How to Value Your Business When Selling
There are many reasons to sell a business as well as many reasons to have an up-to-date business valuation even if you aren’t selling. Regardless of the reasons, a number of factors will play a part in determining the value of your business. On top of that, all of them require a professional to properly assess.
Hire a professional
The first and most important rule of valuing your business is not to do it yourself, as owners tend to — understandably — overestimate the worth of their enterprise. “There is a level of emotional attachment owners place on their businesses; after all, you put years of blood, sweat and tears into its creation, therefore it feels like it should hold more value,” Andrew Bass, Chief Wealth Officer for Telemus, writes in a March 2018 article for Kiplinger.com.
It is going to be impossible for you to step back and make an objective assessment of your own business, making it important to get your valuation done by a professional. “It’s not uncommon for owners to think their business are worth more than they actually are, and they might balk at the legitimate offers being made,” Bass says, though he adds that it can go the other way around as well. “Unique tax and business aspects of the business and environment may result in greater value!”
A Chartered Business Valuator, or anyone valuating your business, such as an accountant, can use a number of business valuating methods to determine a fair price for your company.
Earning value
Often regarded as the best way to value an establishment, the earning value approach attempts to estimate a business’s ability to generate wealth in the future. “With this approach, a valuator determines an expected level of cash flow for the company using a company’s records of past earnings, normalizes them for unusual revenue or expenses, and multiplies the expected normalized cash flows by a capitalization factor,” writes Susan Ward, co-head of IT consulting business Cypress Technologies, in a September 2017 article for TheBalance.com.
One of the weaknesses of this method is that it is difficult to assess the percentage of business that may be lost by a change of ownership, which will affect customer loyalty. Ward says this can be mitigated in several ways, such as when a trusted family member takes over the business.
Market value
The market value approach attempts to determine the value of your business based on the value of similar businesses that have been recently sold. While this method is trickier than others because of the requirements involved — there need to be sufficient similar businesses to compare yours to and sufficient information about their sales, which can be difficult to acquire — it also comes with some advantages to the business owner. “Using competitor valuations to establish your own makes it difficult for investors to tell you that your valuation is too high which is often a tactic used by investors to bring your price down in order to obtain more equity for their investment,” says Alejandro Cremades, co-founder of Onevest, in a March 2018 article for Forbes.com.
These are just two of the most common types of business valuation methods, though there are many more, and combinations of methods ultimately tend to be the most effective. Regardless of the methods you adopt in the end, remember that the most important step of successfully selling your business is to start by hiring a professional.
How to Adjust Your Savings When Your Income Changes
Have you ever heard the phrase “The more you make, the more you spend” If you have and live by this mantra then you are doing it wrong!
An increase in your income does not mean you need to up your shopping list, it means you need to increase your savings.
Basically, if you have been making living on $45,000-a-year and you have been paying rent/or mortgage and paying your bills on time, there is no need to increase your spending. We are not saying you cannot treat yourself once in a while. However, you do have to make smart decisions and be conscious of the fact that a big emergency fund matters and can help you when you need it most.
Keep the following tips in mind if you are getting a raise soon:
- Do not spend more
If you earn a raise or bonus, congratulations you deserve it!
Just be careful, most people become trapped in a spending circle with no money saved up for the future. Take a look at the goals you are trying to reach, be ready for unexpected expenses that may come up and be comfortable without exceeding your means.
- Grow or Create an emergency fund.
Your emergency fund should cover a minimum of 3-months expenses. A good emergency fund covers 6 months of expenses easily. Make this one of your goals! Do not use these funds for a vacation, a wedding or leisure time. An emergency fund, as the name suggests, it’s only for emergencies. For example, an emergency fund can be used for an unexpected hospital bill, car issues or job loss.
- Create a separate savings account and make the funds transfer automatically
If you don’t see it, then you don’t need to spend it. Additionally, if your income shirks, the savings you have should help you carry you thru. A BrightStar Savings Account is completely FREE and it does not require a minimum when it’s coupled with a FREE Checking Account. What better way than to save money in a reliable credit union?
Do not forget the essentials of saving, living in moderate means, and to plan accordingly.
How to save money on your 4th of July BBQ
If you are lucky enough to be off today, you are probably enjoying the day with your friends and family. After all, there is nothing better than a good food, music and fireworks. However, sometimes the joy becomes worry by the realization you spent over $500 on a day of burgers.
To try to avoid this issue, help you save and help you keep a good memory without thinking of money, we have a few tips for you.
Tip 1: Strategize the Way You Buy Food
Let’s face it, if you are having a backyard BBQ for multiple people your bill will be sky high. Buying cheaper meats can help keep your guest and wallet full. We are not suggesting you buy expired items, but replacing foods like fresh ground beef with hotdogs can be reasonably cheaper and just as good.
Another way to save money is to buy meats in bulk. Costco and Sam’s Club are big money savers and can give you extra coupons during this time. Additionally, do not be afraid and ask your friends to help you with the extra items like chips, salads and beverages. Most of them, will just be happy to have a good day.
Tip 2: Dollar Store Decor
American-themed table decorations can often be bought from dollar stores and your guests probably won’t even notice the difference. Balloons can also be bought inexpensively so you can buy some packs in red, white, and blue and use them to decorate the party area in patriotic colors. You don’t necessarily need to go overboard with the decorations and they can sometimes have greater impact if you use them more sparingly.
Tip 3: Enjoy local fireworks.
If you live near a park, this one should be a no-brainer. After you eat and have fun with friends, take a walk to the local park. Most of the time, these parks will have FREE entertainment such as live bands, pretty fireworks, and good dancing. Not only will you have fun, you will also get to meet some great people around the area.
Happy 4th of July!
Shopping Online Vs. In-Person
With the advent and spread of smartphone technology, entrusting your money to an online bank has become an increasingly popular alternative to the traditional experience. Traditional banks, however, still offer several distinct advantages that the online experience cannot provide, including in-person customer service when you have questions or concerns.
How do you decide which type of bank to use? Here are a few things to consider about your transactions.
Getting cash
If you use cash on a regular basis, make sure to consider the locations and accessibility of in-network ATMs before choosing your bank. Choosing a local bank or credit union means you should have good access to multiple ATMs, and many banks will reimburse you for fees incurred by using other ATMs.
Online banks don’t typically have ATMs of their own, which means you are more likely to pay a fee to withdraw your cash. These fees usually run a few dollars per withdrawal, but can often be frustrating since you are paying to take out your own money. This isn’t always the case, though. According to Business Insider’s Megan Durisin, some online banks will provide you with compensation for your fees. However, there is usually a cap on how much they will reimburse you per month.
Making deposits
When choosing your bank, you also want to consider how you will deposit money into your account. While both online and traditional banks usually allow direct deposits from your employer, online banks have several restrictions when it comes to other deposits.
At a traditional bank, you can deposit cash, checks, money orders and more. Simply walk into your bank and speak with a representative about your deposit. If you make a significant number of deposits, especially with checks or cash, traditional banking is a convenient option.
With online banking, your deposit options are a bit limited. Depending on your bank, you might be able to digitally deposit a check, but there are usually limitations on how much you can digitally deposit in one day. If your check exceeds that limit, you’ll have to mail it in. To deposit cash to an online bank account, you may have to purchase a money order and mail that in, as well. “You might have to pay a small fee for the money order,” explains Spencer Tierney, a contributor at NerdWallet. “For amounts larger than $1,000, you may have to spring for a cashier’s check at a bank.”
Customer service
Many online banks provide great customer service, including online live chats and call centers. But for some, speaking face to face is an important part of creating a trusting relationship with your financial institution, and it is a service that Durisin notes can only be offered by a traditional brick-and-mortar bank.
Choosing your bank is a personal decision that should be based on services that are most important to you and your lifestyle. Speak with a representative at either a traditional or an online bank to learn more.
How Community College Can Save You Money
Financial benefits of taking classes or earning a degree at a community college
To college hopefuls, the financial burden it represents can be daunting. However, community colleges offer multiple money-saving opportunities while still allowing you to earn an education.
- Tuition savings
Tuition is perhaps the most immediate money-saving benefit of applying to a community college rather than a larger four-year university. Hocking College lists the average cost of tuition and fees at a four-year university as follows: One year at a private school runs an average of $33,480, and one year for in-state residents at public schools runs an average of $9,650. Comparatively, community college costs an average of $4,900 per year for public institutions and $15,478 per year for private institutions. Hocking College notes that community colleges only require two years of schooling while traditional colleges require four. As such, the price difference becomes far more pronounced when multiplied.
- Room and board savings
Another source of savings, as pointed out by The Princeton Review, is room and board. Because there is a community college located within 90 percent of U.S. residents’ commuting distances, this allows students to continue to live at home while they complete their degrees.
- Job savings
Community college students often take classes part-time while keeping their job. This allows the chance to save up money or pay for classes going forward. Hocking College says that this could be an especially good choice for nontraditional students, such as parents or older students, who simply don’t have the ability to take full-time classes.
Even if the student is not of a nontraditional group, community college degrees are only two-year degrees. This means that students can go into the workforce in half the time it would take attending a four-year school, giving them a head start in the workforce.
- The 2+2 plan
Community college can also help students whose ultimate goal is to complete a bachelor’s degree at a four-year institution. The method for doing so is often referred to as the “2+2 plan.”
The plan involves taking advantage of the above sources of savings for two years at a community college before transferring the credits to a larger university to complete a degree. According to U.S. News, many community colleges offer agreements that ensure student credits will transfer to certain four-year schools. It described the situation in Massachusetts, where community college graduates with a GPA of at least 2.5 can transfer all credits, guaranteed, to any state university by using the Joint Admissions or MassTransfer programs.
In theory, this academic plan could result in a significant savings when pursuing a bachelor’s degree. However, both U.S. News and Dr. Robert Ronstadt, a former vice president of Boston University writing for Forbes, offer warnings about the 2+2 plan.
U.S. News says that not all four-year institutions accept credits from all community colleges, so students should speak to advisors at both schools to make sure that transfer credits are accepted, and under what circumstances they are accepted.
Dr. Ronstadt says that the 2+2 plan can also lead to trouble if it isn’t completed properly. The problem, he says, is that to achieve the savings promised by the 2+2 plan, students absolutely must graduate in the implied four years. If classes at the larger university prove to be difficult or not enough credits transfer, causing the student to take 3 or 4 years at the second school, the savings from the two years in a community college are swiftly consumed. In addition, to successfully complete the 2+2 plan the student needs to be a full-time student at the community college, which could put an overwhelming burden on students who need to work to pay expenses, potentially causing schoolwork to suffer and jeopardizing the transfer to the four-year school.
Overall, community college can definitely save students money due to lower cost of tuition, convenience of location and the option to work while taking classes. Whether the student then uses these boosts to transfer to a bachelor’s program at a four-year school or to graduate and enter the workforce is up to them.
4 Ways to Start Investing in Your 30’s
If you’re in your 30s, now is the time to prioritize investment
Your 30s are a time of transition. While you are no longer in the beginning years of adulthood, retirement is still far away. Investing may seem like less of priority than starting a family, purchasing a home or paying off student loans.
While these are important goals, your 30s are a crucial decade for investing. According to finance writer Paula Pant in an article for The Balance, if you begin saving for retirement at age 30, you will need to save at least 15 percent of your income to retire at age 65.
Whether you’ve already prioritized investing or need a place to begin, these are some options to help you build wealth and save for retirement.
- Focus on your 401(k)
If your employer offers a 401(k), maxing it out is one of the most important investing steps you can take in your 30s. According to the IRS, the maximum you can contribute in 2018 is $18,500. Your contributions are taken from your paycheck before taxes and are not taxed until you make withdrawals for retirement. “Perhaps best of all, many employers will match your contributions, at least up to a cap,” finance writer Arielle O’Shea notes in a February 2017 article for NerdWallet. “That’s free money you won’t find through other offerings.” If you’re unable to contribute the maximum amount to your 401(k), taking full advantage of your employer’s match is a good place to start.
- Consider a Roth IRA
If you’ve maxed out your 401(k), or if you don’t have access to one, consider opening a Roth IRA. According to O’Shea, Roth IRA contributions “go in after tax, which means no tax in retirement. Your money also grows tax-free in a Roth IRA.” For 2018, the IRS says you can contribute $5,500 to a Roth IRA unless your income is above $120,000.
- Other investment accounts
Beyond your 401(k) and Roth IRA contributions, investing in stocks is another avenue to consider. Picking individual stocks is one option, although successfully doing so requires a high level of research and expertise. Another option is an index fund. According to finance writer Dayana Yochim in an August 2017 article for NerdWallet, “When investors buy an index fund, they get a well-rounded selection of many stocks in one package without having to purchase each individually. And because these funds simply hold all the investments in a given index … management fees tend to be low. The result: Higher investment returns for individual investors.”
- Investment risk
Any investment involves risk. However, O’Shea writes, “Risk is one reason there’s such emphasis on investing when you’re young—young people have a long time horizon before retirement, which means they can worry less about short-term volatility. That allows them to accept risks that should lead to higher average returns over the long term.” For example, stocks offer a higher return on investment, but they are also riskier. Bonds and mutual funds carry less risk but a lower return rate. A more aggressive investment strategy for your 30s might emphasize a heavier allocation of stocks with a smaller percentage of bonds. Then, as you get older, you can slowly shift your investments to focus on safer holdings.
While in your 30s, it is important to prioritize investing in retirement, especially if you’re only just getting started. Whether that’s the case or you’re building on what you’ve invested, the additional effort will help put you on the path to peace of mind and a secure retirement.
How Can You Help Your Parents Manage Their Finances?
As the years pass responsibilities shift. One day you may wake up and realize you have become the caretaker of the family. Your parents may no longer have the ability to make reasonable financial decisions and you have to step up to the plate.
Research shows that your ability to make financial decisions peaks at the age of 50 and can rapidly decline after the age of 70. However, it can be rather difficult to convince your parents you (the person they raised) can teach them a thing or two.
Instead of changing their mind, try to encourage them to consolidate and simplify their finances. How?
Lower the amount of opened accounts
Help them bring their money to one financial institution and one brokerage firm. Then help them reduce the number of credit cards they hold. Ideally, you want them to keep 2 credit cards; one for groceries and one for automatic payments.
Pick a Power of Attorney
Having power of attorney allows you to have decision over your parents’ financial matters. It is normal for an elderly parent to neglect your recommendations. They see you as the small person they raised and forget you are a grown adult. A power of attorney will make your life a little easier in case something happens to them. You need to have the time to go over all of their accounts, insurance policies and balance sheets if necessary. It takes great responsibility to have power of attorney. All decisions must benefit your parents and you must be involved in their lives entirely. It is also important to be transparent about the decisions you make with your siblings, parents, and all parties concerned.
Analyze their Investment Accounts
You have to make sure only 30 percent of your parents’ money is in stock. The rest of their money should be in corporate and government bonds. The reason behind this statement is that your parents need to have immediate access to their money and do not have the time to make up for any losses.
Lastly, if your parents have plenty of money to care for their needs and want to leave some assets behind to benefit grandkids, consult a money manager. It is better to get seek professional help in order to avoid any future issues.
How Can You Keep Your Small Business Competitive?
If you are a small business owner you must prepare for everything. For the not so profitable months of the year and for the months your product has more demand. You must also make smart investments, keep your small business trendy, and always have long-term and short-term goals. Keeping your small business competitive can be a little challenging. The following tips may help you improve your small business strategies.
- Know the meaning of the word “but”
This seems like an odd tip but this small word can be very powerful. For example, if you charge more than your competitors’ chances are you get a few complaints. The short-term solution can be to change your product prices for a period of time, but that doesn’t solve the actual problem. Plus, if customers are going to you for products (even while complaining) it means it is worth buying. With this in mind, this is how the word “but” can help you. First, acknowledge your high prices, then follow with the word “but” and add a valuable statement.“Yes, it is true our prices are high but we use high quality products that can help save money for our customers in the long run.”By doing this, you are sending the message that you care enough about the quality of your product and to help your customers save money. It gives you a valid reason to keep your prices high. - Invest in advertising
Paying top price for a product or service can be justified by its benefits. People won’t choose your business unless you invest in getting the word out there.
Invest on a website with good content and SEO strategies. This will serve as social proof for new customers and it will create a digital convenience for your old customers. - Research the market constantly
Competitive research should be a part of your business planning, and it should continue until your business is stable. The easiest way to do this now is online. Research competitive businesses near you until you can find the differentiating factors and you can promote your business more efficiently. - Offer products and services as needed
It is okay to offer a variety of products that can do the same thing and value at different prices. You can offer your premium product and have a backup to become more competitive in case it might be too pricey. It is better to retain a customer who has the potential of returning and purchasing more.Owning your business can be rewarding and challenging at the same time. Continue to improve your business and see how successful it can be.
How Can You Save on Your Electrical Bill?
Living in Florida has its benefits. You never have to shovel mountains of snow; you never pay an individual state income tax and can enjoy the beach all year-round. However, the never-ending summer leads to the excessive use of air conditioning. Therefore, your electric bill keeps climbing.
If you are looking to reduce your electric bill and save money, our tips will certainly help you.
- Never leave your electronics turned on.
Most of you know this, but do you actually turn off your devices before leaving the house?
Computers, TV’s, coffee makers, and gaming devices should be turned off when they aren’t being used. That means you don’t have to keep them on when you are in the house showering, cleaning or sleeping either.
- Spend time outside.
The more you are outside, the less you will need to use your AC. We are not saying to spend money going out (that will defeat the purpose). You can go to a park with your pets, walk around the beach, or visit a friend. If you aren’t home you don’t need to have the AC on. If you have pets you have an excuse to take them out, and leave it on for them while you are at work.
- Invest in a smart thermostat
A sophisticated thermostat can help you adjust the temperature of your home according to your individual routines. You can divide your day into blocks and set desire temperatures for each. For example you can adjust your settings to a higher temperature while you’re at work and lower them when you return from work automatically. A smart thermostat can trim cooling cost by 15%.
- Insulate hot water pipes
According to the Department of Energy, insulating your hot water pipes can reduce your electricity or gas bill $12 annually. Insulating your hot water pipes is inexpensive– especially if you have duct tape at home.
Stop overspending in your electrical bill change your habits and start saving money.
How Can Decluttering Save You Money?
What is the current state of your closet? Is it stuffed to the brim with clothes, shoes, suitcases, cleaning supplies, your high school yearbook textbook, etc., or can you do cartwheels in there? Is every horizontal surface covered in piles and piles of stuff or is almost like a guest room?
A clutter-filled house can lead to increased entertainment costs; you don’t want your friends to see the mess (or are sick of seeing it yourself), so you go out. Duplication is another way that clutter can cost you. Have you ever spent money on something you already had because you had no idea where it was, and did not want to spend hours looking for it?
If the thought of actually having to go through all your stuff makes you sweat, don’t worry. Here are some tips that can help make the decluttering process as painless as possible:
Do a little at a time: You are less likely to get discouraged and give up if you set a series of small goals spread out over time instead of trying to clean up the whole house at once.
Take a picture of sentimental items: Do you have some items that you never use but can’t throw out because of their sentimental value (such as the doll you bought for your daughter who is now 25)? Taking a picture can make it easier to part with. You will have a reminder even if it’s no longer collecting dust in your closet.
Donate or sell: While some of your items may be worn out and only welcomed by the trash bin, there may be many things you can sell to a consignment or thrift store, or donate to charity. Think of your cleaning as putting money in your pocket or helping others, instead of just a chore.
Use the “one in, one out” rule: After you go through all that effort to get rid of what you don’t need, you probably don’t want the house to revert back to its former messy state a few months from now. A good solution is to get rid of something whenever you purchase something new. You buy a new t-shirt at the mall—when you get home, go into the drawers and get rid of an old one.
By taking the time to declutter, you’ll be cleaning all the way to the bank.