Posted on Thu, Jun 03, 2010
Whether your considering buying a business in Tucson, or placing a business for sale in Tucson, at some point as you move forward towards a transaction the issue of licenses and permits will come up in the conversation. The questions will be: does the business you're buying or selling require a Business License in The City of Tucson, and, if so, is that Tucson Business License current?
It's better to be safe than sorry, it could be costly & inconvenient to say the least if the failure to maintain a necessary business license up to date caused a business transaction to fall through. So how do you know if the business in question needs a business license?
Here are the first two questions you need to ask yourself?
- Will your business be located within the city limits of Tucson? Or, Will you conduct business within the city limits?
If you answered yes to either of those questions, then the business does need a Tucson business license. But it's not that simple, I'm afraid. We are dealing with the government here, after all!
The next question is:
- Do you know if your business is zoned to conduct your type of business in your part of town? Or, Do you know if the property /space you are about to rent will pass building and fire code requirements? Or, Do you have a Certificate of Occupancy for your business name?
If you answered yes to all the above questions, then you are in good shape. But guess what? There are 15 more questions that cover the gamut of things like the type of signage you will use, whether your business serves food, liquor, is a manufacturer, operates out of the home, etc.
If you are considering buying or selling a business in Tucson, this could be the right time to familiarize yourself with these requirement. Click here to Download the City of Tucson Business License Process.
To view the entire set of tax and licensing related regulations in Tucson, visit the City of Tucson's Web page devoted to these questions by clicking here.
If you'd like more information on this subject, please contact us at 520-327-4454 or visit us at www.allenandyoung.com
Posted on Tue, Dec 01, 2009
How long have you been looking at businesses for sale for the the right opportunity to buy a business in Tucson, or make a Tucson Business Investment.
Several months ago, Bizquest.com (a national business for sale listings site) conducted a survey and learned that nearly 70% of the would-be business buyers who responded had been looking for a business for over 7 months. The same group of buyers also reported that they had also met with fewer than 3 sellers during that period of time.:
If you are looking at Tucson businesses for sale, with an eye to making a Tucson business investment, then what this means for you is that if your strategy has been similar to those prospective buyers in this survey, it is time to make a major change to your approach. Otherwise, you might still be sitting in front of your computer in a year, no closer to buying a business in Tucson than you are now.
You can look at businesses, at a superficial level, from your computer. But you can’t buy one that way.
And you won’t ever buy a business if you’re just a “looker,” someone who never gets beyond the executive summary
to really dig in and get to know a business, meet the seller, understand the numbers, etc.
If you want to buy a business, you have to get off the porch and play with the Big Dogs, as they say. You need to get out and meet with people who have businesses for sale if you plan to make a Tucson Business Investment. You should meet them, ask them questions, and arrange to visit their businesses. And you should do this with quite a lot of businesses, because there is no other, and therefore no better, way to to expand your understanding of what different businesses have to offer you in terms of lifestyle, operating model, and return on investment. We believe that your decision to purchase in the end will be based on these factors, and that the lifestyle a business offers you will turn out to be perhaps the most important consideration. If you don’t go meet sellers, and get a feel for what their life is actually like while running the business they intend to sell, how else are you going to get a reality check on what your life would be like if you were running their business? You need to answer the question “what are the fundamentals that I am looking for in a business?”
The more sellers you meet with, the better you will get at rapidly and accurately analyzing a business, getting your questions answered, and working with your broker to determine what you think it is worth. If you don’t go through these steps, you will never actually get to the point of being ready to make an offer. And it goes with saying that you miss 100% of the shots you don’t take. If you don’t go through these precursor steps, you will never be in the position to buy a business. Preparation and practice are essential to buying a business. If you are not working with your broker to better prepare yourself, and you are not practicing by researching and interviewing, then quite frankly you are spinning your wheels and wasting your time.
Businesses for sale come and go on the market continuously. Will you be ready to seize upon the right opportunity when it presents itself? Buying a business can be intimidating, and time consuming, until you take the time to get into the process and understand all the steps involved and develop your own judgment at each stage. Once you’ve made that investment of time, you’ll take the mystery, and any hesitation, out of the process. But unless you take off your gloves and roll up your sleeves and get in there and meet real live sellers and get your hands dirty by digging into the numbers, you will never buy a business, and instead will remain part of the 90% of lookers who never become buyers.
So, unless you’re willing to get out in the market, don’t tell people that you are trying to buy a business. Because the only thing you’re really doing is wasting time.
If you'd like more information on this subject, please contact us at 520-327-4454 or visit us at www.allenandyoung.com
Posted on Sun, Nov 22, 2009
Thinking about listing your business for sale in Tucson, Arizona? Or making a Tucson Business Investment?
At Allen & Young, we believe that you will judge your satisfaction with the process of selling your business by the amount of cash that you end up with in your pocket after the sale of your business.
Before you go forward with the process of listing your Tucson business for sale, and eventually selling it, please keep in mind that there is usually a rather large difference between the sales price and the amount of money that actually ends up in your pocket. This difference could be 50%, or even more.
That is why Allen & Young always recommends that anyone considering selling a business in Tucson, Arizona, that they obtain solid advice from a good estate planning attorney and CPA prior to listing the business for sale in Tucson. This is essential. There are many things to be aware of, and some decisions you will need to make.
Some areas where you will want to investigate prior to listing a business for sale in Tucson include:
– the type of entity structure
– early transfer of stock and assets to trusts
– partnership and /or family members need to be considered.
Selling a business is fairly straightforward, and we would love to help you prepare to put your business for sale in Tucson. Just keep in mind that there are a lot of considerations, and make sure that you have access to high quality advice. We maintain a rolodex of skilled and trusted advisors in every relevant field, and are always happy to answer questions.
It all starts with a handshake.
If you'd like more information on this subject, please contact us at 520-327-4454 or visit us at www.allenandyoung.com
Posted on Sat, Oct 10, 2009
If you want to sell a business in Tucson or Southern Arizona, or make a Tucson business investment, choose your business broker carefully.
Most business owners seeking to sell their business in Tucson or Southern Arizona have a pretty good idea of what they would like to get for their business. And there are many business brokers who will simply ask them what price they want for their business, and then tell them what they want to hear. “Sure, I can sell a business in Tucson like yours for that price,” they’ll say. They will tell a business owner that they can get whatever he or she wants for the business in order to get the listing. They base this decision not on any analysis of comparable businesses for sale in Tucson or Southern Arizona in the past or present, nor based on the soundness of the business’ financials, rather on their desire to get the listing. Such brokers are in the “listing business”, and are not being 100% honest with business owners seeking to sell their business in Tucson or Southern Arizona during this process.
When you sell a business in Tucson or Southern Arizona, what you end up getting for your business is not what you want for it, but what a buyer, someone wanting to buy a business in Tucson or make a Tucson business investment, will be willing to pay for it. Any rational buyer (and nearly all buyers of small businesses are highly rational about how to invest their hard won dollars) will perform due diligence on your business and determine what they are willing to pay for it based on the reality of its historical financial performance and a realistic assessment of future cash flows. The fact is that this has very little to do with what you may want for your business, or think it is worth. If you are trying to sell a business in Tucson or Southern Arizona, keep in mind that the asking price is what a seller wants, and the sales prices is what a seller gets based on market realities.
If you work with a business broker who is in the “listings” business, and who goes along with listing the business at the price you might want, but a price that is not supported by the financial performance of the business and prevailing market realities, you will get a wake up call not long after the business has been listed. Your broker will tell you, usually within 30-60 days, that your business hasn’t received many inquiries from investors seeking to buy a business in Tucson or Southern Arizona, and that they would like to lower the asking price. They will lower the price repeatedly over time until it reaches the range of its realistic market value. In other words, the price it should have been listed at to begin with. At this point, buyer inquiries are more likely to occur and to be serious.
If this sounds to you exactly like what happens when you are selling a house, you’re right, because it is. Most business brokers operate their businesses based on the real estate model, and have no further training or certification to enable them to properly understand the differences between valuing and selling a business and a home. But the two could not be more different.
If you want or need to sell your business, wouldn’t you rather work with a broker who counsels you to set a realistic market price based on fact-based analysis, and who will sell your business as soon as possible because it is priced right?
Allen & Young’s brokers have achieved many additional accreditations and specializations within the field of business brokerage, and we do not run our business based on the real estate model. Our customers are only satisfied when we put money in their pockets, as soon as possible. We will not list a business at all unless the seller agrees to set a realistic asking price.
If you are serious about selling your business, and want to deal in a straightforward process based on experience, integrity, facts and analysis, please contact us.
If you'd like more information on this subject, please contact us at 520-327-4454 or visit us at www.allenandyoung.com
Posted on Sat, Oct 03, 2009
If you are considering selling a business in Tucson or Southern Arizona, or making a Tucson Business Investment, another critical aspect of your business that needs to be in order before you sell is your Income Statement.
Don’t wait until you are ready to sell, or need to sell, your business to invest the time and resources in ensuring that your income statement (and all of your accounting records) is thorough, accurate and consistent in the methods applied. If someone else, perhaps a book-keeper or CPA, has been doing your bookkeeping for you and you perhaps have only been reading top-line reports, you may not be aware of how entries are being booked.
Review the Income Statement and understand each of the entries. Dig in to the General Ledger to thoroughly understand what sub accounts and line items are being rolled up into each Income Statement Summary line, for both revenues and expenses.
Pay particular attention to what is included in the different expense accounts. Someone considering buying a business in Tucson or Southern Arizona, or making a Tucson Business Investment, will expect a detailed explanation of all expenses and will be looking for discretionary items that can be added back to income. Make sure you have recorded these, and kept back up receipts for spot check and cross reference during due diligence.
Make sure the Cost of Goods sold is accurate based upon accurate inventory amounts and purchase prices. If current prices of major inputs have changed since the time your raw material inventory was purchased, make sure to make a buyer aware of that and its materiality to the business.
We believe It can be well worth the expense to hire an outside bookkeeper or CPA to look over your bookkeeping processes and advise you on an changes in your procedures that may be advisable or necessary.
Again, don’t wait until you want or need to sell to commit to accurate accounting records. The Income Statement is the first place a buyer will go, and yours better be able to stand up to scrutiny during due diligence or you may lose the deal. Then, you’ll be hiring a forensic CPA to go back in time and clean things up. It is easier and more cost-effective to do things right the first time.
If you'd like more information on this subject, please contact us at 520-327-4454 or visit us at www.allenandyoung.com
Posted on Thu, Oct 01, 2009
Whether you are buying a business in Tucson or Southern Arizona, or selling a business in Tucson or Southern Arizona, or considering making a Tucson Business Investment, remember one thing: the market rules.
Most business owners considering selling a business in Tucson or Southern Arizona, will at some point ask themselves “I wonder what I could get if I sold my business?” The asking price is what a seller wants, and the selling price is what a seller gets.
Here are 4 common myths about selling a business in Tucson or Southern Arizona that Allen & Young would like to help you avoid:
Myth One: Businesses in my industry all sell for “X” times annual revenue.
While many people fall back on these kinds of “rules of thumb,” they turn out to be unhelpful because as regards the sale of your business, averages don’t apply. Just consider: If you had 5 businesses sell, and 4 sold for $150,000 and the 5th sold for $500,00, the average would be $220,000. A buyer is not going to pay an average price for your business; they will pay what your business is worth as determined by the market.
Myth Two: A local competitor selling a business in Tucson or Southern Arizona sold the business for X times revenue a few months ago, so mine must be worth at least that much.
False. The 3 things that determine the price you can ask for your business are:
a) The cash flow it generates
b) The buyer’s or investor’s required rate of return
c) The expected growth in cash over foreseeable future.
Rarely will a buyer pay for projected future revenue unless there is a VERY compelling case to be made. Establishing a value for the business is based on the confidence that the historical financials you have provided are a reliable predictor of future business performance. It is based on upon what a buyer can reasonably expect to generate in their pocket based on past historical information.
Myth Three: My business loses money, so it isn’t worth anything
False. Many businesses lose money. But that does not mean that have no value. The most common valuation for a small business is called Seller’s Discretionary Income. It involves pretax profit, owner’s salary, owner’s perks, interest and depreciation. We all take money out of our business for personal uses. But clear documentation is necessary of everything that is taken out at the owner’s discretion as a personal expense in order that it can be added back to show a potential buyer that these personal expense are actually income that the business is generating for the owner. This is critical to establishing value.
4) Valuing your small business should only be done when you’re ready to sell or need a loan from a bank
If you are considering selling a business in Tucson or Southern Arizona and you wait until the moment you actually decide to sell to find out how much your business might be worth in the market you have missed the opportunity along the way to make or improve upon critical business decisions and estate and planning issues.
If the Tucson or Southern Arizona business that you are selling is to have a life after you, you should value your business at least once a year. If you knew what your business was worth today, we believe you would certainly begin tomorrow to take steps to increase its value. Don’t wait until you want or need to sell your business in Tucson or Southern Arizona to discover the ways you could have increased the value of the business
Money is not the key motivator behind a person’s decision to buy a business in Tucson or Southern Arizona, or make a Tucson Business Investment. Countless studies have shown that it is more about freedom, lifestyle, and the desire to be their own boss. The money the business generates is the by-product of this broader decision.
If you want to sell a business in Tucson or Southern Arizona, put yourself in the shoes of someone who may be considering buying a business in Tucson or Southern Arizona, or making a Tucson Business Investment, and be prepared to showcase and sell the benefits of the lifestyle you lead as a result of the business you own.
If you'd like more information on this subject, please contact us at 520-327-4454 or visit us at www.allenandyoung.com
Posted on Thu, Oct 01, 2009
If you are considering buying a business in Tucson or Southern Arizona, you will no doubt be interested in learning more about SBA Loan Programs and what it takes to quality for an SBA Loan
The SBA has a basic loan guaranty program called the 7(a) loan guaranty. This program may be available to help people seeking to buy a businesses in Tucson or Southern Arizona obtain loans that they normally would not obtain. The SBA guarantees that the lender will receive most of their money back if the business defaults on the loan.
Lenders can become Certified Lenders by showing that they have the ability to process, close, service, and liquidate loans. They must also have a satisfactory history with the SBA, an acceptable SBA rate, and have shown the ability to work well with the SBA. In return the SBA promises a fast loan decision. The proceeds of the loan can be used for any business purpose. If the loan is for working capital then the maturity is 10 years and if it is for fixed assets then the maturity is 25 years.
Another loan program is the Certified Development Company program which is also called the 504 loan program. This program allows people seeking to buy a business in Tucson or Southern Arizona, or anyone wishing to make a Tucson Business Investment to purchase real estate, machinery, or equipment for the purpose of expansion or modernizing the business.
The Micro loan is a very popular loan program for those who need up to $35,000. This loan can not be used to purchase real estate or to pay existing debt and they are not guaranteed by the SBA. The Low Doc program is a loan program in which the lender doesn’t require as much paperwork as with other traditional loans.
SBA lenders will generally require the following from anyone seeking to buy a business in Tucson or Southern Arizona, or make a Tucson Business Investment:
Confidential Business Profile – this is our prospectus we have prepared for our business opportunities that will detail the specifics of the business and financial statements and projections that a bank will be interested in.
Business financial statements- Tax returns and/or P&L statements for the prior three years in most cases.
Personal financial statements- Detailed personal financial statements will be required for any owners, partners, or any stockholder holding more than 20% interest in the business will be required to provide this information.
SBA Loan Request – A standard form showing description of how the funds will be used, etc.
Collateral- Describes the collateral used to secure the loan.
For more information about how the SBA program could work for you if you are planning to buy a business in Tucson or Southern Arizona or make Tucson business investment, please give me a call at 520-327-4454.,
If you'd like more information on this subject, please contact us at 520-327-4454 or visit us at www.allenandyoung.com
Posted on Tue, Sep 22, 2009
Are you considering listing your Tucson business for sale? Or making a Tucson Business Investment? Or maybe you’re thinking about buying a business in Tucson, or Southern Arizona.
No matter what role you are playing in a potential business for sale transaction, it is paramount that you review all leases and customer and vendor contracts. Make certain that they are favorable and assignable to the buyer.
If possible see if you can renegotiate these contracts prior to listing the business for sale. A longer term real estate lease with at (or below) market rent and an option to renew for a specific period of time, with the rent increase spelled out in black and white, will be perceived as valuable by a buyer. And it also helps eliminates a source of risk and uncertainty for a potential buyer.
Similarly, it is a good idea to review you’re open customer contracts. Some customer contracts are with the business entity and will not transfer if just the assets of the business are sold and not the stock. Sometimes the contract will not transfer if more than 50% of a business is sold. Make sure you know the status of very customer contract prior to listing the business for sale. A contract guarantees future business to the buyer, and is therefore a sense of comfort. You want to be able to answer affirmatively to the greatest extent possible that these contracts will endure the sale of the business, and their benefits accrue to the individual buying business in Tucson, or making a Tucson Business Investment.
Vendor contracts may not transfer or assign as they are tied to the seller’s personal credit. A business buyer should be prepared to have to re-estabslish such lines of credit based upon their own credit.
If you'd like more information on this subject, please contact us at 520-327-4454 or visit us at www.allenandyoung.com