Each answer (except the multiple choice) needs to be 4+ sentences, with both in-
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Each answer (except the multiple choice) needs to be 4+ sentences, with both in-text citiations, as well as a full citation UNDER EACH ANSWER. I do not need a cover or reference page and formatting does not matter.
MUST USE ONLY THESE SOURCES (SOME ATTACHED, SOME LISTED BELOW):
-Buying and Selling a Business with Mel Lisiten from Mind Your Business with Yitzchok Saftlas, (2017) New York 77WABC talk show, Retreived from https://youtu.be/mrGz7PsXyDw
-Franchising (Evidence-based acquisition package). (2010). Sunrise, FL: D.E. Visuals. https://video-alexanderstreet-com.libproxy.nau.edu/watch/franchising
-Selling Your Business: The Sales Agreement from the Small Business Administration (SBA) (2018)
-Branding 101, understanding branding basics and fundamentals
What is debt financing and what are the most common sources of debt financing? Discuss several of the advantages of this type of financing.
Cities can promote the development of their small businesses and encourage local small businesses to bid for city contracts. Provide an example of a city program, illustrated in the lesson resources, which demonstrates how a city provided direct support to small business in building their capacity to bid for city contracts.
Business financing can be obtained from a range of sources. Each has costs and benefits that should be considered. Provide an overview of how prepay financing can be used as a financing method for small businesses.
Provide a brief summary of franchising and what a franchisor has to offer an investor, if they choose to become a franchisee.
Owning a franchise comes with defined costs, franchisor controls, and contractual obligations. In exchange for the right to use the franchisor’s name and benefit from the franchisor’s assistance, franchisees could pay an advertising fee. Provide a brief overview of this fee.
Provide at least three examples of ways in which a franchisor provides support to a franchisee.
Describe the approach a business investor might take if attempting to determine the value of the assets of an unfamiliar business. Whether buying or selling a business, what are the five-step strategies for valuing a business?
What assets are included in an intellectual property audit? Explain how owning a patent or other intellectual property can increase a company’s valuation.
Read the following mini case and use the capitalized earnings method to calculate the value of the business.
Lauren Holcombe has wanted to open her own clothing store since she was in high school. Her career interest and dynamic personality enabled her to get a part-time job at a small women’s clothing shop in her hometown after school. When Lauren enrolled in the state university to major in retail management, she got a part-time job in the ladies’ clothing section of a prestigious department store in the city. During Lauren’s senior year in college, her aunt Bessie died and left her an inheritance of nearly $300,000. Lauren immediately began planning to launch her own clothing store. During a trip to her hometown over the Christmas break, Lauren discovered that a well-established ladies clothing shop was up for sale. The shop was well known and quite successful, but the owner, Kathleen Todd, was retiring. Lauren contacted Ms. Todd to discuss the sale of the business.
Ms. Todd hired a company to conduct an independent appraisal of the business, which concluded that tangible assets were $230,000 and assumable liabilities were $18,000. The appraisal estimated net profit for the next year to be $73,000, before deducting any managerial salaries. Lauren expects to draw $20,000 in salary since she believes this is the salary she could expect when working for someone else. Lauren estimates that a reasonable rate of return on an investment of similar risk is 25 percent. Ms. Todd has set a value of $85,000 for intangibles such as goodwill, and is asking $297,000 for the business.
Using the capitalized earnings method to calculate, what is the value of the business? How does it compare to the amount of Ms. Todd’s sales price?
Explain the concept of earn-out payments when a business is being sold. What does the seller gain from this type of financing arrangement?
Potential buyers of a business typically value a private company in one of several ways. Discuss the discount cash flows method of valuation.
What is the most common exit strategy for selling or transferring ownership of a business? Provide an example of an alternate option.
When selling the business assets or stock of a corporation, a sales agreement is a key document. What is the main objective of a sales agreement? Identify at least four items that should be addressed or included in a sales agreement, according to the Small Business Administration (SBA).
Provide a brief overview of brand drivers and why they are important in creating value for an organization.
If business investors buys a franchise, they must pay a percentage of every unit sold/sales volume to the franchisor. That percentage is called ________.
a franchise fee