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Written by Michael Weisbrot


Hard Times In Surety The surety bond market is currently a very conservative market. Contract and commercial bond departments throughoutrepparttar nation have tightened up their underwriting practices due to enormous loses throughoutrepparttar 136538 industry. Many sureties have had to close their doors, other have had their ratings drop to a level where they can not writerepparttar 136539 same business they could in years past. Obviously this leavesrepparttar 136540 bonding companies that are still operating with a very conservative outlook when it comes to their underwriting guidelines.

One thing that many do not understand is whilerepparttar 136541 current surety bond market is tough, it is considered a more traditional underwriting approach. Contractors are being angered by decreases in their bond lines, or in worst cases are now being deemed "not bondable". Business owners seeking commercial bonding such as license bonds to run their business are not only finding it harder to obtain an approval, but are also seeing rates much higher than years past.

Why such a drastic difference? A couple years backrepparttar 136542 industry sawrepparttar 136543 softest bond market ever, which caused a backlash to what is now today's hard market. The surety bond market is cyclical, a member ofrepparttar 136544 Surety Bond Forums commented onrepparttar 136545 cycle stating:

Body Shop - How to Value One

Written by Willard Michlin


Many smaller body shop owners have asked, “How do I appraise my body shop?” Inrepparttar last month I have been asked to do two appraisals on body shops. The first appraisal was to assist in partnership dissolution;repparttar 136537 second appraisal was for marriage dissolution. (That is whatrepparttar 136538 attorneys call a divorce.) Would you like to know how to appraiserepparttar 136539 value of a body shop business?

Before we begin, I would like to make one comment. Whenever a CPA has done an appraisal of a body shop, I find that their opinion of value is much greater thanrepparttar 136540 actual valuerepparttar 136541 market place will pay. This is not becauserepparttar 136542 CPA’s do not know what they are doing because they do; it is just thatrepparttar 136543 market place places a much higher risk on buying a body shop thanrepparttar 136544 accountants do. The following is an excerpt from one of those appraisals.

THE THREE WAYS TO APPRAISE A BUSINESS 1. The ASSET VALUATION METHOD. This method is basically used when a body shop does less than $400,000 a year in gross income andrepparttar 136545 seller is making wages, but no real profit above what he would be paid if working for another. On this size business, a buyer is willing to pay forrepparttar 136546 assets ofrepparttar 136547 business but little or nothing for goodwill. The equipment is usually worth between $50,000 and $100,000, depending on how many frame machinesrepparttar 136548 business owns and how nice a spray boothrepparttar 136549 business owns.

I have seen some specialized shops sell for more thanrepparttar 136550 above number because they have a truck spray booth or another business attached torepparttar 136551 main business. Examples of attached business might be an auto repair shop or towing operation. Alsorepparttar 136552 location, size and real estate rental amount will influencerepparttar 136553 value of any business, to some degree.

2. The second method, I callrepparttar 136554 GROSS SALES METHOD. This is used whenrepparttar 136555 sales are over $1,000,000 a year butrepparttar 136556 profit is unknown or financials are not available or reliable. Because of experience, a Body shop buyer can make reasonable estimates of future profits, if they have some basic information. The basic information includes rent, source of business (DRP, STREET, or a CAR RENTAL AGENCY), andrepparttar 136557 desirability ofrepparttar 136558 location.

When this method is used,repparttar 136559 value appears to be about 3 months sales or 25% ofrepparttar 136560 last 12 months sales. This method is not very reliable on businesses with sales of less than $1,000,000, becauserepparttar 136561 question of being profitable is very questionable. Why is this breaking point $1,000,000 in annual sales? Multi-store buyers will have well paid managers, so many figure their breakeven point is around a million.

Less than $1,000,000 in sales is not even worth their time. Of course we know that there are exceptions torepparttar 136562 rules. Some ofrepparttar 136563 exceptions are A. when a new location will be a satellite store to a bigger location. B. The buyer must have a location in a specific area to please a DRP. C. To get rid of a competitor.

3. The third and most used method of evaluating any business, including body shops, isrepparttar 136564 NET PROFIT METHOD. This method is based onrepparttar 136565 idea that a business is worth what it generates, in profit and benefits, for an owner. Body shops, like so many other small businesses, often do not show a profit, atrepparttar 136566 end ofrepparttar 136567 year. Strange, how so many businesses of different sizes all just happen to end up with little or no profit. What I find really amazing is thatrepparttar 136568 IRS doesn’t audit more businesses then they currently do.

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