Millennial Money

New Mexico is moving up in the ranks of states for millennials to live, according to WalletHub—all the way from last place to second to last place! The penultimate spot does not tell the whole story, though.

Albuquerque is a pretty great place for millennials, in fact. The low cost of living, proximity to gorgeous outdoor scenery and recreation, and rich culture contribute to a high quality of life. The burgeoning film and tech industries are creating jobs and contributing to the “cool factor,” and supportive economic policies make it an opportune place to run a business.

According to Albuquerque Economic Development, “The region has a favorable ratio of residents in the key working age group of 20-34 years. Current estimates show that 19 percent of the population is in this key age bracket, compared to the national average of 18 percent. Albuquerque’s 20-34-year-old category is also projected to expand by a greater rate than the national average.”

This matters, even if you eschew avocado toast and Instagram, because millennials are a crucial market. They are projected to become the largest generation this year and currently represent 21% of all discretionary spending in the United States.

CNBC summarizes a recent report by Coldwell Banker Global Luxury and WealthEngine that studied some of the economic and life choices of “millennial millionaires”—of whom there are apparently about 618,000.

The population of wealthy young people is growing, the report finds. And they’re getting richer: “By 2030, millennials will hold five times as much wealth as they have today, and are expected to inherit over $68 trillion from their predecessors in the Great Transfer of Wealth.”  The “Great Wealth Transfer” refers to the trillions of dollars that will be passed down to millennials from their baby boomer parents, who are considered the wealthiest generation in history.

The same study also found that millennials are choosing to live in more affordable markets and second-tier cities where it’s easier to get ahead financially. As we’ve reported, Albuquerque ranks in the top 10 affordable cities and top 5 for building wealth.

So factor millennial spending power into Albuquerque’s phenomenal economic growth potential. If you’re a millennial thinking about where to move,  take that WalletHub report with a grain of salt. And read about opportunities to own an ABQ business here.

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More Love for Santa Fe

Santa Fe and local hospitality businesses are basking in love this week thanks to the voters in Condé Nast Traveler’s 32nd annual Readers’ Choice Awards. Based on survey responses by 600,000 people, The City Different is Number 2 on the list of Best Small Cities in the U.S. (after Charleston, S.C.).

Inn of the Five Graces and La Fonda on the Plaza were Numbers 1 and 2 on the list of Best Hotels in the West, respectively. Albuquerque’s Los Poblanos Historic Inn and Organic Farm was ranked fourth. El Dorado Hotel and Spa came in at Number 9 and Rosewood Inn of the Anasazi was twelfth in the same category. Inn of the Five Graces was also dubbed fourth best hotel in the country and 17th in the entire world. Major congratulations to our neighbors!

“These rankings are so important, particularly the rankings that are reader polls or scientific rankings,” says Santa Fe Executive Tourism Director Randy Randall in the Santa Fe New Mexican. “When people are talking to other people and telling them how great Santa Fe is, that is so incredible.” Santa Fe’s many charms draw 1.8 million tourists a year, with a direct economic impact of $750 million.

“There is a lot of sameness in cities around the world,” says Mayor Alan Webber. “We remain unique.”

Incidentally, SGA’s office is located on the same beautiful street as the lauded Inn of the Five Graces. Come see us—it’s a lovely place! And read about opportunities to own a business in this inspiring city here.

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Smart Millennial Retirement Planning

Millennial Retirement Plans (Hashtag!)

Last week, the trending hashtag #MillennialRetirementPlans shone a darkly funny light on the despair many millennials feel regarding their financial futures. This generation (born from around 1981 to 1996 depending on the definition) has faced its share of economic challenges. The 2008 crash hit many millennials with the triple whammy of skyrocketed healthcare, student loan debt, and a dearth of paying jobs and wage stagnation. Their average net worth is less than their predecessors’, at less than $8,000, according to a study by Deloitte. They have witnessed wild volatility in the stock market–with swings of a hundred points in a day or thousands in a week—whereas the Baby Boomer generation saw the consistent climbs of the 80’s and 90’s. Research indicates that financial fears are causing this group to defer home ownership and families.

Despite the challenges, millennials are approaching financial planning with their eyes more open than their parents’ and grandparents’ generations. A study by TransAmerica found that found millennials start saving for retirement at age 24, compared to 30 for Gen X and 35 for Baby Boomers.

Business Ownership and Financial Planning

One smart way of preparing for your financial future is business ownership. As we’ve written before, entrepreneurship through acquisition allows you to mitigate the risks involved with starting a business from scratch while maximizing the personal rewards of owning a business.

“[Your] significant ownership interest adds both to rewards and stability. In the long run, we think that being a senior consultant involves much more angst than being the CEO of a small business,” write Harvard Business School professors Richard Ruback and Royce Yudkoff.

An additional benefit of business ownership is in-built, savvy financial planning. You can leverage up to 100% of your 401(k), 403(b)s, IRA, or any other retirement fund to purchase a business. IRS code allows, when structured properly, that such a roll out does not incur penalties for early withdrawal. This frees up funding without creating interest payments on loans, allowing you to launch into your business unencumbered by debt—or at least much less burdened. If you use financing from an Small Business Administration loan, which most purchases do, the terms are almost always better than banks’.

“Instead of investing your money in mutual funds or stocks over which you have no management control, you can invest your savings in your business and grow your equity,” says SGA President Michael Greene. “Your business becomes your retirement fund. With good management and a strong growth record, you can usually sell it for more than you paid for it when you’re ready.”

Opportunities

Click here to see the business listings currently on the market to launch you on the path to a rewarding, independent future.

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ABQ Ranked in Top 10 for Affordable Cities and Cities to Build Wealth

Albuquerque was recently ranked America’s ninth most affordable city by Move.org. The comparison of 75 major U.S. cities considered the following factors:

  • Rent for a 1-bedroom apartment
  • Utilities (electricity, water, etc.)
  • Internet
  • Gasoline
  • Food (groceries plus occasional restaurant meals

Rounding out the top ten were El Paso, TX; Lincoln, NE; Toldeo, OH; Wichita, KS; Louisville, KY; Tulsa, OK; Memphis, TN;  Lexington, KY; Albuquerque, NM; and Mesa, AZ.

The top five most expensive cities were San Francisco, CA; New York, NY; San Jose, CA; Oakland, CA; and Boston, MA.

Significantly, Albuquerque’s low cost of living contributes to its also being ranked one of the top five cities in which to build wealth by pay experts Salary.com.  This ranking, “based on census data and Salary.com analysis, focused on local salaries, the cost of living, and unemployment. Secondary factors, such as diversity of the local economy, residents’ education, percentage of population below poverty level, and commute time were also measured,” according to CNN Money.

Learn about opportunities to buy a business in ABQ here.

(Infographic by Albuquerque Economic Development)

 

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11 Reasons to Do Business in Albuquerque

In more #AlbuquerqueAscending news, economic development and media company Livability lists 11 reasons why ABQ is the perfect place to do business.

“The Southwestern city is witnessing an entrepreneurial renaissance with the help of startup-friendly culture, excellent universities and a great cultural scene for that ever elusive work-life balance. Albuquerque’s tech scene is so vibrant that even Facebook is setting up an outpost in the area, and the city has seen a nearly 10% increase in average salaries over the last four years. With STEM jobs galore, Albuquerque also earned a spot on our 2018 list of the Top 10 Best Cities for STEM Workers,” Claire Hannum reports for Livability.

The list focuses on Abq’s business-friendly and innovative economic, policy, and cultural environments.

1. There’s no shortage of startup incubators.
2. Tech companies love it here.
3. There’s plenty of funding to be found.
4. The city encourages tech innovation that benefits the economy.
5. There are excellent co-working spaces.
6. Albuquerque provides support for female entrepreneurs.
7. You can make your business official in less than a day.
8. You can work from home without losing your mind.
9. The great outdoors are right in your backyard.
10. You’ll never run out of amazing food to try.
11. And you’ll always be able to end your day with a cold beer.

Find out more about great opportunities to join the vibrant community of Albuquerque business owners.

 

Photo Credit: MarbleStreetStudio.com

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Tumbleweeds, Beloved Community Resource, on the Market

Tumbleweeds, an early and mid-childhood development magazine loved by parents and educators, is now on the market. Long-time owner Claudette Sutton is ready to move onto her next projects after decades of growing the publication into a staple resource for northern New Mexico families.

Listed at $95,000 with a cash flow of $50,000, this home-based business allows for a flexible, part time schedule and engagement with a passionate, grateful community. The publication enjoys an established advertising base, strong distribution, and a dedicated team of writers, designers, and editors.

A recent article in Santa Fe New Mexican highlights community appreciation for the publication’s helpful content:

“Where would parents and teachers be without Tumbleweeds?” said Joani Kennedy, who has operated the Wee Spirit Preschool in Santa Fe since 1984. She’s been a Tumbleweeds reader since the beginning [in 1995].

“There are profound articles for teachers and people to solve the wonderful problems that come with working with children,” Kennedy added.

Tumbleweeds grew out of a four-page newsletter, Tot’s Hot News, that Sutton started in 1991 focusing on early childhood. By 1995, it had grown to 16 or 20 pages and was addressing increasingly older children. Sutton upgraded to a magazine format with Tumbleweeds.

“I was realizing a lot of articles were not just for parents of young children but children in elementary school and approaching teens,” she said.

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Albuquerque Ascendant: ABQ Ranks in Top Ten Cities for Economic Growth Potential

Albuquerque ranks in the top ten large-size metro areas in the country for economic development potential, according to site selector publication Business Facilities. It’s a great time to buy a business in Albuquerque—or sell a business and move on to the next Big Thing! Albuquerque was ranked ninth. Topping the list were Atlanta, GA and San Antonio, TX.

In a recent Albuquerque Business First article, reporter Collin Krabbe writes:

“‘Albuquerque has a foothold in very high-tech industries,’ including renewable energies, photonics, and information technology,’ said Business Facilities’ Editor in Chief Jack Rogers. ‘We think the up arrow is going to stay for a while.’

Rogers said targeted growth sectors and industries, the efforts to diversify those clusters, local demographics, and workforce development were factored into the analysis. He also praised the state economic development department’s Job Training Incentive Program, a government-funded incentive tool that pays for classroom and on-the-job training for new jobs at expanding or relocating businesses.”

 

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4 Ways to Eliminate Customer Concentration and Build Confidence with Prospective Buyers

If you are preparing your business for sale, you need to start to think like a buyer. Customer concentration is a red flag to potential buyers. A company with more than 15 percent of its revenue dependent on one client is vulnerable. That client might leave shortly after you sell your business. A buyer will recognize this risk.  Follow these tips to minimize risk for the potential buyer and better position your business to sell at a premium value:

Remove the Client Trap

A lot of business owners fall into this trap. It’s easier to please and upsell existing clients than it is to look for new business. Start looking for “like clients.”  A good client is like a map to new clients. Identify key components—such as size, problems, or needs—and seek out new customers who fit the profile.

Ask for Referrals

Happy clients are happy to refer you to others. If you don’t ask for referrals, you won’t get them.  Stop by or give your best customers a courtesy call. Let them know you are looking to grow your business and ask if they know of any other business that could utilize your services. If not now, ask them to keep you in mind.  In some cases, businesses offer a referral fee. This may or may not work for you, but it’s an option to reward the referring party.

Seal the Deal in Writing

When you have a customer or client who is a significant portion of revenue, get the deal in writing. Spell out the duration of the agreement between the customer and your business. Although contracts can be nullified post-transaction, at least the contract minimizes the risk of them leaving and gives the new owner some peace of mind.

Remove Sole Dependency

With key accounts, the customer often becomes dependent on you.  Start to transition the responsibility of client relations and management to another team member now, even if you aren’t looking to sell right away. The customer needs to transfer their confidence from you to the business. This will add even more assurance to the prospective buyer.

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Leadership Santa Fe

Leadership Santa Fe helps up-and-coming leaders develop high-level management skills and connects them to key players in Santa Fe’s business and policy spheres. Participants delve into challenges facing the city and actively engage in the process of creating solutions. The program takes place every year between September and May and consists of 12 sessions, about two per month. Alumni include Santa Fe City Manager Erik Litzenberg, Police Chief Andrew Padilla, and multiple City Council members and business leaders. We spoke with Program Director Valerie Alarid about LSF, its participants, and its value to the city and graduates. Applications are open through August and available here. There will be an informative kickoff celebration Monday, August 26, 5:30-7:00PM at Rio Chama Restaurant. RSVP required – register at info@leadershipsantafe.org.

Could you give us a bird’s eye description of the program?

LSF has a civics and a leadership skills development portion. We focus on six topics: youth and education, economic development, government, energy and sustainability, health and public safety, and non-profits. We go into the whole community of Santa Fe, holding sessions at multiple venues. It’s a great way to get to know different businesses and connect with people in various sectors.

What are the most important takeaways for participants?

First, they learn so much about the community and fiber of Santa Fe. Both locals and newcomers tell us they gained insights into areas and issues they’d never considered before. Second, people learn about themselves. They cultivate new skills and discover strengths they often hadn’t realized they had. The program also creates a lifetime of strong professional and personal relationships. Participants leave knowing they can always reach out to this network.

What are the benefits to Santa Fe?

LSF aims to create leaders in many forms. We support rising business leaders that might go into upper management roles as well as people who are interested in public office. Participants move on with a practicable understanding of diverse facets of the city. This allows them to contribute and make a positive impact whatever area they choose to pursue.

What’s an average cohort like, and who are your participants?

Cohorts are usually around 30 people. We keep them small so that our trainers can give everyone the attention they deserve. Groups are diverse and balanced. There is an application process and a review committee accepts the top candidates. A lot of individuals are sent over by their business’ management team for training. We also have independent individuals who want to go into public service, learn more about Santa Fe’s vast non-profit scene, or start or grow their own business.

What are you most excited about for this year’s program?

I’m especially jazzed that the economic development session will feature Daniel Werwath, who focuses on affordable housing and community development in Santa Fe. There’s a coalition working on housing solutions for the city, and I’m hoping some of this year’s cohort will bite into that work. It’s an important issue for attracting and retaining talent for Santa Fe.

The program is $1,045 for the whole seven months. Sponsors underwrite about 80% of the budget. LSF thanks early committed 2019/2020 program sponsors Enterprise Bank & Trust, New Mexico Gas Company, Delta Dental, Journal North, Century Bank, State Employees Credit Union, and CHRISTUS St. Vincent.

 

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What’s It Worth? 9 Key Factors for Business Valuations

Do You Need a Business Valuation?

Whether you’re buying or selling a business, a business valuation is a necessary step in the process. You might be more familiar with the term “business appraisal.” These two interchangeable terms describe a complicated process used to determine what a business is worth.

There is no “cookie cutter” way to do this. There are different types of business valuations for different circumstances. There are some circumstances where a formal valuation is needed. In other instances, a less formal approach can be taken. We will help you navigate the various types of business valuations and determine which type of appraisal you need for your specific circumstances.

What Is My Small Business Worth?

Every business owner (and potential business owner!) wants a simple, clean answer. Unfortunately, too many business brokers, CPAs, and fishing buddies are more than happy to give them a simple yet incorrect one. The process of pricing a small business is like preparing a complex meal. You put in a lot of key ingredients to get to the end result.

9 Key Ingredients for Pricing a Small Business Correctly

  • Sales revenue – Is the business growing? Shrinking? Is it volatile year-to-year?
  • Profits – After adjusting for the owner’s earnings, what profit is the business actually making?
  • Customer Concentration – Is the largest customer a large part of the total business sales? Is it the same large customer every year? What is the risk of losing that customer?
  • Vendor concentration – Is the business dependent on a critical supplier? Is there a replacement supplier if something goes wrong?
  • Family members – Who is involved in the business?
  • Big industry or regulatory changes – What shifts are in the works?  Good or bad?
  • Financial records – Does the profit and loss statement accurately reflect the financial performance of the business? Can the tax returns and P&L be reconciled easily?
  • Accounting – Is the accounting done on a cash basis? Accrual? Are tax returns and financial statements prepared with consistent accounting principles?
  • Current interest rate – What is the present interest environment? Generally speaking, the higher the interest rates the lower the business value to a buyer due to the higher cost of borrowing to pay for the business.

And the list of issues goes on! The best advice: ignore any “Rule of Thumb”advice.  Contact us to set up a frank, confidential discussion. We can guide you through the process of determining a price for your business in today’s market that will help you meet your goals.

 

 

 

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