Family Income and Main Street Businesses

Sunbelt sells “Middle Income, Family Incomes” or “Main Street” based on this report from PEW Research on MSN via CNBC today:

Question; Do the Business Broker Rules of Thumb Work regarding Family Income and Value of a Business?
—————————————————————————
“The share of American adults in middle-income households also decreased, from 55% in 2000 to 51% in 2014,” Pew Research Center reports. “At the same time, the share of adults in the upper-income tier increased from 17% to 20%.”
Although income is just one part of class, it’s a crucial element and the one that’s easy to measure and track.
So just how much do you need to make to qualify as middle class these days?
Pew, which defines middle class as adults whose annual household income is two-thirds to double the national median ($55,775 as of 2016),
details the national middle-income range for various household sizes.
“The income it takes to be middle-income varies by household size, with smaller households requiring less to support the same
lifestyle as larger households,” Pew explains.
Here’s the breakdown of how much you have to earn each year to qualify as middle-income family, depending on the size of your family:
Household Income: A. Business Gross Revenue C. Ave. FI x 2.5 = Biz Value
Household of one: $24,042 to $72,126 $160K to $480K $49K x 2.5 = $123K
Household of two: $34,000 to $102,001 $226K to $687K $68K x 2.5 = $170K
Household of three: $41,641 to $124,925 $280K to $833K $84K x 2.5 = $210K
Household of four: $48,083 to $144,251 $320K to $960K $96K x 2.5 = $240K
Household of five: $53,759 to $161,277 $360K to $1,080K $108K x 2.5 = $270K
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Business Broker Rules of Thumb:
A. Using Ed Pendarvis’s Rule of Thumb: A business will net the owners 10-20% of the Gross Revenue Amount when run correctly.
B. So if we take 15% as an average and apply to the above:
C. Using the Business Reference Guide multiples for Business Value: A business is worth 2-3 times it’s SDE (Seller’s Discretionary Earnings (lets call that a (FI) Family Income.
D. So lets take 2.5 x the Family Income Average – this shows we sell business’s in the price range of 2 x $24K = $48K to 3 x $162K = $486K.
E. We looked at 36 random deals closed and the average was $484K – with a range from a small $50K to a larger $3M deal.
In summary; the Rules of Thumb (A & C workout right as shown in E).

“So Sunbelt Is The Place To Go To Buy or Sell A Business”
Call Cecil Dye, The Business Guy to find the Right Business.

Thank You, Ed Pendarvis, Founder of Sunbelt Business Broker’s and Tom West for The Business Reference Guide – The Essential Guide to Pricing Businesses and Franchises.

Sunbelt Business Brokers of Charleston, SC

We have a lot of really good small business listings.

From auto repair, car washes, commercial property, convenient stores/gas, hardware stores, hvac, landscaping, manufacturing, numerous restaurant/bars, various retail shops, salons, tourist businesses and more.

We are the leaders in matching buyers and sellers thru our proven business processes.

Give me a call: 843.636.2475

How Long Will It Take to Sell My Business?

Depends on a couple factors:

1. Pricing it right based on Seller’s Discretionary Earnings.
2. Type of business by industry.
3. How ease or difficult is it to replace the owner?

We are finding that it takes 9-15 months to sell a business; but we have lots of buyers in the market in 2017.

At Sunbelt Business Brokers, we know how to advise you in making good decisions to get your business sold as soon as possible.

Call Cecil Dye, the Business Guy for a free consultation about Listing Your Business For Sale. 843.636.2475 cecil@sunbeltnetwork.com

How Do I Keep My Business Sale Confidential?

Great question by every business owner. When it’s time to sell their pride and joy, they don’t want their customers, competitors and employees to know it is in the process of being advertised For Sale.

How do Business Broker’s accomplish this Confidentiality?

Carefully Using Accepted Tools in our Industry.

In summary, we use the NDA for Buyers, Confidential (limited information) websites to advertise, meetings with you after hours, at our office or other offsite location, screen prospects with you before proceeding to release information, etc. etc.

Give me a call and we can answer your questions to you become Comfortable with our Confidential Process. Sunbelt Network is The Place to go to Buy or Sell a Business.

Contact Cecil Dye, the Business Guy; 843.636.2475 cecil@sunbeltnetwork.com

HR Hapenings 3.1.15

Tracking Wage Increases by Kathy Coughlin

According to the Workforce Vitality Index, which measures the total wages paid to the U.S. private-sector workforce, growth in wages and employment were up in the fourth quarter of 2014. In 2014, job holders’ hourly wages rose 2.7 percent overall and job switchers’ hourly wages rose 8.2 percent, according to the index report. While job switchers’ wages grew at a much faster pace than job holders’, the gap has closed a bit year over year, possibly fueled by employers attempting to retain talent by offering better wage increases, the report noted. Wages grew by 2.4 percent for full-time workers as opposed to only half a percent for part-time workers.

Growing confidence in the labor market appears to have prompted companies to create and hire for more full-time positions. Wages for those in the under-25 age group grew nearly 6 percent year over year, more than twice as fast as the wages of any other group, the index showed. On the other end of the spectrum, wages for the age 55 and older segment increased by 2.3 percent, which was slightly lower than the wage growth of the two middle tiers. Workers age 55 and older, however, showed stronger employment growth than other age groups.

This may have been driven by a combination of workers crossing the age-55 threshold and older workers delaying retirement, the index report stated. Absence management remains a priority for U.S. companies and employers of all sizes, according to the 2015 Guardian Absence Management Activity Index and Study, released in February along with a summary infographic.

Absence Management
It’s imperative for employers to understand the importance of employee absences and how, if not managed properly, can significantly compromise workplace productivity. Employers of any size can no longer afford to view absence management as optional. Given the availability of resources in technology and expertise, it is easier than ever to start or improve an existing absence management program and manage it effectively. A study by the Guardian Life Insurance Co. of America showed that employers feel better able to overcome absence management obstacles than in the past, due to more resources and expertise available in the marketplace. For instance, just over half (53 percent) of companies reported facing challenges with applying regulations related to the ADA Amendments Act, down from 60 percent in 2012.

But while many companies have made progress in their absence management efforts, there is still a long way to go. Employers indicated that they still:  Have difficulty interpreting federal and state leave laws (58 percent of respondents).  Face challenges ensuring employees will be able to perform their essential duties when they return to work (54 percent).  Lack the staff resources to manage absenteeism (42 percent).

Listed below are steps employers can take to enhance their Absence Management program:

1. Institute a return-to-work program with:  A written return-to-work policy. An interactive process where the employee, manager, HR representative, case manager and/or physician can talk about return-to-work possibilities.  Guidelines for the duration of disability based on diagnosis.  Accommodations to help facilitate employees’ return to work.  Nurse case management.

2. Be able to obtain reports that include:  Disability usage patterns.  Disability claimant status.  Disability cost.  Family and Medical Leave Act (FMLA) usage patterns (for employers with 50+ employees).  FMLA claimant status.  Integrated disability and FMLA information.

3. Refer employees to health management programs such as:  An employee assistance program.  A disease management program.  A wellness program. 4. Have a contact person (HR) for reporting the following:  Short-term disability and FMLA absences.  Other leaves of absence such as sick/vacation leave or paid time off.

Additional Initiative – Employee Engagement: When asked to name the most critical measures of successful absence management programs, nearly half of employers said employee engagement—by far the top mention. This finding is not surprising given the linkage between employee engagement and productivity, which has been documented in several studies showing that engaged employees miss fewer work days and are more productive. It can improve the bottom line to any organization if some planning and resources are dedicated to managing both scheduled and unscheduled absences.

Kathy Coughlin, President

www.HRServiceGroup.com

SBA Build Your Business Plan

Tons of good resources for small business buyers and owners:

Build Your Business Plan

Are you interested in starting a business? Creating a business plan is one of the most important steps you will take because the plan serves as your road map for the early years of your business. The business plan generally projects 3-5 years ahead and outlines the route a company intends to take to reach its yearly milestones, including revenue projections. A well thought out plan also helps you to step-back and think objectively about the key elements of your business venture and informs your decision-making on a regular basis.

SBA’s Business Plan Tool provides you with a step-by-step guide to help you get started. All of your information entered into this tool is 100% secure and can only be viewed by accessing your account using the password you have specified. Not only can you save your plan as a PDF file, you can also update it at any time, making this a living plan to which you can often refer. You can also use your completed business plan to discuss next steps with a mentor or counselor from an SBA resource partner such as SCORE, a Small Business Development Center (SBDC) or a Women’s Business Center (WBC).

Complete each section of SBA’s Business Plan Tool at your own pace. Save your work at any time and pick up where you left off the next time you log into the tool. Your information will be saved for up to six months after your last login date.

During the step-by-step process, this tool will update the status of your business plan. Once you save your information and move to a new section in the business plan, a checkmark will appear in the numbered section menu at the top of the screen denoting when each section is complete.

Get started now by going on line and logging in or registering for a new account at SBA.gov.

Debt Financing vs. Equity Financing

Why More Debt May be Good for Your Business – Omar A Ramberan Sun Trust Bank 843.412.9108

Ever since the recent financial crisis introduced the general public to the pitfalls of excessive leverage within the financial system, there’s been a common misconception that “leveragability” for corporate borrowers may have been fundamentally altered. However, lending in today’s environment remains robust and is driven by the same fundamental analysis that occurs across financing cycles – stability and predictability of a company’s cash flow, coupled with the market value of core assets, remain paramount to any lender’s underwriting.

So, with a relatively more stable market environment, companies that have survived and thrived in the post-crisis environment are well positioned to access the vast amount of underutilized debt financing that’s available.

Nonetheless, equity financing remains a very appealing option for many. Why is it so appealing? To many
entrepreneurs, at first blush it seems like “free” money – with no repayment obligations and no interest payments. And they can often retain some say in determining stock price, dividend payments and the role investors will assume in their company.

What many business owners overlook, however, is that while equity financing doesn’t have to be repaid like a bank loan, the long-term costs of equity financing (in the form of relinquished ownership and control) can be significantly higher than debt. This is especially true in light of today’s low interest rate environment, where the relative cost of debt is near an all-time low. Keep in mind that each share of equity you divest to investors is not only an ownership share out of your pocket that has an unknown future value, but also dilutes your control over both the long-term vision and day-to-day operations of your business.

The Preferential Tax Treatment on Debt Financing
One of the major attractions of debt financing is that interest payments on debt are excluded from corporate taxes. In most cases, the principal and interest payments on a business loan are classified as business expenses, and thus can be deducted from your business income taxes. But while the interest on debt is paid before taxation, dividends paid to equity holders in most cases are paid from after-tax profits. As a result, the cost of debt is often significantly less and therefore more attractive than the cost of equity due to its tax-deductible interest.

While an optimal capital structure will typically involve a mix of both debt financing and equity financing, a greater dependence on debt finance may be advisable given the preferential treatment of debt relative to equity in the federal tax code.

Equity Financing – High Transactional Costs and Diminished Control
In addition to the tax considerations, there are transaction costs associated with raising capital, whether through debt or equity financing. Your company must pay fees and outside expenses when issuing stock or corporate loans. But equity financing transactions generally require a greater time commitment from senior management, potentially at the cost of diverting their focus from more pressing business matters.

Raising debt capital may prove a less complicated endeavor, because with debt financing your company isn’t required to comply with complex and arduous state and federal securities laws and regulations. Nor does debt financing require you to distribute periodic mailings to a large number of investors, hold regular shareholder meetings, or seek shareholder approval for certain actions.

And because lenders don’t have an ownership stake in your business, unlike equity investors, they have virtually no say in the business decisions of the company. The dilution of ownership interests that occurs when equity is relinquished often comes with infringements on both your control and decision-making power. Investors expect a return on their investment, and if it’s slow to materialize, they’ll typically insert themselves more actively in the day-to-day running of the business. There’s no shortage of business owners who have found themselves on the outside looking in – having been forced out by their own investors.

Refinancing Higher Interest Debt
In much the same manner as individuals will refinance their home mortgage as interest rates decrease, business owners too need to remain vigilant as to the various loans and lines of credit they have in place. The current interest rate environment may afford you an opportunity to obtain more favorable rates, terms
or covenants which can serve to help lower your overall debt servicing costs and in turn make obtaining additional capital feasible.

Potential Drawbacks to Debt Financing
Of course, there are also inherent disadvantages to debt financing. Unlike equity, debt must at some point be repaid. It’s the reason why many start-ups are drawn to the equity side, sometimes willing to relinquish a majority stake in their fledgling business in order to minimize their personal risk. Companies that are highly leveraged (have a large debt to equity ratio) are more susceptible to experiencing cash flow issues due to the high cost of debt servicing, and are viewed as riskier investments by potential investors. And corporate loans may also contain certain restrictions on the borrower’s activities, such as preventing management from pursuing other financing options or non-core business opportunities.

As a result, businesses are often limited as to the amount of debt they can carry and commonly required to pledge company assets (and in some instances personal repayment guarantees) to the lender as collateral. At SunTrust, we are committed to helping our clients meet their growth and financing goals. The more your banker knows about you, your company and your financing needs, the greater their comfort level in lending to you, and the more creative and innovative they can be in financing your growth.

As a leading universal bank, SunTrust can offer your business extensive debt and equity expertise, in-depth industry insights, and a commitment to work with you to help achieve your financing objectives. For further insights or to discuss your growth and financing needs, talk to your SunTrust Relationship Manager.

Omar A Ramberan 843.412.9108
Vice President, SunTrust Bank
276 East Bay Street
Charleston, SC 29401

© 2013 SunTrust Banks, Inc. is a federally registered service mark of SunTrust Banks, Inc.
Content used with permission. Content is intended for educational purposes only. SunTrust Banks, Inc. and its affiliates are not responsible for this third party content, and the views expressed in this content do not necessarily reflect the views of SunTrust Banks, Inc. or its affiliates

Business Owner’s Affordable Care Act (ACA) Strategies

Affordable Care Act (ACA) Strategies
New benefit plan year 2015 is rapidly approaching and employers with at
least 100 full-time employees (or full-time equivalents) during 2014 will become
subject to the shared responsibility (employer mandate) provisions of
the ACA. The employer mandate generally imposes penalties on such a
“large” employer if the employer fails to offer affordable, minimum-value
group health plan coverage to its “full-time employees,” generally defined under
the ACA as employees working 30 hours or more per week.
Keep in mind, employers with more than 50 but less than 100 employees in
2014 will not have to comply with the ACA until benefit plan year 2016.
These employers will have to start tracking their employee hours during calendar year 2015.
Due to the rising cost of employer-sponsored health plans, employers that must comply in 2015 will have
financial challenges. As a result, many budget-conscious employers are exploring low-cost coverage alternatives,
including sub-minimum-value health plans (called skinny plans) and employee-pay-all health plans,
which could be offered to all full-time employees or just to those full-time employees who were historically
ineligible for coverage. However, these strategies carry some risk, as discussed below.
Employer Mandate Penalties
To understand the low-cost coverage strategies, a brief overview of the employer mandate penalties is
required. A penalty under the employer mandate is triggered if at least one full-time employee receives a
premium tax credit or cost-sharing reduction to purchase coverage on the Health Insurance Marketplace
(the health insurance exchanges), and:
1. The employer fails to offer health coverage to all of its full-time employees and their dependents
(no-offer penalty); or
2. The employer offers health coverage to its full-time employees (and their dependents), but the
coverage is either unaffordable or does not provide minimum value (deficient-coverage penalty).
The no-offer penalty is $2,000 per year times all of the employer’s full-time employees (disregarding the
first 30 employees). The deficient-coverage penalty is $3,000 per year times each full-time employee who
receives a premium tax credit or cost-sharing reduction to purchase coverage on a health insurance exchange.
In most cases, the no-offer penalty will vastly exceed the deficient-coverage penalty because, despite the
deficient-coverage penalty being a greater dollar amount, the deficient-coverage penalty applies only to
each full-time employee who receives a subsidy to purchase coverage on a health insurance exchange. On
the other hand, the no-offer penalty is multiplied by the number of all of the employer’s full-time employees
(disregarding the first 30 employees).
(continued)
Volume 8, Issue 9 Latest in HR news and alerts
HR Happenings
Affordable Care Act (ACA) Strategies (cont’d)
Low-Cost Coverage Strategies
To avoid the potentially larger no-offer penalty, some employers are considering
a low-cost health coverage compliance strategy. Subject to satisfaction of any
applicable non-discrimination requirements, this strategy could be applied to all
full-time employees or just to those full-time employees who were historically
ineligible for coverage. There are two main ways to implement this strategy,
both of which involve intentional exposure to the deficient-coverage penalty.
1. Sub-Minimum-Value Coverage (Skinny Plan) Strategy
Generally, a group health plan provides minimum value if it is designed to pay for at least 60% of the cost of
claims for a standard population. Some employers are considering offering low-cost coverage that would
intentionally fail the minimum value test. These so-called “skinny” plans are low cost because they exclude
large categories of care. For example, they may only cover preventive care, like vaccines and cancer screenings,
without employee cost-sharing (as required by the ACA), but not hospitalization, surgery, x-ray, or
prenatal care.
An employer offering a skinny plan would be exposed (intentionally) to the deficient-coverage penalty. Because
the skinny plan fails the minimum value test, each full-time employee who purchases subsidized coverage
on a health insurance exchange would trigger the deficient-coverage penalty. Employers electing this
strategy project that the premium/cost savings from offering the skinny plan will exceed the deficientcoverage
penalties triggered.
2. Unaffordable Coverage Strategy
Generally, a group health plan is unaffordable for ACA purposes if the employee’s required contribution for
self-only coverage exceeds 9.5% of the employee’s household income for the taxable year. Because an employer
typically will not know an employee’s household income, recently-issued final regulations offer safe
harbors that employers can use to determine affordability.
Some employers are considering offering coverage that, in most cases, would intentionally fail the affordability
test. These unaffordable plans are low-cost because employees would be required to pay most or all of
the premiums. In a plan that is designed to be unaffordable, the required employee premium would be set
at a level that is projected to readily exceed 9.5% of household income for most employees.
As with skinny plans, an employer offering unaffordable coverage would be exposed to the deficientcoverage
penalty. Each full-time employee for whom the coverage is unaffordable, and who purchases subsidized
coverage on a health insurance exchange, would trigger the deficient-coverage penalty. However, as
with skinny plans, employers pursuing this compliance strategy project that the cost savings from offering
unaffordable coverage will exceed the deficient-coverage penalties triggered.
Keep in mind – these strategies carry some risk. For example, although Federal officials have informally
indicated that skinny plans currently meet the ACA’s broad definition of “minimum essential coverage”, that
definition could be amended to require more robust coverage.
will continue to monitor strategies and regulatory activities of the ACA and work with clients
to make the best and financially sound decision as the implementation date steadily moves forward.
Wishing you a Happy & Safe Labor Day Weekend!
Latest in HR news and alerts September 2014
Page 2
Complements Kathy Coughlin KathyC@HRServiceGroup.com

HR Happenings

Updated COBRA Notices and the Affordable Care Act (ACA)
The Obama administration announced updates to model notices that employers
must provide to employees, informing workers of their eligibility to
continue health care coverage through the Consolidated Omnibus Budget
Reconciliation Act (COBRA).
The Department of Labor (DOL) released a new model general notice form
and model election notice form for providing COBRA notices to employees.
Additionally, a notice of proposed rulemaking on the COBRA notice requirements were published.
Federal agencies also released an updated model notice regarding premium assistance under Medicaid and
the Children’s Health Insurance Program (CHIP).
The updated notices make it clear to workers that if they are eligible for COBRA continuation coverage
when leaving a job, they may choose to instead purchase coverage through the Affordable Care Act’s
(ACA) Marketplace.
Employees directed to the public exchange/Marketplace, where they may qualify for federal subsidies, are
less likely to feel they need to pay the full premium to continue with their former employer’s health coverage
through COBRA.
Workers and their families who are eligible for employer-sponsored coverage generally must be informed
of their right to COBRA continuation coverage at the start of employment. They must also be informed
of their right to purchase COBRA coverage when separating from a job. The proposed changes to the
model notices would offer information on more affordable options available through the Marketplace,
where workers and families may be eligible for financial assistance that would not otherwise be available
for COBRA continuation coverage.
The new COBRA notices offer an opportunity for employers to provide further encouragement and education
to plan participants about non-COBRA coverage options.
Employers are not required to use the model notices but plans that do use the model notice are presumed
to meet COBRA notice requirements. Employers that are covered under the COBRA Federal
regulation (more than 19 benefit eligible employees) should consider these revised model notices.
Potential Gap in Coverage
When a COBRA qualifying event occurs, coverage could be lost either immediately or, in many cases, at
the end of the month in which the event occurs (for example an employee terminates 5/25/14 and may
become COBRA eligible 6/1/14). Notice of COBRA rights (which will now explain Marketplace rules) is
not provided for weeks and, sometimes, a couple months after the qualifying event. At that point, there is
a gap between the loss of coverage and someone’s actual choice of COBRA or Marketplace coverage.
During that gap, individuals are at risk of significant claims if they need health care. The main purpose of
COBRA coverage is that it is retroactive to the date of the loss of coverage and is designed to fill that gap.
(continued)
Volume 8, Issue 6 Latest in HR news and alerts
HR Happenings
Updated COBRA Notices and the Affordable Care Act (ACA) (cont’d)
Marketplace coverage, however, applies prospectively only. Therefore, individuals will be faced with a
choice: (a) elect the more expensive COBRA coverage retroactively to make sure claims are paid but then
be forced to continue that coverage until the next annual enrollment period (or a special enrollment period
if earlier); or (b) take the cheaper Marketplace coverage but suffer the gap in coverage and be forced to
pay for the claims incurred without coverage.
The choices and risks between COBRA vs. Marketplace is not explained in the new model COBRA notices.
Perhaps future guidance will solve this problem by allowing individuals the choice to opt out of COBRA
coverage and into Marketplace coverage on more frequent intervals.
For additional information, the DOL published frequently asked questions related to the proposed changes
to model notices on their website: www.dol.gov.
Guidance on Background Checks
Employers conducting background checks should be sure to evaluate their policies
to make sure they are in compliance with varies regulations pertaining to their hiring
process and the Fair Credit Reporting Act (FCRA). Non-discrimination legislation
such as the Americans with Disabilities Act (ADA), the Genetic Information
Nondiscrimination Act (GINA) and Title VII Civil Rights Act all should be considered
when creating background check policy and procedures.
Any personnel or employment records you make or keep (including all application
forms, regardless of whether the applicant was hired, and other records related to
hiring) must be preserved for one year after the records were made or after a
personnel action was taken, whichever comes later. If the applicant or employee files a charge of discrimination,
you must maintain the records until the case is concluded.
Professional Note: Treat everyone equally. It’s illegal to check the background of applicants and employees
when that decision is based on a person’s race, national origin, color, sex, religion, disability, genetic
information (including family medical history) or age (40 or older). For example, asking only people of a
certain race about their financial histories or criminal records is evidence of discrimination, the EEOC document
states.
can help you with these and other topics
Latest in HR news and alerts June 2014
Page 2
Kathy Coughlin, President
KathyC@HRServiceGroup.com.

Do You Want to Buy or Sell a Midas Auto Center?

Midas has re-upped their commitment to Sunbelt Business Brokers Re-sales in a BIG WAY.

We recently executed new contracts with Midas on:

• Franchise Re-sales
• Franchise Referrals (1st time Midas is using a Franchise Broker!)
• “Matchmaker” Program !

Midas is the largest auto after-market repair franchise, Midas has over 2,900 locations operating in the World. However, there is still ample room to grow. In the recent history, finding real estate to put new shops has become Midas’ biggest challenge.

Our Matchmaker relationship with Midas allows your office access to their pre-qualified and highly motivated buyers…a terrific asset to both help you SELL your existing auto repair shop listings, and to PROSPECT for additional independent auto repair center listings as well. If a Midas buyer purchases your listing and converts the store to a Midas, you receive FULL RE-SALES COMMISSIONS AND A MATCHMAKER FEE on top!

Learn how you can sell some of your existing auto repair shop listings easily and quickly!

Please look at your roster of listings. If you have car repair facilities, please plan on joining us for the call, or invite your listing broker(s) to do so. If you recently had a car repair center listing expire, this is a great way to re-engage. If you have sellers on the fence, this program can help you secure the listing.

If you are seeking to buy or sell a Midas Auto Center or Other Brand Auto Center; call Cecil Dye, the Business Guy; 843.636.2475