Archive for August, 2011

Contributed by Tim Coutts, COO, Central Bancorp

Gone are the days where a business valuation was only done when contemplating a sale.  The process of determining the value of your business is a good practice in a market where efficiency is key.  Understanding the weaknesses and potential opportunities for your business is of tremendous value, so why wait until you want to sell your business to gain this insight?

Formal business valuation is an excellent tool for businesses that can afford the time and expense that is required.  However, resources for quick, easy and cost effective estimates are also available. We are currently offering our clients access to an Online Business Valuation tool provided by ValuSource, a locally-based national company with over 25 years of experience.

Here are a few examples of how even a high-level business valuation can make your business more efficient and more profitable, long before you ever think of selling it.

  1. Find opportunities for improvement in your operations by comparing key financial benchmarks (e.g., sales, distributed earnings) with companies in your industry that have been sold.  One of the key tools for strategic planning is benchmarking – measuring the performance of one company against another high-performing company.  The challenge for businesses, especially for small businesses, is finding the data to use as a benchmark.  When you obtain an estimate of value from Online Business Valuation, one of the resources involved is a database of over 30,000 businesses that have been sold, including numerous details about their operations.  By comparing such performance metrics as sales, revenue, and discretionary earnings to those of companies in your industry, you can see how those metrics impact the price for which that company sold.  How do the sales, discretionary earnings or other metrics of your company compare to other companies that sold in the price range you want to reach for your company?
  2. Find an opportunity for growth through leveraging debt (more…)

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Contributed by: Steve Schneider, President, CB Insurance

Because they are more likely to travel, own second homes, host fundraising and other events in their homes, and drive expensive vehicles; affluent families and individuals have greater exposure to loss. Personal insurance for the affluent, such as homeowner’s, personal auto, and coverage for valuables like jewelry, antiques, art, and gun collections, should be tailored to address these risks.

Specialized insurance programs tend to carry larger liability limits, higher deductibles, and broadened coverage than traditional insurance. Insurance companies specializing in the affluent market offer tailored coverage such as guaranteed home replacement cost coverage, ensuring that special features of the home are replaced with like kind and quality.

The review process itself should be approached like a business insurance review. The first review can feel a bit overwhelming, but it’s critical to understanding our clients’ exposures to loss in order to provide comprehensive solutions. I always emphasize the need for comprehensive solutions based on my experience seeing affluent families targeted for fraudulent claims and higher reward demands.

Claimants can now easily research you online and determine with some certainty that you have financial means. There aren’t many secrets these days. A few clicks of the mouse, and claimants (and their attorneys) can determine occupations, organizations to which you belongs, social engagements you attended and the like. Claim demands will be higher; making the need for high limits of insurance all the more important.

Tom Kammerer, Sales & Marketing Manager for Chubb Personal Insurance, stresses the importance of working with brokers and carries with this type of experience in affluent insurance coverage.

“Sometimes it takes a poorly-handled claim to make people see they need specialized help,” says Kammerer. “For our clients maintaining their lifestyle after a significant loss is important. Large, custom-built homes can take well over a year to replace. After large losses, we work with clients to help them find accommodations, replacement cars and other important personal affects they enjoyed prior to their loss.”

To protect from huge potential loss and headaches, the affluent should go through a review with their insurance broker and carrier once a year. High-end insurance carriers should delve deeply into client practices and ask questions about domestic staff (gardener, nanny, etc.), central alarm systems, valuable articles, and more.

So, yes, there is a difference when it comes to insurance for the wealthy! And I’d advise you not to wait and learn that lesson the hard way.

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Contributed by Tim Coutts, President of CB&T Mortgage

While the dust settles from the political arm wrestling over the debt ceiling increase, the downgrade of US debt and the slow pace of economic recovery, a bright spot has emerged – mortgage rates.  Mortgage rates have fallen to historic lows and a refinance could represent a real opportunity to improve your personal financial situation.

The recent fall in the stock market has investors seeking the safety of  US government treasuries.  The increased demand has pushed yields dramatically lower on 10-year treasuries.  Since mortgage rates move in tandem with the yield on 10-year treasuries, we are seeing 30-year mortgage rates near 4% for conventional loans and below 4% for government (VA and FHA) loans.  A refinance of your existing mortgage could substantially reduce your monthly payment.

An attractive alternative for some homeowners is the 15-year mortgage.  The shorter maturity results in a lower rate than a 30-year loan.  Today’s 15-year rates are in the low 3% range.  A shorter maturity and lower interest rate means more of your monthly payment goes to reduce the loan balance.  If your plan is to have your home paid-off by the time you retire, this may be just the product for you.

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