A total of 1,024 mid-sized and small business opportunity offerings changed hands in California last month, a 24% increase from the 865 sales recorded January 2009.
Most of the strong increase occurred in Southern California with Los Angeles posting 292 sales last month compared to 227 during the first month of last year, Orange County recording 96 deals vs. 80 in January 2009, and Riverside County showing an increase from 16 during last year’s January to the 25 closed escrows for the month just completed.
Northern California and the central part of the state turned in mixed results. Sacramento County saw 27 sales, 6 fewer than a year ago, the January total for San Francisco was 34 vs. 40 during January of last year. Alameda County saw a decline from 72 to 58 transactions.
The overall strong start for the year had been anticipated as business brokers have been reporting increased activity. In recent weeks they’ve been receiving more phone calls, conducting more showings and writing more offers. All of this results in more closed small business opportunity escrows.
The gains can be attributed largely to pent-up demand. Many business owners who’ve thought about selling and were postponing the decision hoping for a more favorable economic climate are deciding to "pull the trigger."
As one told me: "There’s no telling how long we’ll have to wait until profits are back up and I can get a better price. Meantime I’m not doing other things I want to do. So I’ve listed the business for sale. It’s time to move on.”
Indications that the economy is starting to turn around are encouraging sellers, and also buyers, to get involved in the market.
Long Term Small Business Opportunity Trends
Expectations for the long term point toward continued growth in activity in the small business opportunity marketplace. On the demand side, the fact that more people are out of work than at any time in the recent past translates to more buyers out there contacting sellers and brokers so they can find a business to buy.
At the same time, the baby boomers who have their own businesses are nearing retirement. If the business is not a good fit for the owner’s kids or employees, it’s going to come on the market. So we can look forward to increased supply for the growing number of buyers.
Lending Remains an Issue
One of the biggest impediments to completing deals, of course, has been the shortage of money available from business lenders. This followed the mortgage meltdown and the credit crunch that we went through starting in the fall of 2008.
If there is more money available for buyers to complete their deals, it will certainly help to spur activity in the marketplace for small businesses.
We're hoping that President Obama’s pledge to provide small business with $30 billion in TARP (Troubled Asset Relief Program) money through local lenders will be instituted and will have the desired result.
Also contributing to boosted sales activity is the innovation and determination of California’s entrepreneurs. They’re pretty resourceful at finding ways--such as seller financing, earnout agreements and vendor assistance--to fund deals without the help of the banks.
We’ve been providing the public with mid-sized and small business opportunity sales statistics in California for the past 12 years. This information represents an important indicator of economic activity and is valued by BizBen.com visitors, including business buyers and sellers, brokers and other professionals who serve this marketplace.
County-by-county Breakdown
The by-county sales of small and mid-sized California business opportunities during January 2010 are as follows:
Alameda: 58, Butte: 8, Contra Costa: 27, El Dorado: 9, Fresno: 40, Glenn: 1, Humboldt: 1, Imperial: 4, Inyo: 1, Kern: 20, Kings: 1, Los Angeles: 292, Madera: 1, Marin: 11, Mendocino: 2, Merced: 8, Monterey: 15, Napa: 9, Nevada: 5, Orange: 96, Placer: 14, Riverside: 25, Sacramento: 27, San Bernardino: 38, San Diego: 68, San Francisco: 34, San Joaquin: 30, San Luis Obispo: 15, San Mateo: 17, Santa Barbara: 12, Santa Clara: 83, Santa Cruz: 11, Shasta: 4, Solano: 9, Sonoma: 11, Stanislaus: 24, Sutter: 3, Tehama: 1, Tulare: 14, Tuolumne: 3, Ventura: 16, Yolo: 6
About the Author: Peter Siegel, MBA, the founder and CEO of BizBen.com, is a consultant to business brokers/intermediaries, business buyers, and small business owners interested in business opportunity purchases and sales. You can phone him at 866-270-6278 to discuss the best ways to utilize BizBen to buy or sell a California business.
Posted on February 1, 2010 | 
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