Posted on Thu, Mar 11, 2010
Have you considered that in today's economy buying a business is essentially buying a job that you can never be laid off or fired from?
If you have the requisite skills and access to capital and / or financing, there could not be a more favorable time to buy a business. Most buyers today have less than $100,000 to invest, and much of this may be pulled from a 401k or home equity. A buyer's motivation is generally to gain more control over their own life and achieve pride of ownership.
What would your dream job look like? How many hours a day would you work? How long would your commute to work be? Where would you live? What would the weather be like? What would your average day be like, what kind of activities would you be performing?
It is important to ask yourself these questions, because buying a business is really the same thing as buying a lifestyle. In addition to the choice of what kind of business to buy, whether that be a manufacturing business, service business, restaurant, franchise or any other kind, there is the choice of where to buy that business.
Buying a business in Arizona offers many different lifestyle options, for example:
- Buying a business in Phoenix offers access to the nation's 5th largest city and year round warm temperatures. Proximity to Sedona, Flagstaff and the White Mountains offer weekend escapes.
- Buying a business in the White Mountains area, including Pinetop and Show-Low, affords buyers with 4 seasons and mountain and lake sports.
- Businesses for sale in Tucson or Southern Arizona offer buyers less extreme weather than Phoenix, access to Mexico, and plenty of great hiking and outdoor activities.
There are many different lifestyles available to investors considering in buying a business in Arizona. We would be happy to answer any questions or point out of state buyers in the right direction to discover more facts about life and business ownership in in Arizona.
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 Wed, Dec 02, 2009
Whether you are selling or buying a business, allowing a business broker to assist you with the due diligence process is a good idea. Most business brokers would use a simple definition of “due diligence” to mean the process through which a potential buyer evaluates a target company or business for the purpose of acquisition.
According to the U.S. Securities Act of 1933, business brokers must conduct a due diligence investigation for the businesses they are selling and disclose their discoveries in order to not be held liable for non-disclosure.
In Arizona, business brokers are governed by the Arizona Department of Real Estate, which requires them to disclose material information that could affect a buyer’s interpretation of the sale price as well.
The due diligence process is similar to a forensic analysis. According to many business brokers, relevant areas of concern can include financial reports, the business’s place in the market, real and personal property, insurance and liability coverage, review of debt, employee benefits, immigration, and international transactions.
Business brokers say that due diligence should be performed before a company goes to market. This helps to uncover any hidden or unexpected costs that may be associated with the sale of the business, ensuring that the seller is receiving a fair sum from the buyer. The best advice is to employ the help of a qualified business broker.
Protecting the seller is a business broker’s job, and properly performing due diligence is one of the most important steps to take when selling your company. Broker’s may also be retained to protect the interests of buyers.
Portions of this post originally appeared on Web site of the International Business Brokers Association, Inc.
http://www.ibba.org”>http://www.ibba.org
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 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 Wed, Sep 23, 2009
It seems that blogging has become the rage in the business community today. Everyone is fascinated by social media, developing profiles on Facebook, and beginning to explore the use and business value of networking sites and social media outlets like Twitter.
If you’re like us, you probably already have enough on your plates, and creating your own social media presence, much less reading someone else’s blog or tweets, seems like more than you may be able to handle. You are right to question the value of this blog, and doubt whether you should take the time to read it. We are aware of that.
That is why with this first post, we are making the commitment to you to not waste your time. We want you to be able to trust us, and trust what we say. We will not write anything here that will not or does not add value to your business, or share knowledge with you about what we believe are the best practices in buying and selling a business in Tucson or Southern Arizona. Period.
Thanks for reading. We welcome your comments and look forward to a dialog with you.
Carrie Allen CBI BBS
Owner and Designated Broker
If you'd like more information on this subject, please contact us at 520-327-4454 or visit us at www.allenandyoung.com