Column & Features: The Weekly Briefing

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A FIRST PERSON ACCOUNT OF

RUNNING A SMALL BUSINESS

Craig Block was working for a Los Angeles liquor wholesaler when he first helped a customer whose store had burned down to find a buyer for his liquor license. Block quickly realized the market potential of the service. Because California issues a limited number of new distilled spirits licenses each year, most new business owners must buy them on the open market from existing license holders.

Block formed Liquor License Specialists in 1983 to broker liquor license sales and provide consulting. He even has an affiliation with an escrow company to hold the payment for a license, pending state approval. Jennifer Smith spoke with him about building the business in the face of strict state and local regulation of alcohol sales.

“It’s been a recession-proof business. There’s about six people who do what we do in the state. We’re a service business, but we also do a lot of consulting, which has really grown the company.

“Licenses in L.A. County can vary in value from $5,000 to $10,000. Our base fee is $1,500, but it can go up to $20,000, depending on the complexity of the transaction.

“We take a license that is available in the county and quantify its value, which is predicated on supply and demand. Then the parties settle on a price and enter an agreement to go into escrow. The buyer then has to submit to state and local governing bodies for approvals.

“The bulk of the business is major corporations. The remainder of our clients are sole proprietors or people who own, say, three businesses. Those are the small markets and on-site businesses. We don’t like to call them ‘bars’ that’s a bad word, and so is ‘nightclub.’ You want to term it as an ‘entertainment venue.’

“The process is problematic. Community objections are the underlying problem. Some people are averse to development and object to the license as a way to delay that. Others object because of religious reasons. And elected officials don’t like to be advocates of alcohol, even if they do want to contribute to the tax base.

“You can massage these situations to mitigate concerns and make the problems go away, but it takes time. If the process was simple, we wouldn’t be in business.”

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