The Law of Two Feet

The Law of Two Feet

What do you know about owning a business and the Law of Two Feet?

So we have all heard of the Law of Attraction and Einstein’s Law of gravity but have you heard of the Law of Two Feet?

If you look up Wikipedia it appears to give credit to the Law of Two Feet to Harrison Owen. Not sure who he is but what I love about the Law of Two Feet is that it is practical and makes perfect sense, especially to business owners. So I hear you ask – what is the Law of Two Feet?

The Law of Two Feet simply states that if at any time you find yourself in any situation where you are neither learning nor changing, use your two feet and go someplace else.

This is a great law for business owners or those who want to be business owners to follow and live and die by. Too many business owners start or buy a business, get into a routine, and create a cash flow. What they then fail to do is watch where that cash flow comes from and using a sailing term, do not trim the sails or adjust the mast but just keep sailing as if the wind will always be at their back.

The importance of globalization

Two major areas of change affect all businesses. The first area is globalization. Globalization demands that a business continue to source the best products at the cheapest cost so the business remains competitive. As emerging markets and economies throughout the world want to raise their standard of living, they do this by importing the “latest and greatest.” If the “latest and greatest” keeps changing quickly, then those who bought several years back are now behind.

The second area is technology. Technology touches a business in two ways. First, it touches a business with the tools including hardware and software they use to connect with their customer. This not only means the telephone, fax, and email but also social media and the myriad of other ways to stay in front of their customer.

Second, it touches a business with the equipment and machinery they use in their business. New technologies allow new tools to be built and put into the market much quicker than previously. To see this, look no further than the iPhone and iPad and how quick they are to release new and upgraded models. Once a customer enjoys a new product or service they get from a competitor, there is little chance of you winning them back to your old way of doing business. What I see happening a lot in the market, is that some businesses are not moving with the market to protect their market and the products they provide. Some good examples would include the printing business with new ink and equipment technologies. A business in the medical field sees innovations. The auto industry is constantly changing with the parts and technologies it creates. Many products and services are moving online and away from brick-and-mortar stores.

The critical thing is for a small business owner to understand and recognize the changes and be part of them. Not sitting and watching and refusing to move their two feet as they are no longer learning or contributing.

Avoid Business Risk With Real Estate in California

You’ll have many questions to ask when you’re buying or selling a business. Working with a qualified business broker in California will pay dividends. Your business valuation consultant will help you review the documents, the business climate, and the industry so that you make a wise decision that will build your business for the future.

There is simply no “one size fits all” approach whether selling or acquiring a business with real estate. Here are some other factors to consider.

• Some California business owners that also own the Real Estate, simply prefer to keep the Real Estate and offer a lease to the buyer of the business. If a decision has been made to sell the business, before a final decision is made about whether to also offer the commercial property for sale or not, the following are important items to consider.
• How critical is the Real Estate to the operation of the business? For example, if the business is a gas station or a car wash built on the Real Estate the business operates from, it may be hard to sell just the business and offer a lease to a buyer. This is because the business cannot easily and readily be moved
• Is the Real Estate just land or does it include buildings or structures on the Real Estate? If it includes buildings or structures, are they in good condition or do they need repairs and maintenance? If repairs and maintenance are required, is the seller willing to pay those costs so the buildings and structures are brought up to date and the latest building code?
• The buyer will probably want a lease for the Real Estate. If the buyer wanted a three- or five-year lease with options but only stayed for the initial lease and then left, would the Real Estate owner easily find a replacement tenant? If the buyer is getting an SBA loan, they will require a lease to match the length of the loan which is typically 10 years.
• Has the owner or seller of the business been allocating an amount for rent and is this amount a market rate or the amount the owner of the Real Estate is willing to accept as rent? If there is no rent allocation or the rent is below the market rate and the buyer has to pay a higher rent, it will lower the value of the business as expenses are higher.
• This also applies if the owner of the business has not been paying the property taxes, building insurance, or maintenance of the Real Estate and now expects the buyer of the business and Real Estate to cover these costs.
• Are there any environmental issues on, or near the real state? If so, this may lower the value of the Real Estate and the business.
• When was the last time that local zoning ordinances were checked so if the Real Estate is put on the market, it is ‘smooth sailing’ to close the sale?
• Related to local zoning ordinances are local Use requirements typically defined at the municipality level.
• Is the Real Estate part of a flood zone?

• Sample report of California Commercial Real Estate with basic property overview, environment, building, value, and more.
• Sample report of California Commercial Real Estate with climate check including flood, fire, storm, heat, and more.
• Sample report of California Commercial Real Estate property of the environment with regulatory summary and neighborhood.
• Sample report of California Commercial Real Estate flood certificate.
• Sample report of California Commercial Real Estate with property condition report, site summary, building summary, hazard risks, and more.
• Sample report of California Commercial Real Estate estimate of value.

How to Sell a Commercial Property Fast with a Business in California?

Are you looking to sell your commercial property and business in California?
A crucial first step is to get an accurate business valuation.
This is not only important for you as the seller, but also for potential buyers and lenders if the buyer needs financing.

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