The 48 San Joaquin County small and mid-sized business for sale offerings that resulted in a deal during the three months of 2013 represent a sharp decline from the count of 82 completed transactions in the same quarter of 2012. The drop in deals ran counter to the statewide tally of 4,006 sales during the quarter, a nearly ten percent increase from the same period last year. But California’s figures still lag far behind pre-recession totals, according to business transfer figures collected from California Government records and other sources and reported by the BizBen Index.
"While the increase in the number of small business sales in the state is a positive sign, it’s a mistake to believe we’re about to experience full recovery of the marketplace where California businesses are bought and sold. In other words, don’t expect activity in this market soon will return to ‘normal’," said Peter Siegel, MBA, Founder and President of BizBen.com, parent of the BizBen Index. "We might hope for a substantial increase in the level of transactions because more baby boomer owners are trying to retire, while a growing population of Californians want to buy businesses as an alternative to the disappointing job market. But small business buyers and sellers are just like participants in most other economic sectors who are trying to succeed in the ‘New Economy.’ The small business market presents a number of challenges, with the result that many of our familiar methods of achieving our objectives hae become less effective."
Behind by 29%
Siegel noted that the first quarter figure of sold California businesses is up almost ten percent from the 3,652 transactions completed during the first three months of 2012. "But look at where we are, with four thousand deals, compared to the total of 5,643 transactions successfully closed during the first quarter of 2008! We still are behind where we were five years ago by 29%.
"This suggests that over the past five years, nearly one-third of the growing population of baby boomer owners and others who wanted to sell their businesses have been unable to do so. And nearly one-third of the increasing number of Californians unable to find secure and suitable employment—some of whom may have been able to take over those businesses--tried unsuccessfully to purchase a company and still may be working for someone else or among the 9.6% of the state’s workers who are unemployed."
San Joaquin County Results
The city of Stockton has been responsible for 33 of the transactions completed on small and mid-sized businesses this year. There were seven deals on Lodi businesses, six sales in Tracy and one each in Farmington and Manteca. The county’s sales count to date is available at www.bizben.com/stats/san-joaquin-county.php.
"The good news is that more and more entrepreneurs are learning how to overcome some of the problems that have stalled business sales," said Siegel. "Smart buyers are dealing with what has been one of the major issues—access to capital needed to complete deals by leveraging the rising value of their homes. Either they convert growing home equity directly into cash or use it as security to support bank, or seller "carry back" loans.
"And a number of buyers are learning to draw on their retirement accounts for purchase funds or working capital without triggering a taxable event. But this is not a DYI project. The rollover of funds from a tax deferred account and used to buy a business needs to be done correctly in order to avoid taxes and penalties."
More details about this and many other strategies helpful in buying businesses in this challenging market are covered in Siegel’s just-released ebook, "Buying a California Business in the New Economy." It offers advice for buyers determined to find and buy a good business, and seeking useful information and ideas to help achieve that goal.
BizBen Index Sales Stats
For the just completed month, California sales totals, by county, found at http://www.bizben.com/stats/stats-monthly-mar.php, are:
Alameda: 101, Amador: 1, Butte: 3, Contra Costa: 26, El Dorado: 18, Fresno: 47, Glenn: 4, Humboldt: 2, Kern: 23, Lake: 3, Los Angeles: 389, Marin: 1, Mendocino: 5, Merced: 12, Monterey: 9, Nevada: 5, Orange: 177, Placer: 12, Riverside: 84, Sacramento: 33, San Benito: 1, San Bernardino: 99, San Diego: 157, San Francisco: 96, San Joaquin: 16, San Luis Obispo: 37, San Mateo: 34, Santa Barbara: 12, Santa Clara: 61, Shasta: 7, Solano: 14, Sonoma: 18, Stanislaus: 28, Sutter: 13, Tulare: 10, Ventura: 18, Yolo: 4.
Sales statistics by city and county throughout the state for the past four years are accessed at: http://www.bizben.com/stats/stats-total.php
The BizBen.com website features more than 8,000 California businesses for sale and businesses wanted postings, along with offerings of new franchises and business opportunities. Since 1994 this niche online network and service has proved a valuable tool for thousands of California business buyers, small business owners/sellers, intermediaries, and advisors. The site also includes articles, resources, news and tips, and a daily blog. For the past 16 years, its BizBen Index has collected and reported on business sales statistics, by county and city, throughout the state.