This company was founded with the mission to assist financial institutions develop a sustainable competitive advantage through service quality delivery and sales effectiveness. The firm specializes in research, training and consulting solutions that improve bottom-line sales and service quality results. The firm's products include a proven and proprietary process for inculcating cultural change, service quality research via customer interviews, on-site mystery shopping and web-based surveys, a comprehensive library of basic and advanced sales, service and leadership training programs, training needs assessment process,
leadership skills inventory and incentive compensation consulting. Founded in 1995, the firm has a 15 year track record of producing results for financial institutions throughout North America...and high margins for itself.

2009 Sales:  $500,000
2009 SDE:  $322,500
Year Established:  1997

"Service Businesses" make up a category of businesses ranging from auto repair services or pet care and grooming companies to fitness centers and travel agencies. We are all keenly aware that the U.S. economy is moving away from its historical manufacturing base to a more service-type economy. This has not been good news for the areas that were built on and provided manufacturing jobs.  Searching any of the online business MLS sites today, however, business purchasers are presented with the greatest choice of potential businesses to acquire in this category.

The skill set needed to be successful is generally more generic for most service businesses than a manufacturing business for example.  Still, there are key factors that you should consider before purchasing a service business, including:

·               Make sure that the business fits your strengths and preferences.  Ask yourself, are you more comfortable dealing directly with consumers or businesses? Are you more comfortable with offering an intangible or tangible type of product or service for sale?

·               What are you really buying? Is there some element of exclusivity, brand recognition or product differentiation to the product or service in the target market?

·               What can you do to build the business? Can you add additional products/services and sell them to the existing customer base or can you expand the geography or industries served?

·               During the due diligence phase be certain to investigate the suppliers, customers, and contracts in addition to the financials.

·               What are the competitive dynamics of the market?  Is there an "800 Pound Gorilla" in the business - meaning a huge competitor who can ultimately impact your business?

·               How easily can a competitor enter into the business? What are the barriers to entry if any?

·               How easily can any employees quit and become your competitor?

·               Is the Seller willing to sign a non-compete clause?

·               Can you obtain financing?  In this category, there will typically be less "hard assets" such as machinery and equipment to use as collateral.  Is the Seller willing to provide financing?

·               Investigate whether there are customer relationship and/or concentration issues. You will want to be sure (and have some protection in the deal terms) that a smooth transition of these relationships will occur after the sale.

·               Allow yourself enough of a transition/training period with the seller.

·               After you take over, consider not making any drastic changes until you are totally comfortable with the peculiarities of the business.
 
A service business will usually enjoy higher than average profit margins compared to other businesses and can provide you will an excellent platform to grow. Touchstone can help you locate and buy a service business that makes sense for you!  Contact our office today at 303-278-7501 to schedule a meeting or visit www.touchstonebiz.com for more information on Touchstone's services. 

Here are some of the funding avenues available to small businesses.  The Small Business Administration works with private lenders that follow SBA guidelines. 

7(a) - The 7(a) Loan Program is SBA's primary program to help start-up, existing small businesses and business acquirers obtain financing when they might not be eligible for business loans through normal lending channels. The name comes from section 7(a) of the Small Business Act, which authorizes SBA to provide business loans to American small businesses. SBA itself does not make loans, but rather guarantees a portion of loans made and administered by commercial lending institutions.  The maximum 7(a) Loan is currently $2 Million.

CDC/504 - The CDC/504 loan program is a long-term financing tool for economic development within a community. The 504 Program provides small businesses requiring "brick and mortar" financing with long-term, fixed-rate financing to acquire major fixed assets for acquisition, expansion or modernization. A Certified Development Company (CDC) is a private, nonprofit corporation set up to contribute to the economic development of its community. CDCs work with SBA and private sector lenders to provide financing to small businesses.

Typically, a 504 project includes:
·  A loan secured from a private sector lender with a senior lien covering up to 50 percent of the project cost;
· A loan secured from a CDC (backed by a 100 percent SBA-guaranteed debenture with a junior lien covering up to 40 percent of the total cost;
·  A contribution from the borrower of at least 10 percent equity.

Microloans - The Microloan Program provides small, short-term loans to small business concerns as well as not-for-profit child-care centers. SBA makes funds available to specially designated intermediary lenders, which are nonprofit community-based organizations with experience in lending as well as management and technical assistance; these intermediaries make loans to eligible borrowers. The maximum loan amount is $35,000; the average loan is about $13,000.  Microloans may be used for working capital or the purchase of inventory, supplies, furniture, fixtures, machinery and/or equipment. Proceeds cannot be used to pay existing debts or to purchase real estate.

Contact Touchstone for the information on structuring and financing business acquisitions.