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Showing posts with label nv. Show all posts
Showing posts with label nv. Show all posts
Monday, December 9, 2013
Friday, February 3, 2012
Financing Nevada Pharmacy Franchises
By Brad MacLiver
Authorship and profile at Google
A NV pharmacy franchise is a contractual relationship between two parties. One, the Pharmacy Franchisor is the party that developed their drug store business model, branded the pharmacy related products, and produced the system the pharmacy franchisees will operate under. The second party, the Pharmacy Franchisee, purchases a franchise license from the Nevada Pharmacy Franchisor, and usually pays an ongoing pharmacy franchise fee, or royalty fees, to use the name, products, systems, trade secrets, etc., created by the Pharmacy Franchisor.
Authorship and profile at Google
A NV pharmacy franchise is a contractual relationship between two parties. One, the Pharmacy Franchisor is the party that developed their drug store business model, branded the pharmacy related products, and produced the system the pharmacy franchisees will operate under. The second party, the Pharmacy Franchisee, purchases a franchise license from the Nevada Pharmacy Franchisor, and usually pays an ongoing pharmacy franchise fee, or royalty fees, to use the name, products, systems, trade secrets, etc., created by the Pharmacy Franchisor.
When financing a pharmacy franchise or business, there quite a few options available. All pharmacy franchise funding sources, for drug stores, prefer lending to a pharmacy franchisee who will be working with a nationally recognized name and long track records. Newer pharmacy franchise models in Nevada
Traditional Bank Financing used in funding a pharmacy franchise is available when a pharmacy franchise has the track record and pharmacy name recognition. Many of the banks will show interest in this type of funding opportunity. Unfortunately once the bank reviews the loan documents, many of these banks decline the funding request because they don’t understand the security provided for the pharmacy loan. Community drug stores traditionally have very little in the way of traditional assets to offer as security. Lenders for Nevada
As a borrower, even when incorporated, the independent drug store owner’s personal credit rating will be a factor, along with personal tax returns, and financial statements. The amount of actual cash on hand and the verification of the source of the down payment will be critical factor in qualifying for a pharmacy business loan.
NV Pharmacy Franchise Funding Tips:
1. Because there are quite a few pharmacy franchise financing options to choose from, pharmacy owners in Nevada should perform proper due diligence then obtain the pharmacy funding that best suits their situation.
2. Have an accountant or attorney that is acquainted with pharmacy franchise financing to review the pharmacy business loan documents.
3. There are NV pharmacy consulting services and franchise associations who can help guide a prospective pharmacy franchisee or borrower or a drug store loan.
4. New pharmacy owners need to make sure their funding request is enough to get the Nevada
When pharmacy owners have questions and need information regarding pharmacy franchise business loans, or any types of funding for community drug stores and pharmacies, they should contact a NV pharmacy industry specialist who can provide quality answers and sound advice.
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Tuesday, January 17, 2012
Financing Types Available for Nevada Pharmacies
By Brad MacLiver
Authorship and profile at Google
There are a number of different options available for funding NV pharmacy franchises, specialty pharmacies, and traditional community drug stores.
Authorship and profile at Google
There are a number of different options available for funding NV pharmacy franchises, specialty pharmacies, and traditional community drug stores.
SBA Financing for Pharmacy Business Loans in Nevada
The U.S. Small Business Administration (SBA) partially guarantees loans for pharmacy franchise lenders reducing the risk exposure for the lender. A loan program called 7(a) is a standard for funding pharmacy franchises. These loans can provide funds for pharmacy franchise entry fees, real estate where the pharmacy will be located, property improvements, working capital, and pharmacy related equipment.
Borrowers for the pharmacy franchise must be creditworthy, without any bankruptcies, have ample down payment, but there are variations here, and the business must be able to repay the loan from the cash flow of the Nevada
Terms can range from 5 to 20 years. Within SBA standards interest rates may be adjustable or fixed and will be negotiated by the lender dependent on the financial strength of the pharmacy transaction.
There are SBA fees for guaranteeing Nevada
Patriot Express Business Loan Program
This is another SBA loan program that can be used for pharmacy franchise business loans and is reserved for military veterans, active service members, their spouses, and survivors. The Department of Veterans Affairs would be involved in the Nevada
Funding for Pharmacists in NV Who Are Veterans
There are specific franchise loan programs available for honorably discharged veterans and these Vet programs can be considered for pharmacy franchise loans.
Pharmacy Financing From the Franchisor
Financing a pharmacy franchisee is a usual topic in discussions with a pharmacy franchisor. Franchisors should be able to direct potential drug store franchisees toward funding programs that have previously been successful for their other pharmacy franchisees. Preferred lenders will already be familiar with the pharmacy franchisor and their systems.
Pharmacy franchisors in Nevada
Personal Assets Used in Nevada
Not all prospective pharmacy franchise owners have enough cash on hand. Part of the drug store business financing may require the borrower to liquidate personal stocks, provide personal assets as collateral, refinance their home, or use their 401k to assist the lenders security for making the pharmacy business loan.
If the borrower still does not have enough personal assets then a family member or a friend may be required as a partner in the Nevada
Retirement Accounts Used in Nevada
Retirement Plans can be self-directed and used to invest into a pharmacy franchise. The retirement plan can purchase stock in the NV pharmacy franchise. This is similar to how the retirement plan currently may be investing in publicly traded stocks and mutual funds. Lower debt service and higher profit potential may result when incorporating this option that uses less external financing in funding the franchise.
The downside is, if the pharmacy crashes, so does the retirement fund. The method of providing less expensive financing for the pharmacy in Nevada
Because of the factors involved such as deferred taxes, early or improper distributions, and IRS involvement, funding a Nevada
NV Pharmacy Franchise Agreement Buyout Funding
Keep in mind that the situation with pharmacies are changing due to economic factors, a growing mail order pharmacy market, and shifting market shares. All of these variables have a negative impact on cash flow for Nevada
Buying out the franchisor allows the pharmacy to remove the franchisor from the equation. This in turn allows the pharmacy owner more flexibility in their business decisions. The pharmacy franchisor sold the drug store franchise with expectations of earning income from the cash flow their Nevada
Unfortunately many banks don’t understand the dynamics of the pharmacy industry. This lack of pharmacy knowledge results in the banks looking at the funding request and all they see is a business that has very little collateral compared to amount of financing the pharmacy is requesting. To assist the successful funding process a Nevada
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Tuesday, January 3, 2012
Nevada Pharmacy Cash Flow Instruments and Financial Discount Rates
By Brad MacLiver
Authorship and profile at Google
When a NV pharmacy is considering selling a cash flow instrument such as the pharmacy’s receivables, or a pharmacy business note, the price the Nevada pharmacy owner receives will reflect how much time is involved before the Buyer/Investor/Funder of the cash flow instrument will recoup his principal investment and the desired rate of return the Investor needs to make it desirable to take the risk of buying the pharmacies cash flow instrument.
To entice an Investor to shift the risk of holding the cash flow instrument from the pharmacy owner in NV to the Investor, there is typically a financial incentive for the Investor. The incentive is the rate of return, which is required to compensate for the Investors perceived risk. The risk is based on the credit of the cash flow instrument’s Payor, previous payment history, seasoning, interest rate, and other variables. Discount rates may change depending on the circumstances of the cash flow instrument, the economy, etc.
If theNevada
Time Value of Money:
The concept of cash being more valuable to have a dollar today instead of tomorrow is based on the Time Value of Money (TVM). Most business people are aware of the TVM and how it is fundamental to both personal and corporate decision making, but to make sure we are on the same page, we will cover the basics of TVM.
TVM assumes that money earns interest over time. Therefore, as the cliché says time is money, and because of this we can compare money at different points in time that have different values and call them equal.
An example: If $3.50 today earns 10% interest, it will be worth $3.85 at the same time next year. Therefore, $3.50 today = $3.85 next year = $9.08 ten years from now.
Within the same reasoning the reverse is true. An investor will not pay $1.00 today for a dollar that won’t be collected until next year, or 10 years from now. Today’s dollar will be discounted to reflect risk, inflation, the strength of the economy, etc.
Along with interest rates and principal amounts, a cash flow instruments such as Nevada Pharmacy Business Notes, are originated with a certain time period. The TVM can be looked at, as if it were on a sliding scale. The earlier in time the Note is paid off, the smaller the amount becomes. When the Note is paid early, you don’t get to collect the compounded interest amount, which would have accumulated if you had waited the full time period. The Note was already written and it has already had its terms set. Unlike a loan where the rate of return needed to cover any risks, this risk is added to the loan amount. An investor is unable to go back to the buyer of your business and retroactively change the terms of the note. so the investor will look at only a portion of the note that is going to be purchased and subtract the rate of return necessary to justify the risk. This is practice called Discounting, and the size of the discount is contingent on the risks.
Example:
If you sell something for a $4.50 with 4% interest, equal payments received over a 20 year period, you would expect to receive $9.86. However, should the note be paid in full in 10 years you will only have collected $6.66. You are not collecting the other $3.20 because you are no longer risking anything (you are not earning it). If you want an investor to advance you the $9.86, you will no longer have any risk because you have transferred it to the Investor. To compensate the Investor for accepting the risk of holding the note, the Investor will discount the note, and pay you an amount equivalent to the time and risk involved.
The price you receive when selling your note will be the discounted rate according to the basic TVM principals minus the amount that allows an investor to justify the risk.
If a note is a length of 3, or more years, it may be beneficial for you to sell only a portion of the note. Because the payments from a month in the 5th year will hold less value than payments collected this year, it is beneficial to you to only sell the number of months that you need to obtain the cash that meets your current financial needs. You can always sell more payments at a later date if you need additional funds. Determine what cash you really need and we will calculate the number of months we will purchase to meet your needs.
Although it involves a much shorter period of time, understanding discount rates is the same when selling aNevada
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Authorship and profile at Google
When a NV pharmacy is considering selling a cash flow instrument such as the pharmacy’s receivables, or a pharmacy business note, the price the Nevada pharmacy owner receives will reflect how much time is involved before the Buyer/Investor/Funder of the cash flow instrument will recoup his principal investment and the desired rate of return the Investor needs to make it desirable to take the risk of buying the pharmacies cash flow instrument.
To entice an Investor to shift the risk of holding the cash flow instrument from the pharmacy owner in NV to the Investor, there is typically a financial incentive for the Investor. The incentive is the rate of return, which is required to compensate for the Investors perceived risk. The risk is based on the credit of the cash flow instrument’s Payor, previous payment history, seasoning, interest rate, and other variables. Discount rates may change depending on the circumstances of the cash flow instrument, the economy, etc.
If the
Time Value of Money:
The concept of cash being more valuable to have a dollar today instead of tomorrow is based on the Time Value of Money (TVM). Most business people are aware of the TVM and how it is fundamental to both personal and corporate decision making, but to make sure we are on the same page, we will cover the basics of TVM.
TVM assumes that money earns interest over time. Therefore, as the cliché says time is money, and because of this we can compare money at different points in time that have different values and call them equal.
An example: If $3.50 today earns 10% interest, it will be worth $3.85 at the same time next year. Therefore, $3.50 today = $3.85 next year = $9.08 ten years from now.
Within the same reasoning the reverse is true. An investor will not pay $1.00 today for a dollar that won’t be collected until next year, or 10 years from now. Today’s dollar will be discounted to reflect risk, inflation, the strength of the economy, etc.
Along with interest rates and principal amounts, a cash flow instruments such as Nevada Pharmacy Business Notes, are originated with a certain time period. The TVM can be looked at, as if it were on a sliding scale. The earlier in time the Note is paid off, the smaller the amount becomes. When the Note is paid early, you don’t get to collect the compounded interest amount, which would have accumulated if you had waited the full time period. The Note was already written and it has already had its terms set. Unlike a loan where the rate of return needed to cover any risks, this risk is added to the loan amount. An investor is unable to go back to the buyer of your business and retroactively change the terms of the note. so the investor will look at only a portion of the note that is going to be purchased and subtract the rate of return necessary to justify the risk. This is practice called Discounting, and the size of the discount is contingent on the risks.
Example:
If you sell something for a $4.50 with 4% interest, equal payments received over a 20 year period, you would expect to receive $9.86. However, should the note be paid in full in 10 years you will only have collected $6.66. You are not collecting the other $3.20 because you are no longer risking anything (you are not earning it). If you want an investor to advance you the $9.86, you will no longer have any risk because you have transferred it to the Investor. To compensate the Investor for accepting the risk of holding the note, the Investor will discount the note, and pay you an amount equivalent to the time and risk involved.
The price you receive when selling your note will be the discounted rate according to the basic TVM principals minus the amount that allows an investor to justify the risk.
If a note is a length of 3, or more years, it may be beneficial for you to sell only a portion of the note. Because the payments from a month in the 5th year will hold less value than payments collected this year, it is beneficial to you to only sell the number of months that you need to obtain the cash that meets your current financial needs. You can always sell more payments at a later date if you need additional funds. Determine what cash you really need and we will calculate the number of months we will purchase to meet your needs.
Although it involves a much shorter period of time, understanding discount rates is the same when selling a
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Thursday, August 11, 2011
Buy-Sell Agreements for Pharmacy Owners in Nevada
By Brad MacLiver
Authorship and profile at Google
When a NV pharmacy is owned by two or more people the stockholders/partners should have a Buy-Sell Agreement. A buy-sell agreement is a written document that provides the procedures and governs the future sale of the pharmacy business.
Nevada pharmacy buy-sell Agreements protect the interest of the parties who own the pharmacy in NV and directs the actions triggered by a stockholder leaving the business due to death, disability, divorce, dissolution, or retirement. The agreement will govern how and when the shares of the pharmacy business can be sold, or transferred. It will also provide guidance as to how the pharmacy will be valued along with the obligations of the remaining shareholders of the NV pharmacy.
Buy-sell agreements are important because the different elements of a future sell are predetermined and won’t need to be negotiated during a heated dispute, or during a grieving period. It provides both the stockholder and the family a comfort level that when the inevitable time comes for an exit strategy that the process was thoroughly thought out in advance.
Disadvantages of not having a buy-sell agreement between pharmacy owners in Nevada is that a disability may leave one partner working more and another not adding to the productivity. In the event of a death, without an agreement, one partner may be left with a nonproductive heir, or a new partner may be inserted that has personality conflicts with the surviving partner. The wrong partner could be devastating for the NV pharmacy business.
There are various types of buy-sell agreements such as: Entity Buy-Sell Agreement, Cross-Purchase Buy-Sell Agreement, Wait and See Buy-Sell Agreement, Disability Buy-Sell Agreement. Buy-sell agreements are also known as a Business Will or a Buyout Agreement.
Potential elements of a Nevada Buy-Sell Agreement: 1. The names of, voting rights, and quantity of shares belonging to stockholders.
2. Guiding procedures for the certified pharmacy valuation and potential purchase of a stockholder’s shares.
3. Mutual covenants and considerations.
4. Restrictions on the transferring, purchasing or encumberingNevada
5. Established protocol in the event of a shareholder’s death, disability, or divorce from a shareholders employment.
6. Obligation to buy/sell shares from an estate.
7. Purchasing of insurance to ensure obligations are met.
8. Purchase of stock paid either in one lump sum or in instalments.
9. Remedies for either a breach of the agreement or default of payment.
10. The right to inspect books and records until transfer has been completed.
11. Notices and amendments and for legal matters or offers.
12. The ability to enforce the agreement, its binding effects, and arbitration procedures for any disputes.
13. Process for dissolution, or liquidation, of the corporation.
14. Maintaining the premises during a transition.
15. Preserving representations and warranties.
16. The terms of transfer.
17. Bill of Sale.
To ensure that the money required is available, buy-sell agreements are often funded with a life insurance policy. Should the death of one of pharmacy owners occur, the life insurance settlement will provide the funds for the remaining pharmacy owner inNevada
Life insurance coverage for each partner needs to be in place, because without a way to accomplish the purchase of the NV pharmacy shares the buy-sell agreement will not be functional. As the business grows and develops the amount of insurance need to be adjusted to provide an adequate coverage. Without the insurance the surviving stockholder may not have enough cash to satisfy the amount required to buy out the estate - leaving the survivor with an unwanted partner.
To have the adequate insurance coverage and to determine the specifics of the buy-out terms, a certified pharmacy business valuation is needed. There are a large number of companies that provide business valuations. Due to the dynamics and current market conditions of theNevada
NV Pharmacy buy-sell agreements are extremely important documents that need to be completed with seriousness and care. Even with a long standing partnership, it is only too late to create a buy-sell agreement when an event has already occurred....that would require the document.
Tips for Nevada Pharmacy & Drug Store Owners:
1. Buy-Sell Agreements are critical documents that should not be taken lightly. Consult a licensed professional.
2. Documents must address the proper laws and regulations which vary from state to state. Seek the proper guidance.
3. Premiums for insurance that will fund the buy-sell agreement might be deductible.
4. Ensure that theNevada
Authorship and profile at Google
When a NV pharmacy is owned by two or more people the stockholders/partners should have a Buy-Sell Agreement. A buy-sell agreement is a written document that provides the procedures and governs the future sale of the pharmacy business.
Nevada pharmacy buy-sell Agreements protect the interest of the parties who own the pharmacy in NV and directs the actions triggered by a stockholder leaving the business due to death, disability, divorce, dissolution, or retirement. The agreement will govern how and when the shares of the pharmacy business can be sold, or transferred. It will also provide guidance as to how the pharmacy will be valued along with the obligations of the remaining shareholders of the NV pharmacy.
Buy-sell agreements are important because the different elements of a future sell are predetermined and won’t need to be negotiated during a heated dispute, or during a grieving period. It provides both the stockholder and the family a comfort level that when the inevitable time comes for an exit strategy that the process was thoroughly thought out in advance.
Disadvantages of not having a buy-sell agreement between pharmacy owners in Nevada is that a disability may leave one partner working more and another not adding to the productivity. In the event of a death, without an agreement, one partner may be left with a nonproductive heir, or a new partner may be inserted that has personality conflicts with the surviving partner. The wrong partner could be devastating for the NV pharmacy business.
There are various types of buy-sell agreements such as: Entity Buy-Sell Agreement, Cross-Purchase Buy-Sell Agreement, Wait and See Buy-Sell Agreement, Disability Buy-Sell Agreement. Buy-sell agreements are also known as a Business Will or a Buyout Agreement.
Potential elements of a Nevada Buy-Sell Agreement: 1. The names of, voting rights, and quantity of shares belonging to stockholders.
2. Guiding procedures for the certified pharmacy valuation and potential purchase of a stockholder’s shares.
3. Mutual covenants and considerations.
4. Restrictions on the transferring, purchasing or encumbering
5. Established protocol in the event of a shareholder’s death, disability, or divorce from a shareholders employment.
6. Obligation to buy/sell shares from an estate.
7. Purchasing of insurance to ensure obligations are met.
8. Purchase of stock paid either in one lump sum or in instalments.
9. Remedies for either a breach of the agreement or default of payment.
10. The right to inspect books and records until transfer has been completed.
11. Notices and amendments and for legal matters or offers.
12. The ability to enforce the agreement, its binding effects, and arbitration procedures for any disputes.
13. Process for dissolution, or liquidation, of the corporation.
14. Maintaining the premises during a transition.
15. Preserving representations and warranties.
16. The terms of transfer.
17. Bill of Sale.
To ensure that the money required is available, buy-sell agreements are often funded with a life insurance policy. Should the death of one of pharmacy owners occur, the life insurance settlement will provide the funds for the remaining pharmacy owner in
Life insurance coverage for each partner needs to be in place, because without a way to accomplish the purchase of the NV pharmacy shares the buy-sell agreement will not be functional. As the business grows and develops the amount of insurance need to be adjusted to provide an adequate coverage. Without the insurance the surviving stockholder may not have enough cash to satisfy the amount required to buy out the estate - leaving the survivor with an unwanted partner.
To have the adequate insurance coverage and to determine the specifics of the buy-out terms, a certified pharmacy business valuation is needed. There are a large number of companies that provide business valuations. Due to the dynamics and current market conditions of the
NV Pharmacy buy-sell agreements are extremely important documents that need to be completed with seriousness and care. Even with a long standing partnership, it is only too late to create a buy-sell agreement when an event has already occurred....that would require the document.
Tips for Nevada Pharmacy & Drug Store Owners:
1. Buy-Sell Agreements are critical documents that should not be taken lightly. Consult a licensed professional.
2. Documents must address the proper laws and regulations which vary from state to state. Seek the proper guidance.
3. Premiums for insurance that will fund the buy-sell agreement might be deductible.
4. Ensure that the
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