the changes in the economy over the last 3-4 years and the values of real estate plummeting, it’s only natural to ask whether investing in real estate is still better or as good as other investments like stocks or even investing in your own or another’s small business. Let’s revisit some of the risks and returns and see if investing in real estate really makes sense.

From a standpoint of returns, this is still a major reason why people continue to looks towards real property investments. Real estate has and will most likely continue to generate the best returns on your money over the long term. And, unlike stocks and a business, real estate has the unique ability to produce rental income and even profits if run correctly. As always, selecting the best investment properties will always yield the highest returns so managing your properties as best you can and keeping them in areas that you really feel will appreciate over the long term is the best way to position your portfolio.

As with any investment, where there are rewards there will inevitably be risks. As we’ve seen over the past few years, property values will not always appreciate over the long run (and you can look at history to confirm this.) Property values are not normally as volatile as the stock market so you will not see huge 80-90% swings in value as you could see in the stock market. However, you need to be prepared for the long haul and build your portfolio of properties in areas that you’ve studied and can be as certain as possible will hold up better than others as time goes on. Doing your homework on location is by far one of the most important things you can do in order to avoid some of the huge risks that come with investing so make sure you know your target area well.

One of the biggest arguments against real estate investing has been that it’s not a very liquid investment, meaning the speed and ease at which you can sell your investment and recoup your money. I would say that not being very liquid is actually a plus for real estate investments as it keeps your mind focused on building long term value and not buying and selling at a frenzied pace much like the stock market does. Because you’re not tracking values on a daily basis and because it takes a lot of time, money and energy to sell an investment property, you’re much more likely to keep a property in your portfolio for the long term which is where you will build a lot of your wealth.

In addition there are many more tax advantages to owning real estate investments than there are the traditional stock portfolio (which I’ll go into more detail in future articles) which adds icing onto the cake. If you can afford the high capital investment it requires to get into the game, real estate is still the place to be for many more years to come. So, start studying your local market now and take that first step to making real estate a part of your portfolio for years to come.

Business Card Benefits

I probably don’t need to tell you that business cards are an incredibly powerful way of getting your name in people’s minds.

There are several benefits to having your own business card the first being that it gives you a way to leave your impression on potential customers.

Are business cards for everyone? The simple answer: Yes. The more complicated answer: No.

Any business, at any level of complexity, benefits from business cards. But high-volume businesses typically rely on business cards at higher levels of the business–finding new suppliers, prospective employees, and other business contacts–than on the basic promotional level.

For a small business (with a much flatter organizational model, usually), business cards take on a much more vital role. This holds doubly true for skilled trades or any business that works on a client model, rather than a customer model. Customer-based businesses (from supermarkets to software concerns) benefit the most from having a large body of customers to place orders or come into the store, and business cards, for all their advantages, don’t do this as effectively as other forms of advertising. But for skilled trades and other client businesses–for example, graphic designers, efficiency consultants, and even in-home housecleaning services–rely less on a large body of customers than on a few local, trusted clients who’ll patronize the business, form relationships with the business, and provide references to friends and business contacts to allow the business to grow. Basically, if your business provides a service that a larger business needs, or that can be performed effectively for only a few local clients, business cards are essential for business success.

The other business model that benefits the most from business cards is Internet-based business.

Remember, when people leave your website, the majority of the time they forget you, your site and anything to do with you forever.

Having a business card keeps you, your business and your products & services in the mind of your prospects and if they ever have an associate ask about a service like yours, chances are they will recommend you.

Make sure you have cards handy at all times so you can share them with people who would like to have them.

Why Not Sell The Business On Your Own?

How many “Business For Sale” signs have you ever seen while you drive down main street or on your daily drive to work? None? Well, there are very logical reasons why you haven’t. The biggest reason is that the “Business For Sale” sign would soon be replaced with a “Going Out Of Business Sale.” Consider the following points.

First off, even if the you don’t actually hang a “For Sale” sign outside the window, trying to sell it on your own through classified ads, or, heaven forbid, by word of mouth, for instance, threatens the business’ reputation and future. Secondly, even if the right prospective buyer comes along, do you — an owner of a privately-held company — have the required skills and knowledge in the fields of accounting, law, taxes, marketing, and more importantly, negotiating on your own behalf about perhaps your most important asset — your livelihood?

Do you, a business owner who is trying run your business on a daily basis, have the time to find, contact and liaise with potential buyers that are serious about buying your particular business? Can you maintain the confidentiality that is required to prevent damaging your competitiveness in your market area? If staff and suppliers find out that you are selling, it will affect current trading ability. Do you have any experience in selling a business? Can you remain cool and patient when a buyer is trying to negotiate a lower price, particularly if their objectives are the complete reverse of your own? Do you even know how to value your business and what it is really worth in the marketplace?

Let’s discuss the issue of primary concern when selling a business…confidentiality. The most important aspect of selling a business is confidentiality. It must be maintained throughout the entire selling process. If people find out that your business is for sale, it will be perceived in a negative light, where some, mainly your competitors, will take advantage and can cause damage to the ongoing viability of your business.

There is, of course, the proper time to disclose an impending sale. The preferable time to come clean is when the business is under contract and has entered the final stages of the selling process. By looking at the different responses by the varied types of people associated with your business to the news of your business being for sale, you will understand why confidentiality is necessary.

Customers -

If customers get wind that your business is on the market, they will most likely take about a New York minute to hike on over to one of your competitors to do business. Losing customers affects the value of the business — less sales means less profit, and less profit means less interest from prospective buyers. After all, one of the major reasons why someone would want to buy your business is because of the profit they could make.

Employees -

If employees are told that the business is up for sale, think nano-second. If you think a New York minute is fast, your employees would evacuate the premises before you can blink. They will feel insecure about their future and will seek more stable employment. Fear of new management and whether job cuts would ensue are legitimate concerns for anyone in which your business is their livelihood. If key members of staff left the business after hearing the news, it may seriously cripple the performance of your business. Consequently, not only will the value be reduced, but the chance of selling your business is significantly diminished.

Suppliers -

Your relationship with suppliers may take a turn for the worse if they are aware of your plans to sell the business. They may feel that your decision to sell is based around financial difficulties and, if you currently purchase supplies on credit, they may reconsider your position and demand cash on delivery, which may certainly have an effect on your immediate cash flow. Great businesses are sold every day. However, in general, their is a negative perception of a business when it is rumored to be for sale.

Banks -

Banks are very cautious of small businesses because of their risky nature and so it is no surprise to how they would react when they find out that yours is for sale. They may decide to put a halt on further borrowings, overdrafts or lines of credit available to you . Or, even worse, put out a call to recover any outstanding debt.

Competitors -

How would you react to news of your competitor putting their business on the market? Very positively one would assume. This is exactly how your competitors will react should they discover that you are selling your business and would take quick action to affect your sales and customer confidence. Competitors would announce it from roof tops if they could to make it known that you are selling so they can reap the harvest of new profits from your old customers.

For these reasons a business brokerage firm would be very helpful towards selling your business. In fact, they can be the essential ingredient. Let’s explain this statement further. Before you believe in the necessity of contracting with a brokerage firm to represent you in the sale of your business, it is important that you recognize the value they bring to the table.

Business brokers, in general, work on a success-based commission. They get paid when the business is sold and the deal is closed. They are your partner throughout the process and utilize unique marketing methods to achieve the goal. Not only will they find and screen prospective buyers for your business, they can value your business, settle negotiations, and help obtain. Experienced business brokers can often obtain a higher selling price because they are in tune with current trends and economic conditions in their market area and are aware of what people are looking to buy. Supply and demand plays a factor when a business is up for sale. For example, a seller’s market in Houston has existed for the past couple of years and is still ripening due to the superior economic conditions it has enjoyed over the rest of the country.

Also, potential buyers will feel more at ease speaking to brokers then they would directly to the owner and by doing so, it allows you the time to continue running the business and keeping it profitable. Most importantly, brokers will provide the confidentiality you need, saving you potential grief from the issues surrounding customers, suppliers, and competitors.

Finding a reputable broker can be done through referrals from fellow professionals such as accountants, attorneys, small business lenders, and even by word-of-mouth from people that have previously used a broker.

In conclusion, whenever a business is on the market, it must to be done in a confidential manner by someone who has done it thousands of times. Owners have good reasons for selling, and there are great businesses being sold every day. But there are negative connotations attributed to a business for sale in the general public’s eyes. They think there must be something wrong with the business. Which, of course, is not the case in most instances. Keep in mind these two statistics. The national average of businesses that actually sell once they are on the market is approximately 30%, the reasons for which a business broker could explain to you. And, only one in ten people who are looking to purchase a business, ever actually do. So, if trying to sell your business on your own fails, you may have lost customers, vendors, or employees. You don’t want to end up putting that sign on the window that says, “Going Out of Business Sale!”