Posted by Jeff Abbott
If you're like most small business owners in Tucson and Southern Arizona, you've been waiting and watching for signs of economic recovery for several years now. The news seems to be a mixed basket of goods, as various indicators of recovery continue to rise and fall, and often paint contradictory pictures. Housing market analysts suggest that the recovery in home values and sales may be as far off as 2014 or beyond, and we all know the disproportionate role they play in the fortunes of the housing-driven Arizona economy. For you, the small business owner, the numbers that really matter are growth in your business' top line revenues, improved profitability, increased productivity and improve cost position. In short, the numbers that would cause the market to place an increased value on your business were you to consider selling it in 2012.
The reality is, that in recent years most small business owners have concluded that this has not been the right time to sell because they have believed the valuation of their business has been adversely impacted by the overall state of the economy. Will anything change in 2012? To begin with, the right time to sell is the right time for you. Regardless of what the market may be doing, there will always be a buyer for a strong business that is appropriately priced.
There have been some signs of increased interest in the market for selling a business in Tucson and Southern Arizona as 2011 draws to a close. This increase in business owners exploring the possibility of selling has not, however, translated into a large increase in the number of Tucson businesses actually for sale, for the reasons mentioned above. Tucson small business owners appear to still be waiting. Will 2012 be the year they decide to sell? It's hard to say.
We regularly consult local and national databases to review statistics about business sale trends, and maintain an open dialog with other professionals in our field both locally and nationally. All sources confirm that the number of new Tucson business for sale listings and closed transactions are down between 30 and 40 percent from their peak period of 2007. Our conversations with Tucson banks, lenders, and title agencies suggest that lending options may be improving slightly, and that the constriction in lending in recent years has resulted in both buyers and sellers becoming more knowledgeable and proactive about finding financing solutions to help them close the deals they want to do.
Now that 2012 is just around the corner, and evidencing some signs that enthusiasm is building around buying and selling Tucson businesses, lets turn to what those looking to sell a Tucson business should be doing to prepare themselves. The short answer is: start planning now because your potential buyers are out there researching options right now. Here a few things to consider:
1) Understand The Value of your Business:
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Get Your Financial House In OrderStep one is getting your financial records in order. You'll need to have at least three years of tax returns, company financials like P&Ls, balance sheets and statements of cash flows, as well as records of business expenses and other valuable data such customer lists and lease agreements, etc. Each of these documents plays a critical role in establishing the market value of your business, and when presented in an accurate and orderly fashion, provide a qualified with the confidence that they are looking at a well-managed business.
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Resolve Major Outstanding Issues: Before you list your business for sale, you should also endeavor to resolve any outstanding issues that could serve to undermine buyer confidence. Examples include: short-term leases without an option to renew, overdependence on a short list of key customers you could not afford to lose without impairing the business' prospects, and any pending legal issues that could threaten a sale
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Appearance matters. Prior to listing your business for sale, make sure to conduct a thorought review of the physical condition your building, plant and equipment, as neat and tidy and well-maintained assets also create a favorable impression with buyers. Keep in mind that any core business assets that visibly need updating will quite likley be seized upon by a buyer as material reasons to lower the offer. Put yourself in the buyer's shoes; the less work they will have to put in, the more you can likely expect from your final selling price. In other words, make the effort to do a deep cleaning and upgrade inside and out, and we advise you to invest in any building or equipment improvements youmay have considered but postponed.
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Understand the market for your business. A licensed business broker can help you to develop a more complete understanding of the market and how your business is positioned against comparable businesses. This is critical to your ability to set an effective asking price. Every business seller justifiably seeks to avoid undervaluing their business and ending up with less money than it is really worth. However, the flipside of overvaluing the business vs the value of comparable businesses will almost certainly lead to a longer sales process, and one that may end in disappointment.
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Complete a Business Valuation. There are some signs that the economy is improving. Buyers may be more inclined to reenter the market buoyed by these modest improvements, and even in challenging times qualified buyers won't resist paying the price required to acquire a solid business. But during these times they will be even less inclined to pay attention to an overvalued listing. So how can you determine the right price to list your business for? The most straightforward way is to compare it to other similar businesses. A business broker can assist you be researching similar businesses for sale. Some online business-for-sale websites allow you to search for businesses by industry, size and location. By learning the prices that comparable business are listed at or have sold for recently, you will have a sound foundation for determining a price for your own business. You could also purchase a Business Valuation report from Allen & Young, in which we will work with the financial and other information mentioned above for your business and perform this research on comparables for you (selling price and multiples of cash flow and revenue that the businesses sold for) of recently sold businesses in your industry. We have access to many sources of data, and a great familiarity with the local market. A Business Valuation will give you great insight into the estimated value of your small business. However you choose to proceed, it is necessary that you be honest with yourself. Look at your business as a buyer would. If your revenue and/ or profits have been in decline, you must take that into consideration. When it comes to pricing your business, your goal should be to attract as many buyers as possible, create maximum demand, and an atmosphere where they are competing for your business. If you overprice your business, there is no chance of this happening.
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Get the Word Out: Hiring an experienced business broker is the best way to get the word out, confidentially, that your business is for sale. When selecting a business broker, you will want to check their references and make sure that you choose a broker who is accomplished and respected, and ideally has experience selling businesses in your industry. A broker should prepare a marketing package for your business, and advertise it through numerous on and offline marketing channels. Even if you elect not to work with a broker, you should still plan to be aggressive with your marketing plans. Use websites to post your listing, work through trade associations and their publications, and spread the word through family and friends. However, if you need to maintain confidentiality about listing your business for sale, then a business broker is your best option. They can list it and deal with buyers, while you continue to run the business.
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Plan to Offer Seller Financing: Even in good times, banks will almost always require a seller to finance part of any transasction they may choose to fund. In other words, at the time your business sells you are not just going to be handed a check and be able to ride off into the sunset. Rather, you will receive some portion of the sales price at the time of closing, and receive the rest over time, plus interest. From the buyer's perspective, this is valuable because it commits you to ensuring a smooth transition. From the lenders perspective, it commits you to the success of the deal as well and ensures an experienced hand will remain at the wheel to increase the odds of the new owner's success. The upshot is that you will remain connected to your business after sale helping to ensure a smooth transition. Offering seller financing broadens your access to a larger pool of buyers, who are in turn more likely to qualify for lending, and more likely to make you an offer. By helping ensure a buyer's success, you ensure their ability to keep paying you over time.
In conclusion, if you're thinking about a possible sale of your Tucson business in 2012, don't wait until the last minute. Instead, get started putting your house in order now, allowing you to take your time and do it right. By working with a licensed business broker and planning ahead and accurately researching your market, you will prepare your business to stand out from the competition. Understanding and effectively managing the sales process is more than half the battle, and that's a business broker's specialty. If you're thoroughly prepared, and understand the process, you're more likely to achieve a faster and more financially rewarding exit from your business.
If 2012 is the year you decide to explore the possible sale of your Tucson business, we look forward to speaking to you then. In the meantime, Merry Christmas and Happy Holidays from all of us at Allen & Young Business Brokerage.
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Posted by Jeff Abbott
By Larry Orenstein
When is the right time to sell your business? Actually, there is no definitive answer to that question. The reality is that most small business owners wait too long and have unrealistic expectations of how easy it will be to sell or how long it should take. If you are considering the sale of your business, our advice and that of most experts is don’t wait to the last minute. Why do we say that?
Because you don’t want to wait until you have to sell for economic, health, age, or emotional reasons. Anxiety will almost always force you into accepting a deal that is not good for you, causing emotional reactions that will prevent a sale from happening at all. Developing an “EXIT STRATEGY” involves much more than simply the decision to sell. It requires preparation, engaging the right recourses to advertise, finding qualified buyers, negotiating terms of sale, preparing contracts of sale, structuring and securing financing and executing documents to protect your interests after closing, getting yourself, your business, and assets all properly prepared to expedite a sale.
Even if you already set an initial price for your business it is an important subject to review. Determining a selling price range for a business is part of the buy-sell process, but it is often the part most likely to create vast differences of opinion. Buyers and sellers usually do not share the same perspective. Each has their own motives, rationale, and their own way of seeing the facts and figures, colored by their emotional attachment to the business or to their money.
Typically, the buyer probably wants to pay less, the seller want to get more. That is usual and understandable. For a sale to happen both buyer and seller must be satisfied with the price and be able too understand how it was determined.
At Allen & Young Business Brokerage our business pricing analysis will simplify the rather complex process of establishing an asking price for a business. Suffice it to say, there are many factors, variables, and assumptions that are involved in that process. By working with Allen & Young for your business pricing analysis, we can help identify all these variables as they applly to your business, and demystify the process of determining what the market is likely to be willing to pay for it.
Ready to get started developing your exit strategy, or to move forward with a pricing analysis?
Contact Larry Orenstein at Allen & Young Business Brokerage, at 520-820-1706.
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Posted by Jeff Abbott
If you were considering making a Tucson Business Investment, or buying a business in Tucson, Arizona, just imagine how much more confidence you would have in your decision
if there were a strong commitment in the community to buy from locally owned businesses.
ABC News has been running a special during the past 6 months about products that are "Made in America" that has garnered quite a following, as Americans search for and find opportunities to support American jobs and workers with their hard earned dollars. As you prepare for the holiday season here in Southern Arizona, consider the impact of your holiday purchases as well as your ongoing regular purchases on the American economy if you buy products "Made in America," and then take it one step further by challenging yourself to keep as many of your purchases here in our local economy as possible. No matter your walk of life or station in it, research has shown that a dollar spent buying from a local business will have a much greater impact right in your community than buying from a business that is not based locally.
The graphic above, an except from a 2008 study performed by Civic Economics in Grand Rapids, Michigan, determined that for every $100 spent locally, $25 dollars more stayed in the local economy when the purchase took place at a locally owned business as opposed to a chain or branch of a larger out of state company. Here is what they found could be achieved by shifting just 10% of retail sales in favor of independent local businesses:
"According to Claritas, Kent County reached approximately $8.4 billion in retail sales in 2007. This analysis assumes that an extra $840 million was shifted from national chains to locally owned businesses. Since we did not survey every retail sector in Kent County to have the exact shares of revenue kept locally we applied ratios for other areas in which we have done similar studies and normalized the results for the Grand Rapids region. For the categories that we did have actual local results, grocery stores and pharmacies, local results were used.
The results are rather significant. An additional 1600 jobs could be created in Kent County with wages of $53 million being added to local payrolls if such a swing in purchasing behavior
could be achieved. The 1600 additional jobs created would have been enough to increase employment by one-half of one percent in 2007. Output for the county could be increased by $137 million as well and this benefit would be spread among many industries, not only the retail sector."
Pretty convincing, isn't it?
So, here's some advice to you whether you are thinking about selling a business in Tucson, and want to get the highest price the market will offer, or if you want to buy a Tucson business: think about how you can share this message with your customers, benchmark your out of town competitors and see how you stack up, then stimulate local pride, reward loyal customers, encourage referral through viral marketing and social media, and make sure everyone understands that we all win when people shop locally.
Whether you're the buyer or the seller, a local business with a strong and loyal LOCAL following, is a better bet.
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Posted by Jeff Abbott
In general, there are 3 main reasons why anyone thinking about going in to business for themselves should consider buying an existing business in Tucson:
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Buying an existing Tucson business will significantly reduce the uncertainty that is inherent in trying to start a business from the ground up
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When you buy an existing business in Tucson you will also gain access to a business with ongoing operations and cash flow and a network of valuable relationships
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Finally, you might consider buying a business in Tucson if you could get it at a bargain price—a price below what it would cost to start a new business
Let's look at each of these reasons for buying a Tucson business in greater detail
Reduction of Uncertainties
A successful Tucson business has already proven that it can attract customers, control its costs, and earn a profit. While the past is not necessarily an indicator of future performance, the businesses current and past performance is a reflection of its ability to succeed under actual market conditions. When considering starting a new business, selecting the right location is always a concern. When you acquire an existing business you can eliminate that uncertainty because you will know how the business has performed at its present location. No matter how hard you study the strength of a potential location for a new business, traffic counts are only so useful in assessing the potential success of a new location. The real test, of course, comes when a new business opens its doors in Tucson at that location. With an existing firm, this test has already been passed and the results are known. You may not be satisfied with the past results of the business you're considering buying, but at least you will know and be able to formulate plans for exceeding past performance should you acquire the business. You can see the results of an existing business in its sales and profit data. Noncompetition agreements are needed, however; to discourage the seller from starting a new company that will compete directly with the one being sold.
Acquisition of Ongoing Operations and Relationships
The buyer of an existing Tucson business typically acquires its management and staff, equipment and inventories, physical plant and possibly real estate, established banking and supplier relationships, and ongoing other valuable ongoing relationships. To build these relationships from scratch when starting a new business would take an enormous amount of time and effort. The benefit of acquiring the operations and relationships of a going concern are only valuable under certain conditions, however. For example, the management and skilled workers of a firm are only a valuable asset if they will continue to work for the new owner. Buildings, plant and equipment are only valuable to the extent that they are well maintained and not obsolete. Relationships with suppliers, customers, financial institutions and service providers are only valuable if they are healthy, and not impaired by past breaches of trust. It is also possible that new leases and supplier contracts will need to be negotiated with current leaseholders and vendors, but it is generally easier to get the attention of a vendor or partners of an established business where they also have something to lose, than with a startup business that only represents a risk for them until proven otherwise.
A Bargain Price
For buyers considering acquiring an existing Tucson business for sale, it's important to keep in mind that a business is worth what the top bidding buyer is willing to pay. A seller who is more eager to sell a business than a buyer is to buy it, may be willing to make concessions in the sales process. Additionally, most existing businesses are sold with some form of seller financing, which is far easier to come by than bank lending or SBA loans. However, whether it is actually a good buy must be determined by the prospective new owner as part of the due diligence process. The price may appear low, but several factors could make a “bargain price” anything but a bargain. For example, the business may be losing money, the location may be deteriorating, or the seller may intend to reopen another business as a competitor.
On the other hand, an existing business for sale in Tucson may indeed be a bargain and turn out to be a wise investment. What kind of Tucson business are you searching for? Contact Us or give us a call at 520-909-8242 to discuss the many benefits of buying an existing business
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Posted by Jeff Abbott
If you're considering buying a business in Tucson or elsewhere in Southern Arizona, you may want to consider the bar business because it is a category that usually remains stable in good times or bad
Unless you've owned a bar previously, we suggest that you complete the Buyer's section on this website in order to determined if your skills and experience could be a good match for becoming a bar owner.
The Three most important factors to consider when looking at bars for sale in Tucson Arizona are the following:
Location is of paramount importance. As you explore bars for sale in Tucson in different locations around town, take careful note about the general attractiveness of the area, the presence of competitors, and the availability of parking. A great location should bring more traffic flow and visibility, but is also likely to bring more competition. Competition is not necessarily a bad thing, but it will likely require you to be more active in keeping your offering up to date, and more aggressive in the area of marketing.
Lease terms and options for renewal are critical as well. Building a bar business and establishing a regular clientele takes time, and is not very portable should you be required to move to another location as a result of inability to extend a lease. Additionally, ensuring that your renewal options will allow you to keep the cost of occupancy in the 6-10% range as a percentage of gross sales is a critical metric for ensuring that this fundamental lever of profitability is under control. If you're looking at Tucson bars for sale, focus on the details of the lease.
Liquor Licenses are hard to come by these days. Most communities have placed a cap on the number of licenses they will issue, and generally these caps have already been reached. As a result, buyers wishing to get into the bar business generally must purchase an existing business in order to gain access to a license. The license, therefore, has strong residual value and is a saleable asset on its own that makes up a part of the purchase price. Investigate the value of a liquor license for any bar for sale in Tucson to make sure you comprehend this component of price, as well being sure to clarify the type of liquor license included and whatever restrictions may be placed on it. Not all licenses are created equal.
While location, lease and licenses are the three most important considerations when buying a bar, there are many more aspects of a successful bar operation that you will need to delve a bit deeper for during due diligence in order to develop a complete picture about any bar you may be looking it. To read more about things you should consider when looking at bars for sale in Tucson, Click Here.
Keep in mind that not all businesses available for sale in Tucson are actually listed for sale. As licensed Arizona business brokers with a large network of local, regional and national business relationships, Allen & Young have access to many confidential business for sale listings in Tucson and Southern Arizona, and beyond, as well as access to powerful database and research tools. In other words, if you don't find the bar you're looking for listed on the market for sale, that's one more reason to Contact Us. We can help you find it.
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Posted by Jeff Abbott
If you're considering selling a business in Tucson, you may be going through the calculus of whether you should put it "For Sale Buy Owner, " or hire a business broker? Whatever you decide, your goal should be to prepare a complete and accurate package about the business you plan to sell, so that it sells faster and at a better price. The reality is that both of those goals are more likely to be achieved when you work with a business broker. You may also choose to involve other trusted service providers in your deal team, including: accountants, appraisers, attorneys, business coaches, and lenders to help guide you through the process and achieve optimal results.
The reality is that a recent survey showed that around 80% of business sales are sold by-owner, depending on the reason for sale, industry, size and profitability of the business. However, the same survey showed that those sellers who worked with a business broker almost always achieved a higher sale price and more favorable terms in their deals.
Here are 29 reasons you should consider hiring a business broker
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Umm...this may seem obvious, but business brokers know how to sell businesses. It's their specialty. Most business owners do not.
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Most business buyers begin their search with business brokers and online searches
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Business brokers are experts in their local business community and have huge networks of contacts; they often know buyers and sellers not currently on the market.
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Their compensation is aligned with the interests of their client; they only get paid when the client's goals are achieved, and enjoy an incentive to help cut a better deal.
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They can help you determine the best price range and terms of sale before listing on the market if you're a seller
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Or help you determine the best offer price, if you're a buyer
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They should know how to recast the financials in the way a buyer will want to see them. This is not usually how financial records are maintained by owners.
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They can help an owner who wants to sell overcome the fear of selling by educating them about all the steps in the process
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They can help sell a business while the owner stays focused on runnning the business.
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They can help find buyers confidentially; generally speaking, most business owners don't want anyone to know the business is for sale
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Business brokers assist sellers in seeing the business through the eyes of a buyer, and help them identify proactive changes and improvements, to the business itself and the way it is presented for sale, that will make it more attractive to buyers.
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They can coach sellers to anticipate and respond effectively yo buyers’ questions
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They can assist sellers in identifying and compiling necessary information about their business
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They can help bring together a deal-making team, offering referrals to accountants, appraisers, brokers and lawyers, if the seller or buyer do not have contacts in these fields.
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Develop and execute a marketing strategy for your business, including determining the best time of year to place it on the market.
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Assist with developing a negotiating strategy, and conducting negotiations as an unemotional advocate of the seller's (or buyer's) best interest.
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Help buyers or sellers reconcile differences between tax returns and financial statementsts to get the highest price
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Find potential buyer's for sellers
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Help buyers identify businesses that meet their acquisition targets, whether they are listed for sale or not. After all, everything is for sale for the right price, right?
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Advertise the business for sale, online and offline, while maintaining confidentiality.
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Astutely manage the flow of information. How much and what to show to whom, and when, etc
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Find, screen and qualify buyers
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Showcase the seller’s business to buyers
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Provide assistance during escrow and closing
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Perform background checks on buyers or sellers.
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Improve terms of sale
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Provide continual followup with buyers and sellers for decisions
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Help determine the need for, and obtain, business sale financing
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Stay in your Rolodex for future sale or purchase of a busines
Now, if that didn't answer all your questions about how we might be able to help you, you can always Contact Us. We're happy to talk to you about any aspect of the purchase or sale of businesses in Tucson or Southern Arizona. We know it's an important decision you're weighing, and that finding the right partner to assist you is a big decision.
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Posted by Larry Orenstein
One of the most often asked questions and the most difficult to answer. My suggestion, both from an emotional and a practical perspective, is to assume it will take longer than you want it to or think it will. While timing can vary widely, the typical selling time for a Tucson business can range from two or three months to twelve months or even longer. Lots of variables account for this wide range.
Is the business priced to sell quickly (i.e. a real bargain for the buyer) or is it priced to get the highest amount for the buyer (i.e. it will need a very exited buyer to pay the higher price and get a lower return on that investment.)? Do you insist on all the cash up front or will you offer some terms and owner financing? The more you demand all cash, the longer it might take as there will be fewer potential buyers with whom to talk. What are the current economic and market conditions? If the economy is booming this will shorten the time it takes to sell a business. Then it is a “Sellers market”. If economic conditions are challenging, recessionary or uncertain it will likely take longer. Then it is more likely a “Buyers’ market”. And they will be more careful and conservative in buying a business. There are many other considerations pertaining to the sale of a business and finding a buyer.
Other factors include the condition of your business, its appearance, its inventory, and its financial records. Where the business is located is another key issue to the length of time a successful sale might take.
The more flexible or motivated you are as a business seller, generally the more likely a sale can occur and the faster that it may happen. Your own personality or interaction style may shorten or prolong the selling process. So there is no easy answer to the question of “How long will it take?” It might be useful to note here that many, if not most business owners wait too long before putting their business up for sale and this adds time and a pressure that can be unbearable or unobtainable.
There are only three times to sell a business:
It is always more comfortable to start your exit strategy when you want to but don’t have to, time is not your enemy or an unbearable weight. Allow the process of selling your business to take its natural course while you maintain your business, and suddenly the sale will happen.
Allen & Young Business Brokerage uses extensive internet advertising as well as social networking sites, and has a national and international presence allowing us to reach the highest number of qualified buyers.
Ready to talk about developing an exit strategy on your own terms? Contact Larry Orenstein at Allen & Young at 520-820-1706.
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Posted by Jeff Abbott
Linda Stern of Reuters wrote about some of the less well known tax breaks in the proposed tax cut extension legislation before Congress.
Savers, investors could profit from tax bill’s small print
She linked to an analysis of the Senate bill by the Joint Committee on Taxation. One item of interest to readers of this blog is that the 0% [long term] capital gains tax rate will be extended for two more years, i.e. 2011 and 2012.
How can [long term] capital gains tax rate be 0%? Isn’t it 15%? It’s 15% if you are in 25% federal income tax bracket or above. It’s 0% if you are in the 15% tax bracket or below. For the latter group, the [long term] capital gains tax rate has been zero in 2009 and 2010. Now it’s going to stay at zero for two more years. Sweet!
If you belong to this group, there’s still a limit on how much you can sell and pay zero [long term] capital gains tax. Only those [long term] gains that, when added to your regular income, still put you in the 15% bracket or below are taxed at 0%.
For example, if you are married filing jointly and your taxable income before [long term] capital gains is $40,000, you can generate up to $28,000 worth of [long term] capital gains and not pay any federal capital gains tax, because the top of the 15% federal tax bracket for married filing jointly is $68,000 ($34,000 for single). Note the relevant number is your taxable income, not gross. Taxable income is after all deductions and exemptions.
For a retiree, this is a perfect way to reset the cost basis in one’s taxable account. If you have legacy positions you no longer want but you didn’t want to sell because of [long term] capital gains, you can sell them now and buy what you really want. If you still like the investments, sell and immediately buy back the same positions. No federal [long term] capital gains tax. The tax cost basis will be higher, which means lower [long term] capital gains tax in the future when the rate isn’t zero.
Linda Stern mentioned in her article gifting appreciated stocks (or mutual fund or ETF shares) to elderly parents who are in a low tax bracket eligible for 0% [long term] capital gains tax. When you gift stocks or fund shares, the recipient gets your original cost basis. The elderly parents can sell the shares for a [long term] gain and pay no [long term] capital gains tax. If the parents feel generous, they can make a contribution to your kids’ 529 plan. Just saying …
State income tax can be a spoiler to this nice perk. Most states don’t have a special tax rate for capital gains. If you are in a high-tax state such as Oregon, although federal [long term] capital gains tax is 0%, the state of Oregon will still tax the gains at 9%. But considering it’s normally 9% plus federal [long term] capital gains tax, 9% is still a very good deal.
A reader brought to my attention that it can be more complicated if you receive Social Security benefits. Additional income can make more Social Security benefits taxable. It’s best to estimate the effects of realizing capital gains with a tax calculator. With Intuit’s TaxCaster online tax calculator, I see a couple, both 65 years old, receiving $30,000 in Social Security benefits, can generate $60,000 in long term capital gains and pay less than $500 in federal income tax. What a deal!
I must say our current policies are very friendly to retirees who have more liberty in managing their income. I just hope the policies will stay friendly when I retire.
Reference:
S.A. 4753 Tax Relief, Unemployment Insurance Reauthorization, And Job Creation Act Of 2010: Summary, Full Text
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Posted by Jeff Abbott
As we have discussed in numerous places across this site and blog, and would certainly cover with you in person were you to consult with us about selling your Tucson business, one of the most crucial determinants of whether your business can actually be sold is the extent to which it can be run without you.
Many businesses, by their very nature, depend on the skills, relationships, and personality that the business owner has developed over time in their business community. This is particularly true in professional services businesses, or hospitality related businesses where the owner is the namesake and public face of the business. When starting a business, there is great utility in building it around yourself and your name, and perhaps more than a little ego gratification. Even if the business is not named after you, many business owners enjoy the feeling of being indispensable and derive satisfaction from being involved in most every decision made within their business, from large to small. Let's face it, that's part of the personality type of the typical entrepreneur.
If you ever plan to sell your business in Tucson, however, it pays to start planning ahead, and changing your attitude toward business ownership and your role within your business. In larger corporations and organizations, you'll often hear the expression "you've done a good job when you've put yourself out of a job." That's pretty clear; part of doing your job is doing it so well that there is no longer a need for you in it and the next guy can take over and focus on different things. The same way of thinking should be adopted by Tucson small business owners for whom selling their business is part of their future financial or retirement planning. Why? Because unless someone else can buy your business and be assured that it can keep running on all cylinders without you, from day one,
Business owner, and investor John Warrilow is also the author of a book called "Built to Sell" that we highly recommend to anyone considering selling a business in Tucson. Warrilow describes in the book his personal experience of trying to selling a services business, only to find that it could not be sold because he was too central to its operation. He conducted surveys of business owners and business brokers across the country, which included the question ”How would your business perform if you were out of action for 3 months and unable to work?"
The chart below summarizes the responses of those surveyed, and demonstrates that " the most valuable businesses could better handle an extended absence of the owner."
That's exactly the point: your business will be worth more to a buyer if it can demonstrably run without you at the time you put it up for sale. That means you need to develop talent, a manager, or staff, and teach them and delegate to them so that they learn to perform the most important functions.
So, which is the right person within your organization to entrust this responsibility to? How far should you go? Should you entrust portions of responsibility to different managers in different functional areas of the company? Or, should you make the effort to invest in a single manager, someone who you train and empower to fully take the reins in your absence?
Warrilow's research shows that business owners and business brokers alike agree that if you plan to sell your business developing a strong manager is your best bet.
While this study is by no means exhaustive, we think it represents the facts accurately and agree with its conclusions. If you want to sell your Tucson business, you need to be able to convince a buyer it can run without YOU.
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Posted by Jeff Abbott
Well established and in a prime location!
Asking Price: $120,000
2010 Annual Revenue: $410,716
Contact Broker John Oberg at 520-327-4454 for more information about this listing.
This well established interior design business for sale in Tucson has a focus on window and floor covering sales. Located in a prime spot in a busy shopping center it has good visibility and accessibility. The company has designers on staff and has a great reputation with a lot of repeat business and referrals. The owner is not a designer and only works part time in the business. The Discretionary Earnings (DE) reflects an add back for the full time designer on the assumption that the buyer will be a designer and will work full time in the business. Alternately, if buyer is not a designer, buyer could replace the part-time staff and add back a similar amount. The clientele includes a high percentage of affluent retirees who appreciate the level of service this company offers. This business has weathered the current economic downturn pretty well and there is a lot of opportunity to expand market share.
Prospective buyers will need to demonstrate a good credit rating that will be required by the landlord.Years in Business: 33
- Years owned by Seller: 15
- Business Structure: S Corporation
- Reason For Selling: Retirement
- Facility Size: 782 Sq. Ft.
- Lease: $1717 including CAM
- Lease Term: 8/31/2015
- Inventory: $50,012 (incl)
- Equipment: $25,000 (incl)
- Goodwill: $94,500
- Employees: 1 FT, 2 PT
- Down Payment Terms: $120,000 (seller may do small carry)
- Business Structure: S Corp
- Covenant Not to Compete: Yes, as negotiated
- Training: as required and negotiated
- Licenses Required: N/A
For more information, contact broker John Oberg at 520-327-4454.
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