Buy a Business from a Baby Boomer!

Family business

By: Visar Salihu, Business Banker

According to the California Association of Business Brokers, Baby Boomers are on the verge of selling almost 12 million businesses over the next 10 to 15 years. This obviously represents a significant opportunity for Gen X and Millennial’s with entrepreneurial aspirations of their own.

The best opportunities may lie with businesses that are ready to be transferred to 2nd Generation family members due to an impending retirement, but there are also going to be a lot of Baby Boomers who don’t have a family member in line. Find a business that you’re passionate about and make sure that it can adapt to one important thing – technology!

Here are some benefits to consider when purchasing an existing business:

  • Proven Concept – Buying a business with a proven concept is less risky. Buying a business with a proven concept that’s been around for a while is even less risky (although there’s always risk!).
  • Recognition – It’s likely that you’re buying a business with a recognized name already. That’s huge!
  • Equipment – If equipment has been updated recently, the business will have a more seamless transition. You can then focus on improving and growing the business immediately.
  • People – In addition to getting knowledgeable existing employees, you can also have the existing owner stay on for a year or so to show you the ropes (looks great to banks!).
  • Customers – The business has existing, loyal customers! You need to make sure to continue to nurture those relationships.

There is a great deal of initial due diligence, but the most important task is to make sure the business has been (and will continue to be) financially stable for quite some time. I’d advise getting expert help with financials. Then, research if there will be continuing demand for that type of product or service. For instance, if the business is a VHS rental store, then I’d recommend you move on. If you’ve identified ways to make the business better or continue its mission, then you’re on the right track.

There is always risk when you decide to become a business owner, but it’s your job to find ways to minimize it. (Let me repeat: Don’t buy a VHS rental store.)

The Education Center on our website has more information about the pros and cons of buying an existing business, as well as how to get started. If you’d like to talk about buying a business or have a specific opportunity to evaluate, I invite you to contact me with any questions at

 Member FDIC.


Cutting the Fat: Make the Most of Your 2017 Budget

By Paul Manchester, Senior Vice President – Business Relationship Manager

For many small to mid-sized businesses, the details of a budget can take a back seat to producing the best possible product or providing the best possible service. You’re profitable. You’re managing cash flow. And you have a big picture idea of where your money goes.

You can do better.

Controlling your expenses can improve profits, free up extra capital for growth opportunities, help you take advantage of tax benefits, and put you in a proactive rather than reactive mindset.

Understanding Expenses

The first step in developing a disciplined approach to budgeting is analyzing your profit and loss statement from the previous year.

  • What worked?
  • What areas went over budget?
  • Which months were your most profitable and why?
  • Did you have a slow period?

If you aren’t sure how to create or read a financial statement for the month or the year, consider reaching out to one of the many business resources in the area, such as UW’s Small Business Development Center, the online tools offered by the U.S. Small Business Administration (SBA), or your local chamber of commerce.

You also may want to think about outsourcing your financials to an accountant or bookkeeper. The expense of hiring someone to manage this part of your business is usually more than offset by the time and money you save over trying to do it yourself without the necessary expertise.

Tips for Finding the Fat

Once you have the information you need at your fingertips, the following areas are a good place to start looking for extraneous expenses:

  1. Efficiency. What’s your process for getting from A to B? Is each document passing through 10 people when it really only requires two? Understanding your workflow can lead to efficiencies that save time, money, and manpower.
  1. Where are your best customers coming from? It’s important to measure and analyze the return on investment for your marketing efforts. Don’t forget to maximize some of the no-cost or low-cost opportunities available via social media and public relations.
  1. I read somewhere that most people use about 10 percent of any given technology’s full capabilities. If you’re paying for the technology, consider investing in some training for yourself or your staff to take advantage of its full power. In addition, there are tools that might replace traditional ways of doing things. For instance, face-to-face meetings are important, but not necessary every time. Look into online meeting technology to manage travel expenses.
  1. Accounts Payable. Turn your vendors into partners. Find out if there are incentives for paying quickly or paying in a certain way, such as PayPal. Could you pay for the year all at once for a discount? I’ve seen businesses get very good at reducing expenses by talking to their business partners and creating mutually beneficial arrangements.

State Bank of Cross Plains has an entire team of professionals ready to help you add to your bottom line. From our business banking tools to treasury management consultation, we’re here to serve as your business partner, resource, and secret weapon.

Member FDIC

Investing in Bonds: Should Your Strategy Change in a Rising Rate Environment?

By Dan Savage, Senior Vice President and Senior Trust Officer

The wait is finally over! Just a few short weeks ago, the Fed increased the Fed Funds Rate for the first time in a year and only the second time since the onset of the financial crisis. That may leave you with a few questions:

  1. Why did the Fed raise rates by 25 basis points? The short answer is that the Fed now believes that U. S. economic growth and employment characteristics are sufficiently strong to warrant a rate increase.
  1. When will the Fed again raise rates and by how much? No one knows for sure, but most economists and financial analysts believe that it will be a gradual process over three or more years. One popular view is that 2017 will see two or three modest increases leading to a Fed Funds rate range of 1 to 1.25 percent by year-end. More importantly for investors, however, is the 10-Year Treasury, which has recently been trading around 2.5 percent. Many analysts predict little if any change over the next year.
  1. Should bond investors be concerned? Although rising rates can depress bond valuations and disturb equity markets, it’s not all bad news. The plus side is that rising rates are beneficial to long-term investors and savers over time. More importantly, as stated above, we believe that rate increases will be gradual. If true, this will help manage price volatility while offering slowly improving yields.
  1. What strategies might help make the best of this environment? First, remember why people typically include bonds in a portfolio: bonds provide stability when stock market volatility increases. Said differently, successful portfolio construction isn’t only about returns; rather, it’s also about diversification and downside protection. Second, don’t chase yield by excessively extending maturities. You can benefit by including short- and intermediate-term maturity exposure. Finally, laddering individual bonds (staggering their maturities) can be very beneficial when rates are still near historic lows. Yield-to-maturity is knowable and locked in at the time of purchase…provided the investor does not sell the bond prior to the maturity date.

In summary, focus on your overall investment goals and risk tolerance rather than on interest rates alone. Your exposure to bonds should be tailored to your personal financial goals in relation to your other investments. A seasoned Wealth Manager can help design your portfolio to accommodate changing economic circumstances.

Investment Products:

Are Not FDIC Insured | Are Not Bank Guaranteed | May Lose Value


2017 Checklist: Get Your Financial House in Order

By Jeff Supple, Certified Financial Planner®

The beginning of the year is a great time to assess your financial situation and find out if there are things you can or should be doing differently. While a comprehensive list of ways to get your “financial house” in order would be based on your individual situation, below are some universal issues that everyone should consider as the new year begins:

The beginning of the year is a great time to make sure your estate planning documents are up to date. When reviewing beneficiary designation, don’t forget:

  • Group term life insurance policies at work
  • Old 401 (k) plans
  • Health care power of attorney
  • Financial power of attorney

Account Consolidation
It’s a good idea to occasionally reassess your accounts and find out if consolidating those make sense. Sometimes you can eliminate or reduce costs via consolidation. Regardless, whoever settles your estate will be grateful. The less they have to track down the better

  • Checking/savings accounts
  • IRA/Roth IRA
  • 401(k)

Make sure you haven’t misplaced any money
Check the free government search for missing accounts, insurance settlements, etc. It’s unlikely you’ll uncover much of anything, but you never know.

Update your passwords

  • Compile a non-electronic list of your online user name and passwords.
  • Keep your list in a safe location (e.g. safe deposit box) with instructions on how to access it.

Upgrade your financial security
With the increase in data breaches and cyber-attacks, the probability that some aspect of your financial life will be exposed is ever-increasing. An identity theft protection service might help you sleep at night. Below is a sampling of companies that offer this service. we don’t recommend one over the other:

Life changes. Dust off those documents and make sure they’re still relevant to your current life situation. If you need help with your review, contact State Bank of Cross Plains to speak with one of our Wealth Managment experts.




With the cost of borrowing increasing with each Fed rate increase, leasing the equipment your business needs may make more sense than ever. This is true for two reasons; First of all, leasing equipment means no down payment, leaving more cash available to move to better performing investment options that should follow the Fed rate increases and secondly, leasing requires smaller monthly payments to help guard your cash flow if your money borrowed with a variable rate of interest becomes more costly.

The real value of your equipment comes from operation-not necessarily ownership. With owned equipment, you’re allowed to deduct depreciation and interest expense from your taxable income, but not the principal payments. And the depreciation deductions follow a schedule set up by the IRS.

With a lease, you can deduct your entire lease payment as an expense, which will allow you to write off expenses quicker. This shorter period means a larger deduction each year, lowering your taxable income and decreasing your taxes.

Lease approvals and paperwork can be available in 24-48 hours for smaller transactions. You can complete larger transactions in about a week. For more information about which type of lease is best for you, speak with your banker and accountant.

-George Ohlendorf, VP Business Relationship Manager

Member FDIC

The Importance of Asset Allocation: Finding the Right Investment Mix for Your Account

2013 has been an excellent year so far for investors, with the S&P 500 up over 23% and the Dow Jones up nearly 19% as of the end of October. Despite this outstanding performance, we have also seen periods of significant volatility this year and over the past several years since the beginning of the “Great Recession.” Most recently, the government shutdown, talk of an end of the Federal Reserve’s stimulus program, and concern about rising interest rates have caused volatility in both the equity and bond markets during the past few months. These periods of volatility can cause significant concern in investors, and highlight the importance of a basic investing concept: Asset Allocation.

Asset Allocation is the mix of stocks, bonds, and cash equivalents in an investment account. The mix is determined through an evaluation of an investor’s goals, tolerance for risk, and investment time length. The goal of the process is to determine the appropriate percentage to be allocated to each of these asset classes to balance the amount of risk that an investor is willing to take with the return potential of the portfolio.

More simply stated, an investor’s asset allocation should provide the investor with an investment mix that provides investment returns with a level of risk and fluctuation that you are comfortable with. For example, an investor who is uncomfortable with large declines in their portfolio’s value should have an allocation with a significant percentage of investments in less-volatile bond investments rather than the more risky and volatile equity investments. Alternately, an investor who is comfortable with such fluctuations may have a larger allocation to stocks in their accounts.

Having the proper asset allocation in your accounts can provide some peace of mind for you as an investor. If your investment mix provides returns with fluctuations that you are comfortable with, you should have less concern during short-term periods of volatility that are almost certain to happen over the course of a year.

If you are unsure about what the right asset mix is in your own accounts or if you have been uncomfortable with the up and down volatility in your portfolio when you’ve opened your account statements this year, it is a good idea to discuss this concept with your Wealth Manager or Financial Advisor. Year-end is a good time to review your goals and investment mix to ensure that your current portfolio is right for you.