VNB Brokers is providing an analysis of business opportunities in the various zip codes of New York City to help entrepreneurs understand opportunities in buying and selling businesses in the city. For previous posts in this series, check out our section on New York Business Insights.
The Business Landscape in 10002 (Lower East Side)
Overall, the business environment in 10002 — the dominant zip code in the Lower East Side neighborhood of New York City — is up, with the number of establishments having a yearly growth rate of about 0.34% per year from 2012 through 2016 (the last year of publicly available US Census data). This puts the approximate total count of the number of establishments in 10002 at 3,005. As is to be expected from a growing count of business establishments, the total number of employees in 10002 is also up — averaging an annual growth rate of about 1.63% over the period observed. To complete the hat trick is the growth in average salary: the current average salary in 10002 is estimated to be $33,478; moreover, this average salary has enjoyed a growth rate of approximately 3.44% over the past 5 years. Growing establishment counts, employee counts, and average salaries suggests the business climate for 10002 is pretty hot.
As for which industries are growing quickly in 10002, Museums may be worth looking into (incidentally, this was also the case in Chelsea). It now has about 10 establishments in the zip code, and has been growing at about 10.76% per year. For those interested in riding trends, that may be something to watch.
A Look at the Demographics of 10002
Regarding the age of the zipcode’s residents, note that elderly returns amounted to 18.99% of all of its tax returns, or just over one in six. On the flip side, we saw that 2.91% included a childcare credit, which may shed insight into the size of the presence of young families in the zip code. Here’s a chart summarizing the key demographic attributes of 10002:
Highlights From Tax Returns Filed in 10002
As for the demographic breakdown of 10002, here are some of the facts we found to be especially worth observing:
- 10002 is one of the most heavily populated zip codes in New York, as it can claim more filings than over 99% of other Manhattan zip codes.
- One of the more notable characteristics of 10002 is that its residents appear to be especially committed to retirement planning; the zip code’s population ensures that on an absolute basis it has more returns with IRA contributions than almost every other zip code in Manhattan, but even when comparing the percentage of filers in a given zip code with IRA contributions, 10002 on the Lower East Side has a greater percentage of contributors than over 86% of its fellow New York City zip codes. If you have a business that caters towards a demographic that contributes to retirement planning, this may be an opportunity worth noting.
Have additional questions on buying or selling a business in 10002? We’ll be happy to help you as best as we can. Just drop us a line.
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This post is a part of VNB Brokers‘ series on the business environment within given zip codes in the New York City area. If you’re an a buyer or seller of a small business in New York, this data can help understand the opportunity and successfully negotiate a valuation.
The Business Environment in 10001
Overall, the business environment in 10001 (located in Chelsea) is up, with the number of establishments having a yearly growth rate of about 0.12% per year from 2012 through 2017 (the last year of publicly available US Census data). This puts the approximate total count of the number of establishments in 10001 at 7,277. As is to be expected from a growing count of business establishments, the total number of employees in 10001 is also up — averaging an annual growth rate of about 1.45% over the period observed. To complete the trifecta is the growth in average salary: the current average salary in 10001 is estimated to be $68,051, and has enjoyed a growth rate of approximately 3.65% over the past 5 years. Growing establishment counts, employee counts, and average salaries suggests the business climate for 10001 is pretty hot.
As for which industries are growing quickly in 10001, Museums may be worth looking into. There appear to be about 14 establishments identifying as museums in the 10001 zip code, and that number has been growing at about 14.87% per year. For those interested in riding trends, that may be something to watch.
A Look at the Demographics of 10001 in Chelsea
As for insights into age, we should note that elderly returns (filed by those 65 or older) accounted for 17.21% of all returns in 10001, which suggests more than 1 in 6 residents in this zip code are seniors. On the flip side, we saw that 2.15% included a childcare credit, which may shed insight into the size of the presence of young families in the zip code — or, in this particular case, a lack thereof. These observations coupled together suggest an aging demographic. Here’s a chart summarizing the key demographic attributes of 10001:
Highlights From Tax Returns Filed in 10001
Drilling down into the demographics of the 10001 zip code in Chelsea, we find a few interesting anomalies:
- The total reported total income for the zip code is a bit over $2.8 billion USD — that’s greater than about 98.46% of returns in our New York City zip code set.
- It should also be noted that the partnership income total in 10001 ranks higher than approximately 98.15% of New York City zip codes, with the IRS reporting a value of just under $245 million in income for partnerships for the entire zip code.
Have additional questions on buying or selling a business in 10001 in Chelsea, or in other parts of New York City? We’ll be happy to help you as best as we can. Just drop us a line.
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A major part of selling your business is getting the word out. After all, the more people that know your business is for sale, the better off you’ll be. In Bob House’s recent article, “How to Create an Effective Business for Sale Ad and Ensure It Gets the Best Result,” House gives readers an assortment of tips that he believes will help sellers attract higher offers from real buyers.
Getting the Word Out
As House wisely points out, many buyers wait until the last second to dive in and create a good sales ad. In fact, many buyers fail to grasp the real importance of creating a quality and compelling advertisement. Imagine creating a good sales ad like you would going fishing with a group of friends. The more friends you have on your fishing trip, the greater the odds that someone catches a fish. In much the same way, the more people who know you are selling your business, the greater the chances that you’ll get some serious “bites.”
Tips for Receiving More Attention
House has five key tips for attracting more attention from prospective buyers via your sales ad. At the top of the list is to be descriptive. Your sales ad should give an excellent description of your business and its unique features. As House notes, you want to “paint a clear picture.” In other words, now is not the time for mystery. You want prospective buyers to have a very clear idea of what kind of business they could possibly buy.
Secondly, you should have a great headline. People have always skimmed, but the rise of the Internet has taken skimming to a whole new level. Your sales ad should have a very engaging and interesting headline. You want to capture people’s attention. A good place to start is by determining what your business’s best feature is and emphasizing that feature in your headline.
Incorporate Top-Notch Images
Third, the old saying that a picture is worth a thousand words absolutely applies to selling a business. Just as a great headline will capture people’s attention, the same holds true for a great picture. Consider having a professional photographer take the photo, as he or she may have tips to make your business look its best that you may simply not know.
Fourth, your ad should definitely include key financials. Any serious buyer will be very concerned, if not obsessed, with your financials. Information such as cash flow and income statements are a good idea as may potential buyers focus their business searches around key financial metrics.
Don’t Forget the Final Step
Finally, if there has ever been a time in your life to proofread, this is the time. In fact, you should consider hiring a proofreader to look over your ad for grammar and spelling mistakes. As House notes, you want prospective buyers to realize that you are attention oriented and responsible. A simple grammar or spelling mistake could wreck a potential deal.
Creating a great sales ad is an art form. One of the best ways to ensure that you have a great sales ad is to work with an experienced business broker. Business brokers know what buyers are looking for, have great marketing professionals at their disposal, and can help you frame your business in the best light possible.
In his recent article in Smart Business entitled, “How to get your business, and yourself, ready for sale,” author Adam Burroughs explores the key points of getting your business ready to sell. Burroughs points to the truism that, at some point, almost every business owner must sell his or her business. For this reason, it is critical to think about what it takes to get your business ready to sell. Simply stated, it is best to explore and plan for selling your business long before you actually need to place your business on the market. Let’s explore some key points for selling your business.
Broadening Your Options
Burroughs interviews Scott McRill at Clark Schaefer Hackett. McRill notes, “The sooner you think about your exit, the more options you’ll have for yourself and the business when the time comes.” A savvy business owner will always want to give himself or herself as many options as possible. McRill wisely points out that early planning is key, and a failure to engage in early planning could lead to a lower selling price. If you want to get the best price for your business, then planning for the eventual sale as far in advance as possible is a good move.
Planning in Advance
According to Burroughs, business owners should start planning to sell their business at least 2 to 3 years before they actually plan to sell. Part of the reason for this is so that business owners will have enough time to make operational improvements designed to maximize the business’s overall value.
A Financial Review
At the top of every business owners “preparing to sell” list is to have a third-party review the business’s financial situation. This is excellent advice for, as frequent readers of this blog know, any serious prospective buyer will look long and hard at your business’s financials. Getting your business’s financial house in order means that you should turn to an accounting firm for help. You’ll want to review financial statements for at least the previous 2 to 3 years.
Burroughs points out that when it comes to selling a business, there are many variables that business owners often overlook. At the top of the list is the management team.
Your Management Team
Prospective buyers can get very nervous about the stability of the management team once ownership has changed hands. Often, the new buyer may only sign on the dotted line if the owner agrees to stay on after the sale during a transition period. Having a competent and proven team in place, one that is dedicated to staying with the company will help you get your business ready to sell.
There are a lot of variables involved in preparing to sell a business. The sooner that you get experts involved in the process, the better off you will be. A business broker can serve as a guide – one that can point you in the right direction. Find a broker with an abundance of experience, and you’ll have an invaluable ally who can help you navigate the process. It can take a lot of time and effort to sell a business. Working with a business broker can keep you from reinventing the wheel at every step of the process.
It is never too early to start thinking about what tax structure you should use when it comes time to sell your business. A simple, but undeniable, rule of life is that taxes matter and they can’t be overlooked. Author Tim Fries at The Tokenist has written an excellent and quite detailed overview article on what tax issues business owners need to consider before selling their business. His article, “What Tax Structure Should You Use When Selling Your Business?” explores many aspects of a topic that many business owners fail to invest enough time in, namely taxes.
As Fries astutely points out, the taxes involving the sale of a business can be complex and are usually unknown to those selling a business for the first time. Your tax structure can influence how much money you receive at the closing of your deal, so it’s a very good idea to pay attention to all aspects of taxation and your business. It is key to remember, “When you are selling your business – as far as taxes are concerned – you’re ultimately selling a collection of assets.”
Fries points out that taxes and selling a business are no small matter. It is possible that up to 50% of the sale of a business can go to taxes. Don’t worry if you are learning this for the first time and feel more than a little shocked. However, this fact does a good job of illuminating the importance of setting up the right tax structure for your business. While you might not be able to get around taxes altogether by investing the time and effort to set up the right structure for your business, you can keep from paying more taxes than is necessary.
There are a lot of variables that go into how much you will ultimately have to pay in taxes. Let’s take a look at some of the key questions Fries raises in his article.
- Is your sale considered ordinary income or is the sale considered capital gains?
- Are you operating as an LLC, a sole proprietorship, a partnership or are you operating as a corporation?
- What portion of the sale price goes to tangible assets as compared to intangible assets?
- Is there a difference between your tax basis and the proceeds from your sale?
- What does your depreciation look like?
- Don’t expect that the buyer will instantly agree to your terms.
- Realize that the decisions you make during negotiations with a buyer will have tax implications.
- Is an installment sale right for your business?
- With C corporations, sellers usually want a stock sale whereas buyers generally prefer an asset sale.
- Cashing out immediately, where you receive all your funds at once, will increase your tax liability.
- Have you considered switching to an S corporation?
- Have you consulted with experts to decide which tax structure is best for you?
- Have you consulted with a business broker?
Selling a business is obviously complicated. Finding a seasoned business broker can help you demystify many aspects of buying and selling a business. Ultimately, having the best deal structure and finding the right buyer can be a labyrinthian process. Having the very best professional help in your corner is simply a must.