CASE ANALYSIS - WHAT I LEARNT FROM BUYING 217 BUSINESSES

Submitted by : Mythili A (10AA20) Noor Hussain (10AA21) Pradeep VNK (10AA22)

CASE OVERVIEW
Case is all about an interview between Michael Senoff and Arthur Hamel. Arthur is an expert in buying existing business. He gives seminars on Business buying around the world. In the case we have a 58 minute conversation between these person, Where Arthur shares his experience on business buying from his own personal life. Also he tells which business is good to buy which we can avoid from buying. The conversation is a turn back into the career path of Arthur and the strategies employed by him at critical times, which steered his career at a profitable pace. Through the course of the conversation, Michael Senoff, the initiator of the conversation, who is apparently the founder and CEO of Hardtofindseminars.com, puts forth a proposal to Mr. Arthur, which he accepts gladly. The proposal was buy the rights to market Arthurs buying business system, where Michael Senoff thereby got to market the course. Today Michael Senoff has exclusive rights to sell Arthurs home study course. And he has also arranged it with Art so those who buy the course have the option of hiring Art as a consultant, and at his normal consultant rates to help them find, negotiate and land their own business deals. Including help with finding the right company to buy, analyzing it, and getting investor capital to finance it. The report contains detailed insights into some management concepts, that Arthur followed, which were analyzed from the conversation.

CHARACTERS
Whole case revolves around 2 persons Arthur Hamel and Michael Senoff. We have discussed in detail about these to people. The below paragraphs tells us how they evolved into their current position, what are the problems they faced and what they are doing now. ARTHUR HAMEL Arthur Hamel was born and raised in new Windsor, New York. He graduated from Pennsylvania State University with a degree in Industrial Engineering. Arthur married his wife Jane in 1965 and they have two sons. John is a Senior VP in investment banking at Freidman, Billings and Ramsey (FBR) in Irvine, California. Jim also attended the University of Southern California and is working in the automobile repair field. Through his college life, Art began his first business of delivering newspapers, running newspaper stands, shipping books, delivering fast foods and so on. His keen business mind brought him success in even in his early years. After graduation he joined IBM in New York, during which time he started a consultancy business. After around 15 to 20 years, he had businesses worth over a million dollars, and that already have an experienced management team that will account for the growth of the company without his presence. In the 1980s he decided to share his knowledge of business tactics with the public. He started a new business of selling his business ideas the business buying system as he called it. At the same time, Art was getting so many calls and letters from people around the world who couldnt attend his seminars he got in the studio and created a home study course for his business-buying system. It remains the single most comprehensive and practical system of its kind.

Hamel went into teaching a seminar on Business Opportunities. It was The Number One Business Opportunity Seminar in the United States for over 15 years. Over 100,000 attended, with tens of thousands of successful graduates. The cassette program is still being sold internationally, 30 years after it was produced. During this 15 year period Art continued to buy and run larger manufacturing businesses, and he was a weekly guest on local and national TV and radio shows. He also co-hosted local radio shows. Hamel also had a weekly TV show in San Jose, California. However Art did not want to continue his business as teaching how to do business. His real passion was in buying businesses. And he also dint want to let down those who were seeking help from him. And thats when it caught the eye of Michael Senoff, a San Diego marketer who specializes in buying and selling information products. Michael Senoff saw Arts ad on ebay. He bought the exclusive rights to market Arts business buying system. He has also arranged it with Art so those who buy the course have the option of hiring Art as a consultant, and at his normal consultant rates to help them find, negotiate and land their own business deals. Including help with finding the right company to buy, analyzing it, and getting investor capital to finance it Art is the founder and President Emeritus of the first Business Opportunity designation, CBC, The Certified Business Counselor award. Hamel also taught a Business Opportunity class for the California Association of Realtors, and special business opportunity seminars for state real estate departments in Montana, Arizona, Florida, Texas, Michigan and New England; as well as a beginning Entrepreneurial Business Seminar for the University of Southern California (USC). Hamel was appointed to the California Department of Real Estate Business Fraud Committee. He was a Regional Director for the Society of Exchange Counselors; he served as President for two real estate exchange groups, The Bay Area Exchange Counselors (BAEC) and the AIEC. Hamel started two additional management consulting firms, a venture capital (angel investing companies). Arthur Hamel has purchased businesses that have sales of $5 to $10 million and a net profit of $1 to 2 million for 25 years. In 2005 he has finally raised his sights to businesses that have sales of $10,000,000 to $25,000,000 and net profits of $2,000,000 to $5,000,000 billion dollars. ARTHURS VARIOUS POSITIONS & ACTIVITIES y The founder and President Emeritus of the first Business Opportunity designation, CBC, The Certified Business Counselor award Has taught a Business Opportunity class for the California Association of Realtors, and special business opportunity seminars for state real estate departments in Montana, Arizona, Florida, Texas, Michigan and New England; And a beginning Entrepreneurial Business Seminar for the University of Southern California (USC) Appointed to the California Department of Real Estate Business Fraud Committee

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He was a Regional Director for the Society of Exchange Counselors He served as President for two real estate exchange groups, The Bay Area Exchange Counselors (BAEC) and the AIEC. Hamel started two additional management consulting firms, a venture capital (angel investing companies).

MICHAEL SENOFF Michael Senoff could be called the King of Interviews. Having spent thousands of hours interviewing scores of experts on a wide variety of subjects, Senoff has become an expert in his own right. Interviewing isnt the only thing he knows, though. Senoff also knows how to turn the art of interviewing into a profitable business. Michael Senoff is a marketing strategy expert and business consultant. He is the creator of Hard to Find Seminar, a website that offers free marketing interviews with some of the most respected experts in selling, copywriting, marketing, psychology, and more. Michael knows how to turn businesses around and is known for helping business owners explode their sales and grow their business. Hard to Find Seminars and rather than selling audio interviews he recorded with experts, he decided to give it all away for free on his site. Anybody can simply visit his site and browse through 157 hours of audios, download transcripts, and even download reports. Another of Senoffs sites, www.hardtofindads.com, boasts a collection of hundreds of the best ads from the early 1900 s to the present day Michael is also an experienced copywriter and often writes ads for himself and his clients. He has an interest in direct response advertising and his site Hard to Find Ads holds a vast collection of direct response ads. Youll see ads from the 1920s-1960s, find ads by respected copywriters, ads from popular magazines, and a collection of headlines you can use for your own ad. In addition to that, Michael offers consulting for those who want to grow their business, get started on the Internet, or even start a new business from scratch. He also offers a service that helps you create your own audio interview and distribute it all over the net in order to get Michael sells many different products. If you visit his site youll find the Joint Venture Magic System, Art Hamel Business Buying System, Information Product Creation System, Claude Hopkins Advertising collection, Writing for Money Interview Collection, and the Clyde Bedell Marketing System for sale. Michaels main product is the HMA Marketing System which teaches people how to make money at home by becoming a marketing consultant. The system provides you everything from finding clients, doing the initial consulting, finding solutions for your clients, as well tips as running the business. Another of Senoffs web ventures is the Executive Audio Institute. It contains instructions on how to create and post audio content on a website. It also features

downloadable interviews with business experts which can be used for free and posted on a website. Cinnamon Toothpicks He pushed into the business world early. His first of business came in grade school. He created and sold cinnamon-flavored toothpicks that he made by dipping regular toothpicks in cinnamon oil he purchased from the drug store. He also sold Bazooka bubble gum, Charms pops, Wacky Pac collector stickers and anything else I could think of. Tie-dye tee shirt He started tie-dye tee shirt business. One year later, he was exhibiting and selling at craft shows. He became the owner of a tie-dye T-shirt manufacturing business. He opened a retail store and did all the manufacturing in the back. He developed a full color catalog and began selling wholesale to major retail department stores in the south. He even modeled in my own catalog. Before long, he was a B.M.O.C. (Big Man On Campus) as "The Tike Tie-dye-guy". He manufactured, retailed and wholesaled tie dye tee shirts for seven years. His last two years of college, he converted a back room of my retail store into a bedroom and lived in my retail shop. He had a plumber install a shower, and then he cancelled the lease on apartment and eliminated my apartment rent. Profits from his tie-dye tee shirts were his main source of income throughout six year tenure of college. The business was profitable, but required intensive labor for creating the shirts and for staffing and managing the retail store. Dealing with employee problems, maintaining expensive inventory, dealing with the retail sales tax, corporate deadlines, banks, retail overhead, manufacturing hassles, and the long retail hours left him feeling silent, and once again limited by his time. Then he closed the store and began my search for a better way to financial freedom.

GENERAL CONCEPTS/TERMS RELATED TO CASE

SHORT TERM BUYING/SELLING In this case Arthur implies and stresses more towards selling and buying businesses that are profitable for a short term and then ready for another transaction. Benefits are, 1) 1031 exchange 2) Risk diversification 3) Market growth

BUSINESS BROKERS: Art Hamel has mentioned that choosing proper broker vests in the hands of customers because it needs more trust and due diligence to have high credibility over brokers. Positive and negative screening should be done before having a legal agreement with the brokers. Some of the key issues to be asked about business brokers are, y y y y y y y y y How much do you think I should ask for my business? How will you show my business? Do you cooperate with other business brokers? Will you display my business on any Internet sites? How often will you contact me about what is going on? Can you provide any references? Are you affiliated with any business brokerage associations or trade groups? May I have a sample copy of your listing agreement? Can you please tell me about you and your firm?

Compensation for Brokers y y y Hourly, retainer and success fee (commission upon a closing). A business broker may use any one or combination of these when providing services. The most common form of compensation is a success fee commission where the payment of a commission to the brokerage is contingent upon finding a satisfactory buyer for the business for sale, the successful negotiation of a purchase contract between a satisfactory buyer and seller, or the settlement of the transaction and the exchange of money between buyer and seller.

Pros of having a broker y y y Time Saving Marketability Access to informations

Cons of having a broker y y Credibility Absentee ownership

ABSENTEE OWNERSHIP If you work in your business every day, you are called an owner operator. If your business can run without you, you are known as an absentee owner. Art Hamel prefer being an absentee owner, where risk is minimal compared to start a business from scratch and insists in maintaining a good management team which has the capability to run a business effectively.

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Also it helps in acquiring multiple businesses and his customers who went through his course also had hands on multiple businesses being an absentee owner where risk diversification is high and cash flow can be maintained through various industries in the portfolio that earns high profit and can balance the market risks. Absentee ownership ensures more decentralization and control over business has been made simple. Coordination also becomes easy compared to owner operating business since it provides high flexibility They are well organised through the support of management team and transparency among employees will be high enough to support the business. One of the main disadvantages is that more often internal conflicts occur between owner and manager. So ensure that management team works in line with vision of owner. The conflict of opinion between manager and owner might result in a negative impact.

INFLECTION POINT Art Hamel insists his customers in buying a business that has probability of high profits and mentions in the case that, What happens is we encourage people to go out and start a business, build it up to a certain level. I want to take it from the point where its making money up to the next level. Its not very difficult because I have enough money to spend on the business. I also have enough money to cover my mistakes. There is a concept in corporate strategy called strategic inflection point. This is a point at which the business imparts drastic changes in its strategies in order to turn the business in a different line and into a more profitable one. Businesses do implement turnaround strategies as the lifecycle of any business is short-lived. After it reaches its maturity stage, innovative ideas have to be imparted to keep the business going. But Arthur Hamel as mentioned in the case does not believe much in the success probability of turning around a business and he emphasizes on acquiring businesses that have been making profits for at least the last three years. We might interpret from Arthur Hamels suggestion that he does not get involved in most other aspects of the business other than its revenue generation. TURNAROUND STRATEGY This is the strategy applied in the business which is not performing well and make loss at that time to bring about a drastic change in its performance. It makes the business to yield high return and makes high profits. Arthur has no faith in this Strategy. He said the cost involved in buying a loss making business and turn it to make profit is very high when compared to buying normal business. It is very risk to buy a loss making business. It is because there is no certainty that we can turn it around to make profit. It is uncertain that the return of that business will overcome the risk taken.

MARKETING CONCEPTS
Promotional Strategy In one of the first businesses that Arthur Hamel owned (Mickey Mouse Motel), he employed a sales promotion methodology of providing free cold beers for the truck drivers who checked into the motel. There are different concepts of marketing such as product concept, production concept, selling concept and marketing concept. The sales promotion employed by Arthur Hamel shows that he has adopted a marketing concept approach. He has understood the need of his most potential customers (the truck drivers), and made sure that they check into his motel through the offer of the freebees. Sales Promotion Another very interesting understanding from the case is a very unique kind of sales promotion offer employed by Art. Almost all types of sales promotion is an expenditure aiming at increasing the revenue of the organization. It is also termed as an investment by a few, because the money employed in sales promotion activities is expected to generate future returns for the company. Here the buying business system cassettes of Art can be viewed as a sales promotion. The popularity of his cassettes makes him popular and a very well known face in the circle of brokers, aspiring entrepreneurs and all kinds of businessmen. This in turn helps his main business of buying and selling businesses. This promotional strategy employed by Art could be one of the rare circumstances where promotional activity is itself a huge income generating business. A reason for us not to believe Art when he says that the cassettes are his way of sharing with all, what he had learnt is that ; If he truly had such a noble thought he would have put it on the net for free and not charge users for gaining a peak into the expert knowledge he had gained. Self Promotion Goods, services, events, experiences, persons, places, properties, organizations, information and ideas can be marketed. Art falls under the category of marketing persons as he promotes himself through his cassettes and also by creating an image for himself. One example of this can be given from the case itself. He emphasizes how he was the founder of the company Certified Business Counsellors, which he claims to be the predecessor of all business brokerage houses today. This creates an impression that he is the pioneer in what he is speaking about and hence leaves little doubt in the minds of his prospective clients that he could be wrong. Blue ocean strategy It is not about beating competition but about making competition irrelevant in a particular business or market. This is possible only by the market leaders or the first movers who have established themselves well in the business and is hard for new comers to out beat them. He says he has no idea of others who are into the same line and though there have been many competitors in the business; they all withdrew as they were not able to compete with Arts business. Many universities tried competing with Art but failed. Similarly the Geneva group

stepped in to the business as an attempt to through off Art but eventually failed and withdrew from the same. This shows he has used a blue ocean strategy. Online Marketing In early days, people used to go to the newspapers for something to buy or sell. But now internet has played a big role in it. Marketing through online is increasing. Now-a-days if people want to buy or sell something then they go to internet websites like ebay, amazon etc. Arthur put his cassette in ebay is become a promotional online marketing. In a television channel he telecast his cassette in a time 3am to 4am where no other program was there. But due to the time zone variation, in some other place I will get response. This business also generates huge profit and also promotes his core business of buying and selling business. Word of Mouth marketing Word of mouth advertising is an unpaid form of promotion in which satisfied customers tell other people how much they like a business, product, service, or event. Word-of-mouth is one of the most credible forms of advertising because people who don't stand to gain personally by promoting something put their reputations on the line every time they make a recommendation In this conversation we can notice that through radio programs and telecasting his video in major shopping network he gained high popularity among people. Almost all the Mexican business deals, he got through referrals. Direct marketing It is a channel-agnostic form of advertising that allows businesses and nonprofits to communicate straight to the customer, with advertising techniques such as mobile messaging, email, interactive consumer websites, online display ads, fliers, catalog distribution, promotional letters, and outdoor advertising. Direct marketing messages emphasize a focus on the customer, data, and accountability. Characteristics that distinguish direct marketing are: 1. Marketing messages are addressed directly to customers. Direct marketing relies on being able to address the members of a target market. Addressability comes in a variety of forms including email addresses, mobile phone numbers, Web browser cookies,etc 2. Direct marketing seeks to drive a specific "call to action." Direct marketing emphasizes trackable, measurable responses from customers regardless of medium. According to the case, medium used to deliver a communication to a customer has online tools like social media sites, display ads, radio shows, telecasting in home shopping network, audio tapes,etc

Franchise Franchising is a method to enter a business. Giving contract based rights to use the business process of one successful company for success of another startup. Franchising is the practice of using another firm's successful business model. One day arthur met the franchise salesman for Pizza Inn Restaurants. Hamel built a free-standing Pizza Inn restaurant in Modesto and was off to the races. Hamels friends at Pizza Inn offered other existing restaurants in California and Hamel ended up with a few. A movie producer from LA stopped by and asked Art if he would like to start a franchise sales company. He continued to make movies and Hamel expanded the company with three national restaurant chains/franchises. The main restaurant-franchise owners would not invest money back into the business and so Art bought the main company. He had been in businesses for two years and already owned 25 businesses. Relationship maintaining in business Customer interaction and satisfaction is the key in marketing. He gave extra tips to the cassette buyers. He answered their questions without any extra pay other than the cost of the cassette. Good customer service It is about bringing customers back and gaining their trust so that the owner of the business is able to sell something new to the same customer and maintain relationship with the existing customer base. This also helps in gaining word of mouth marketing (where satisfied customers communicate about the products that have made them happy, thus creating a new set of customers for the product). Differentiation It is about differentiating the product from others that is associated with charging a premium price and also displaying sound reasons as to why the product has to be preferred over the others. Art has been pursuing the same strategy with the 12 cassette program that is costly and also produces the best results and benefits to its buyers without misguiding them. Cash off total purchase It is a type of discount where by some specified amount is deducted from the total amount of purchase. The advantages of having such discounts are to attract a large number of buyers of the product and also to attack the budgeted buyers. Cassette price is $345 but is sold after discount at $295 in seminars, which attracts a large number of registrations for the seminar. Competitive advantage It is an edge gained over the other competitors by offering the consumers a greater value, either by means of lower prices or by providing greater benefits and services that justifies higher prices.

People who have undergone the program have benefited who actually have not been so smart, but succeeded over the others with the help of transparent and true content of the business buying program which has been of high quality. Halo effect The halo effect is a term used in marketing to explain the bias shown by customers towards certain products because of a favorable experience with other products made by the same manufacturer or maker. The halo effect is driven by brand equity. Arthur Hamel follows self branding where he shows himself as a pioneer in establishing ICBC standards for brokers, first pricing program set up mathematically for pricing business and his friends are the best business brokers who had trust in Arthur Hamel so referred other brokers for helping him buy several businesses. He have many brokers in contact due to vast experience and he is able to buy business with the help of them as intermediary since they have hands full of experience with the profit made by Arthur in past business buying process and also his success in seminar business. Even the customers are more attracted by his online seminars and that made his customers to buy his recorded audio cassettes and attend seminars conducted by him and his courses about how to buy a business. He was able to have a control over business through his funds invested in it and that helped him acquire business across many countries like Australia, Japan, Mexico, U.S, etc. Because of the goodwill he earned in certain businesses, he was referred to other companies across different countries and he was successful in those countries too. Distribution Channel y y It can be zero level between buyers and sellers through direct contacts It can be multilevel where intermediaries like business brokers, consultants, online trade, etc can be included. Before having brokers, proper legal agreement can be assured for security and should evaluate whether they bring us business that earns profits.

Website Strategy Online marketing is done where his business buying seminars are published in the form of ads and customers can buy through click business model where entire payment process is easy, it can be either cash or through card and make it easier for customers to access. They can select which ever topic needed accordingly from his website. EBay publishes many ads through which business buying seminars became popular and Arthur Hamel was able to win the competition through high differentiation of contents like audio tapes, free guidance. Michael was also running two leading websites that had more interactions with the customers and had link with social networking sites like Twitter and Facebook. He was able to keep track with customers through instant mail and provide free access to many recorded conversation with information regarding businesses. E-commerce business model which helps in acquiring more number of customers through effective interface design and efficient access. His free contents published in website has attracted most of the customer segments who made use of all information in their business and

through that cross selling was done which pulled them to attend seminars conducted by Arthur Hamel. Pure click strategy It is followed here where he sells his seminars through online and also promotes his product through ads in EBay which is also a pure click business model. It is mostly a B2C model where customers make use of the information provided in the recorded audio and seminars uploaded in the website. CONCEPTS RELATED TO FINANCE Sources of Raising Finance The main duty of a finance manager is the raising of finance and its proper allocation. The raising of finance has a cost attached to it. The cost of raising finance is directly proportional to the risk associated in the allocation of the finance thus raised. This is the reason why banks might charge a lesser interest rate than the profit percentage demanded by venture capitalists or other forms of investors. So the person who has the requirement to raise finance has to form a trade off between the cost he will have to pay and the profit he is anticipating to earn from the investment of the raised fund. To quote Arthur Hamel, I have more money than they have. So they listen to me. This shows that money has an upper hand in many things. A person who has a brilliant idea might have to end up offering large percentage of his profits to the venture capitalists or investor he borrows from. This is due to the importance of finance to run a business. Since Arthur Hamel has the advantage of plenty of funds he might find it easier to convince investors and other providers of finance to finance him in his business of buying businesses. Foreign Direct Investment Being an American, he had invested in different nations, contributing to the Foreign Direct Investment (FDI). Arthur Hamel gives a rule of thumb criterion to select or shortlist the companies available for purchase or haveownership. Return on Investment According to him, it is better to have consideration on a company only when there is significant Return On Investment,say 30 to 40%. Arthur Hamel is more of a Financial Intermediary than a businessman himself. He has done quite a lot of negotiations between the investor and the seller.Arthur Hamel insists in making a contract before making a purchase and not a letter of intent. It is because, whenever a buyer takes letter of intent which normally involves 30 to 60 days, this brings in a situation where the seller may default in the terms, but he cannot in a contract. Arthur Hamel after a few years is firm in purchasing businesses which are not less than 1 million USD net worth, Qualified Institutional Placement. Life cycle assessment and investing It is evident that the success of any business relies on the current stage of its business life cycle. Arthur Hamel has a habit of making investments on business at Decline / Recession stage where

he can make a prospective deal. Most importantly Arthur makes big deals out of the investor pool, a leveraged buyout resulting in mutual benefit. Preferential and non equity shares Arthur Hamel is very keen in choosing the type of business holding, he prefers and advices other investors too to have preferential shares and not equity shares. Because, if there is any contingency, then the preferential shareholders are given priority. And, it is to be noted that the ownership of a company can be obtained up to 49% and not more for Foreign Direct Investors. Underwriting Underwriting refers to the process that a financial service provider uses to assess the eligibility of a customer to receive their products. Similarly, Arthur Hamel is going through phases of Economic analysis, Industry analysis, Technical analysis, due diligence and then negotiates for fair price. So, he acts like an underwriter here. Line of Credit Arthur Hamel makes a variety of finance sourcing, like, Line of Credit (bringing investment from other investors with obligation to pay back whenever demanded) and short term capital financing as in the case of Singapore airlines. Portfolio Management He does not involve himself in the day-to-day activities of the business rather he is more keenly interested in viewing his different businesses as investment avenues. He analyses the risks involved in the businesses he is investing in and takes minimum and very calculated risk. Just as investments are not intended to be lifelong commitment but earn us revenue through capital appreciation. Arthur views businesses similarly. The scale of businesses he is involved in is not small and hence managing a portfolio of such businesses requires large amounts of co-ordination and control. The risk analysis, getting large number of buyers or sellers, striking deal with brokers, arranging for investors, ensuring sufficient availability of finance, and most essentially ensuring that the deal is a profitable one are not tasks that can be performed one-handed.

Valuation Arthur explains how it is necessary to provide details about the financial statements for the last three years and also future estimated cash flows and profits for the next five years. Hence, the presentation of future estimated expenditures and income has to be carried on with the collection of large amount of external data pertaining to the market conditions, societal preferences, political influences, regulatory framework, and industry-specific risks. Analysis and interpretation of the future estimated projections is also important. The buyer of a business has to do background research on his part to make sure that the projections that are presented are reasonable and credible.

Capital Structure It is the mix of debt and equity which ensures profits in hand and also sustainability. Arthur Hamel mentions about how investors prefer preference stock to ordinary equity stock. Preference shares ensure a fixed rate of dividend to the investors. Arthur also mentions about how investors would like to have convertible preference shares that can be converted into ordinary equity shares at a future point in time. This will help the investors to be equity shareholders of the company in case the company goes public in the future. The other important part of a capital structure is the debt component. Banks require security for the loan granted and they should also be convinced about the profitability of the business venture. Debt finance does not dilute ownership but because of its strict requirements is a little difficult to obtain. The extent of the debt and equity component even influences the earnings per share of the enterprise. Hence, the capital structure can be seen as an important factor to be analyzed in determining the profitability of a business. Net Working Capital Organising the investors is done for the fee for him and they give more stock because of the capability to find another capable investor and enough working capital. Working capital is a financial metric which represents operating liquidity available to a business, organization or other entity, including governmental entity. Along with fixed assets such as plant and equipment, working capital is considered as a part of operating capital. Net working capital= current assets - current liabilities.

If current assets are less than current liabilities, an entity has a working capital deficiency, also called a working capital deficit. A company can be endowed with assets and profitability but short of liquidity if its assets cannot readily be converted into cash. Positive working capital is required to ensure that a firm is able to continue its operations and that it has sufficient funds to satisfy both maturing short-term debt and upcoming operational expenses. The management of working capital involves managing inventories, accounts receivable and payable, and cash. Attorney's fee is a chiefly United States term for compensation for legal services performed by an attorney (lawyer or law firm) for a client, in or out of court. It is like package deal that includes everything. More they ask for more they lose the ownership. Investors For the terms with investors the explanation is that its all about equity participations. So, somebody comes in and puts up a million bucks, they expect to get a certain amount of stock. Now, the stock is basically worked backwards, and if basically we are giving them more return than they are getting out. We are giving them more return than they get now.

The biggest problem is they have to sit down or get somebody to put together a business plan describing the company and the whole thing. We cant go to an investor verbally and tell the something, or if we have to work with a bank for a credit line, we cant do it verbally. You have to have a business plan.

HUMAN RESOURCE MANAGEMENT CONCEPTS

Personality description y y Arthur Hamel was a person who had openness to experience. He insists that only through experience one can gain advantage, even in buying business. For example, he himself started buying small businesses initially like motels but latter on through hands on experience he is buying only million dollar businesses. To bring competitive advantage develop ability to do something. As experience builds, ability can translate into a competence or capability. If ability continues to be polished and refined, it can become a distinctive competence, providing a path to competitive advantage.

Type-A personality He is a person with high motivation and interest in his work. In almost all the work and business he did, he had more involvement that lead to success .He is very competitive and more leadership qualities can be addressed in him. High self efficacy can be seen where he used his prior experience to validate the business value and set goals to achieve success and manage the obstacles and select best alternatives in a timely manner. He was excited in every single business he did from initial stage and interested in meeting new sellers, customers, stakeholders and negotiating with them. Psychological contract Psychological contract refers to the individuals beliefs about the terms and conditions of a reciprocal exchange agreement between that person and another party. This is grounded on the other partys past experience. The better you know someones past actions, the more accurately you can predict what that person will do in future. Art being an enterprising type has high confidence level, very assertive and energetic. His locus of control is Internal because he believes himself as a master of his own fate and follows what he preaches to others. He says his customers that one should be able to differentiate sellers who are selling their business since there is no growth. Art has about fifty years of business experience and more than twenty-five years of business-buying and seminar experience and made others listen to him always. Job Satisfaction As a person who enjoys what is being done in businesses, Arthur takes a slightly different perspective towards businesses as a hobby of his. Due to this view of his, he is able to enjoy whatever business he does and exhilarates in facing the challenges.

Referral system This system of Arthur has helped to build a serious bond among the employees from Mexico as they are already related and have cordial relationships which help to improve the workplace climate and culture. B PLAN Benefits
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Helping clarify a persons vision and whether or not to forge ahead with an idea. Determining if a product and/or service has a sufficient market to support it and whether or not it will be profitable. Providing an estimate of start-up costs and how much you will need to invest or finance. Convincing investors and lenders to fund the business. Defining the target market (who the customers are or will be) and how to best reach them through strategic marketing actions or expanding market coverage or reach. Defining the businesss objectives and the programs necessary to achieve those objectives. Helping the business make money from the start by developing effective operational strategies. Understanding the risks involved and anticipating potential problems so they can be addressed and solved before they become disasters. Setting a value on a business for sale or for legal purposes.

Arthur Hamel said in the conversation that a Business plan should contain y y y Pro-forma of minimum five years financial statement and mission statement Management team and its background, positions held. Pro-forma of future plans and how projection is made, its vision statement.

Learning from the Case y y y y y y y y y Keep exploring opportunities from all possible quarters. Trust your employees and delegate jobs. Gain maximum exposure of the business world personally, rather than relying upon others. Do not give in to the fear perpetrated by losers. Avoid being excessively optimistic about a business or a strategy. Go for technology upgradation whenever it is relevant and applicable. Never be in a hurry to run yourself into a business. Identify the right time to purchase a business, with an eye on the available funds and cash flow generated by business. Do to others what you would have them do to you the path to fulfillment of life.