A liquor store for sale can be one of the most attractive prospects for those who are seeking to enter the world of entrepreneurialism. Traditionally they are seen as purveyors of “essentials,” with good turnover and reasonable margins. However, performing a liquor store valuation can be a tricky business, even under the best of circumstances. The whole industry has become overly reliant on out-of-date barometers, and more often than you might expect, an owner will try to sell you their business based on long-standing traditions instead of actual “real world” elements.

As such, because of those traditions, the industry retains a somewhat veiled view of strategies utilized to assess actual, individual business values. When it comes to liquor stores, no two are identical, as they have different locations, specialities, and the absence or existence of certain subsidiary products which could easily represent significant values in themselves, etc. Always remember that you need to focus on the claim of profits and not by reference to given percentages or to the fact that the business may have solid sales, but sales in and of itself means nothing.

While you can of course review percentages given to you and use them to interpret any abnormalities accordingly, the best method of business valuation, liquor store experts all agree, is based on cash flow or owner benefits. Often times, these individuals will refer to a figure which represents a “multiple,” and this multiple could easily be three, four or five times. What does the multiple refer to?

The most common figure used represents the owner benefits. This refers to the money that you will have left after you have taken all expenses into account and essentially represents the funds you will use to service the debt, pay yourself accordingly and to build the business. When looking at the books your owner benefit is defined as net income added to the owner salary, perks, depreciation and interest less capital expense allocation. The latter element refers to any major alteration or investment you will need to make in the foreseeable future, by installing updated computer systems or redecoration, as examples. Always be sure that any “add backs” are appropriate and reasonable.

As you are going to buy liquor store business at a premium, in relation to the “multiple” attached to the value, you must of course be sure that it is being sold as an ongoing concern. This claim is particularly appropriate when it comes to the inventory of the business. Make sure that you buy this inventory at terms which are realistic to you. Often, buyers will seek to remove the cost of the inventory from the valuation and add it on separately. It should always be treated as an integral part of the valuation and not used to inflate the seller’s position. Typically an inventory is turned over by a liquor business between eight and 10 times per year and you should ensure that your particular stock does not include a large element of items which may be unsalable or seasonable.

Be wary of an owner who claims a large amount of cash sales, as if they cannot prove it, you should never pay for it. In other words, they should not benefit twice – first when they fool the tax department and secondly from an inflated business sale value.

Remember that you must have a good conversation with the leaseholder or management company, assuming that the business occupies a rented space as is most common. Understand before you go any further what you would need to do to assume the lease or to qualify for a new one.

A word on owner financing, which may be offered. Generally speaking, you may add the value of between 30 and 50% of the amount financed by the seller and consider that to be a premium to the stated business value, versus an all cash transaction.

Be on the lookout during times when you meet with the owner, visit the premises or otherwise conduct your due diligence. Consider the number of patrons that you see going in and out of the store and use this as a benchmark, bearing in mind the time of day of your observation. Do you see many family members of the owner working there or watch the owner working excessive hours? Ask yourself whether you want to replicate the situation and how you can truly arrive at a value for the work input by the family members, especially if they are being paid off the books.

When considering how to value a liquor store, remember that valuation is an art not a science!

Richard Parker is the President and founder of the Diomo Corporation – The Business Buyer Resource Center. His inspiring materials, seminars and consulting have assisted thousands of business buyers with achieving their life long dream to buy a business.

Many graduates exit university now with huge debts. They spend their early working years repaying their student loans which although at very low interest rates are still a lump of their wages which are gone before they get their payslip. This can influence many areas of their lives, buying a house, getting married, starting a family. All may have to be put on hold while the debts are paid back.

Some students therefore select to take a year between A levels and university to work and amass some savings, in order to assist them through their studies, thereby enabling their future working lives to be relatively debt-free. However, with the job market as it stands right now, all jobs become Careers In Demand and it is difficult for these gap year students to pick up a job which will permit them to earn enough money to keep them over the year, while also saving enough to assist them through their studies at university.

As most young people are IT-savvy, it could be a good idea for these students to consider Work From Home careers in the Internet Business. There are lots of jobs available and in many instances if the students have access to a laptop while they are at university, they may well be able to go on working while they study. This mean they can go on to earn through their studies at university, without the requirement to search for a new job during that time.

It stands to reason that in any university town or city, there are a lot of people going after the same roles. Most students want some extra cash and will be fighting for any work which fits around their study. How wonderful, therefore, to be already organised with work and in a subject which is familiar. The Internet Business is quite flexible and therefore if you had opted a Work From Home option in your gap year, then in all likelihood it would be relatively straightforward to transfer this work to your new home.

This type of career could certainly become Careers In Demand for students in the future as they can be so adaptable and indeed a rational choice in the beginning could actually create a good career after the years of study. Some Internet Business options may even allow for students to go on to own their own company and maybe employ students in the future during their time of learning.

Considering these opportunities, there may be a few students who would originally have taken a study break to earn money prior to taking up their option to go to university, who will now be able to choose this form of employment and go straight from A levels to university without a break. The fact that they would not be incurring such high debts would be a big justification for going straight to university.

If the students could also manage to secure a role which matched their preferred field of education, this could give them some extra insight when they are doing assignments and help them to attain good results, leading to better work in the future.

If you’re in the market to buy liquor store business, keep in mind that the process of due diligence goes far beyond simply an assessment of the presented financial documentation. You need to be able to access all the files and records, review information and research personnel as you review what you’re being told. Most experts recommended that you set aside no less than four weeks for this endeavour, and regardless of the circumstances, don’t ever think about rushing into a decision. Some issues may only come to light over a period of time and thus you should proceed carefully.

There are several points that you can give your attention to with regard to buying a liquor store business before you actually decide to immerse yourself completely in your due diligence process. While you may engage in a lot of number crunching and foot work as you go forward, is there anything that you have learned about the industry to this point, or about this specific business, its location or its owners thus far that should give you pause for thought? If for example you already know that financial records are incomplete for reasons given by the seller, or the condition of the store or its assets are not as you had hoped or expected, inventories are incomplete, inspections, certificates or licenses are compromised for one reason or another – all may be reasons for you to turn around and bid good day.

For a process of due diligence to be complete, you will need to concentrate on seven different areas:

1. The Premises.

We’ve already covered the crucial importance of allocating not less than four weeks to this endeavour, and you should reach an agreement with the seller for this set period of time so that you can personally observe the day-to-day operations of the business. First of all, you’re going to need to assess the inside and outside of the place of business and figure out a rough estimate of what you might need to pay out to replace, repair or upgrade. Remember that the attitude of the staff is very important in the retail business and you should immediately assess how the existing staff interact with clients. Are they generally friendly, attentive, and prompt as well? Personal issues or conversations should not be apparent. Ask yourself whether the store looks good, has a good ambience, appears fresh and clean, has well-maintained restrooms and break areas and is generally spick and span.

You must also ensure that you are happy with the general location of the business, the surrounding stores, the type of people who frequent the area, the accessibility and especially beware of any pending major road construction in the area as this often has a significant bearing.

2. The Financials.

As a minimum, you will need to review the profit and loss statements, the balance sheets and tax returns. You would do well to employ the services of an accountant who is experienced in the liquor business to help you here. Look at all the supplier invoices and reconcile them to revenues. This may be a time intensive process but you will be able to determine your margins this way. Be very aware of any transactions that involve cash, especially if it involves your suppliers. You will need to get written confirmation from the suppliers of their ongoing terms.

Remember some of these industry benchmarks:

• gross margin should be between 24 and 28%.

• rent should be 7% of revenue maximum.

• product mix should be up to 70% liquor or up to 40% wine.

• labor should represent 5 to 7% of revenue.

• net profit should be 8 to 12% of revenue.

• inventory should be turned over between eight and 10 times per year.

3. The Equipment.

All equipment and furnishings should be in adequate working order and not in immediate need of repair or replacement. As such you should review all the maintenance and service records and look for yourself to see if all refrigeration cases are clean and well-maintained and all other equipment is well looked after.

4. Vendor Agreements.

Your wholesalers and suppliers are absolutely essential when you purchase liquor store business assets and you must get to know them well during your due diligence. Can arrangements be transferred to you or will you have to make new ones? You do not have to be prepared to settle with the existing suppliers or vendors and you should really investigate as many options or opportunities as you can. You may, for example, see better terms elsewhere and this knowledge will be great ammunition when you come to negotiations and peace of mind.

5. Lease Contracts.

Always be sure the lease is transferable or that there are no obstacles ahead of you. You must be able to assume or acquire a long-term lease before proceeding.

6. Operations.

It is likely that you will need a number of licenses and this should be a particular area of concern when it comes to a liquor license. Sometimes these may not be assigned or transferred or other onerous terms may be set by jurisdictions.

Go through the daily procedures from opening time to closing time; who has access to keys and alarm settings? Does the business have a procedure for emergencies of any kind? Ask the seller to provide you with an optimal inventory level. Ensure that you review all insurance certificates and be adequately covered for all eventualities. You will need to talk with credit card processors and merchant banks and be prepared to move to access better rates if necessary.

7. The Employees.

As this can be a significant cost and liability area, be focused here. Check each member’s compensation, especially if there’s any possibility of cash being paid “under the table.” If you see that there is a high turnover of employees, ask yourself why. Is there a procedure in place for training? While the seller will often be wary about letting his employees know that the sale is in process, you nevertheless need to analyze each employee individually, assess their loyalty and competence and adjust your plans accordingly. Understand that certain procedures may be quite traditional to them and you should ask yourself how you feel they will react if you need to make significant changes. If one or more employees are absolutely critical to your success, you will need to meet with them prior to consummating a contract.

When you find a liquor store for sale, if you conduct your due diligence correctly you will have the opportunity to see exactly how the business ticks, and you won’t be in for any surprises when you take over.

Richard Parker is the President and founder of the Diomo Corporation – The Business Buyer Resource Center. His inspiring materials, seminars and consulting have assisted thousands of business buyers with achieving their life long dream to buy a business.

Because of the increasing accessibility of the internet, there is an expansion in Internet Business. Many new businesses are setting up so roles on the web are becoming Careers In Demand. A good number of these roles allow individuals the chance to Work From Home on a self employed basis.

Young folk, who have vast knowledge of IT can get involved in this area, and gain a reasonable sum of money doing a job they feel confident in. Even if they were to Work From Home they could deal with this as they are knowledgeable about the Internet Business because of their own personal usage of laptops. They could most likely carry out many of the internet jobs a great deal more assertively than some individuals who have had more years in the job market as a whole.

We see ads on television for on line bingo, a relatively new Internet Business which has only come into being because of the accessibility to computers for many individuals who in the past would have gone to their local bingo hall. This is no doubt a well-paid business, as individuals who may have frequented a bingo hall twice a week at most, will be much more likely to go to an on line bingo internet site daily, or more than once in some circumstances.

There are internet gambling sites and even share dealing can now be done through the net. It is easy to see, therefore, how the web now has many types of Careers In Demand for any individual who wishes to take them up.

There is also an increased Internet Business in associated roles. When companies decide that they want to go into business on the web, they will need an internet site creating, which means more work in this field. There is also the marketing of the web pages, once it is up and running, to be certain that searchers actually locate the company, so search engine optimization is now a big and growing industry.

As well as pure internet industries, there are also pc games available which encompass the increasing Internet Business. Some of the pc games allow players to interact with other game players to compete with each other between pcs. Obviously this also creates on line career opportunities, writing and testing these games.

With families leading very busy lives, they are more likely to get involved in web shopping than they once were, so this is another business which has expanded on the net. This can cover anything from the weekly grocery shopping to specialist items which may be troublesome to track down on the local high street.

There are on line auction sites, where once registered, individuals can choose to sell items they no longer require and others can bid to win these items. There are also swap sites, where individuals can deal with each other, swapping one item they do not want for something else they do. On these sites cash does not change hands, it is just recycling based.

You can see, therefore, that there is the chance for many different careers based around the Internet Business and because of the array of businesses, there are careers which would suit most individuals somewhere in the mix.

When a person is looking for ways to make their business more efficient, they usually look toward enhancing customer contact. With a growing customer base a business can thrive. Part of increasing the customer base is being accessible to customers whether a person is in their office or not. Through the virtual phone system, RingCentral, a person is now able to maintain the needed contact to grow their business.

The RingCentral system provides an 800 number to users, or you can use your existing phone number for the system. Some people choose to use a different phone number that has a local area code. When calls are made to the number, they are treated as a regular phone call and connected to the device or devices that you are using.

A person who does not work in a structured office location may need to depend on their mobile phone or messages to keep in touch with important clients. Using the Ringcentral system a person gets their calls where ever they are and there is no need to worry about messages being lost when a call is not received.

By going to the desktop screen that is provided by the system a log containing important caller information is kept for easy retrieval. A person will find a log of recent calls that shows the name and number of the person calling. When people leave a phone message, their message can be played from the computer and all of their information is shown on the desktop.

If a customer leaves a message, it can be played from the desktop and also contains all contact information. When an important call is coming in, a pop-up on your computer will alert you to who is calling and the number. In this way you will not miss important contacts with customers.

The benefits of the Ringcentral system make it invaluable to a growing business. A person will find that when they can automatically route customer calls they have more flexibility in the time that they spend in a single location where there is a phone. You can also send and receive faxes using Ringcentral. The system grows as the company grows and becomes a valued part of the infrastructure of a business quickly.There are many advantages and benefits that can help a growing business to thrive. By using the Ringcentral system a person can configure the type of services that they want to provide to their customers. In some cases a person may want to automatically route calls from customers. As the business grows you may find that the auto-attendant will be an invaluable asset.