As the Founder & President of BizBen.com and the BizBenNetwork Online Community I consult daily with Entrepreneurs that are buying and selling small to mid-sized businesses, franchises, & other opportunities. As a result, I know the small business market like the back of my hand. I'll be the first to admit that in the last few years small business owners have gone on a bumpy, uncertain ride! With the recession, the introduction of Obamacare and all the other challenges small businesses have faced, it has been tough for many companies to just remain in business let alone thrive.
With that, I can optimistically say that I predict 2014 to be a good year for small businesses. Not only for small business owners who want to continue running their company but also for those owners which have plans to sell. There is a new wave of Entrepreneurs ready to take the step toward business ownership and 2014 may be the perfect time for it.
3 Reasons Why It Is a Good Time to Buy a Small Business
For one, revenues are up. Businesses are slowly starting to see their sales improve and I believe that upward trend will continue throughout the year. Because of this, optimism is high with business brokers and agents for this being a very good year. On top of sales, I am seeing more growth in many other areas of small business.
Next, the prices of small businesses for sale are still lagging from the economy. For years, sales were down due to the recession and now business owners that are looking to sell have to base their sale price on a time when they weren't generating as much revenue. With that in mind, now is the perfect time to negotiate and buy a business.
Lastly, lending institutions are coming back to the market and awarding business purchase financing again. I will discuss this in greater detail in another post, [Insert Title of Post and Link] but in short, I am seeing many more lenders willing to finance deals that they haven't been interested in over the last few years. I am also seeing lenders who previously haven't been involved in business purchase financing come to the table.
There are several other smaller, less concrete factors that play into my prediction. There is a glimmer of hope coming from Washington that small businesses may get some additional help in the form of tax deductions. There is a possibility that Congress may change the parameters of a tax code which allows businesses to deduct up-front rather than depreciate the cost of equipment like vehicles, computers and machinery.
Which Businesses Will Have the Most Interest from Buyers
In the upcoming year, I think we'll see that smaller businesses selling for under $100K and businesses with an adjusted net income of over $100K will be hot. Some buyers still have bad credit from the recession and as a result they can't qualify for traditional financing. With that they want to pay cash for a business and can only afford ones selling under the magic number of $100K. Other buyers are from Corporate America. These are the people who are buying businesses with the intent of working in them and replacing their salaries which are usually over $100K per year. As far as industries are concerned, my prediction is that restaurants, niche service businesses, small manufacturing and distribution businesses, gas stations, car washes, absentee run businesses and home-based businesses will all be popular choices this year.
Franchises in 2014
Franchises will always be important to first time business buyers. They provide support and training you just can't get from most independent businesses for sale. However, from what I am seeing many buyers are actually "repeaters" people who have bought or own small businesses and are now buying a second or new location. These buyers don't necessarily see the benefits of buying a franchise. Usually in a "tight" economy you see more franchises being sold because buyers want to take less of a risk at that particular time in an economic cycle.
As I said, I think 2014 is going to be a good year for small businesses. Owners should still be prepared to put in the hard work and dedication necessary to run a small business but I think we are turning an important corner and finally seeing an upward trend in revenues. Along with the improving climate, I think there are a lot of smart people that have been impacted by the recession, either through their company downsizing or closing, which are looking to take control of their financial future and are choosing Entrepreneurship as a means of doing it. Here's to a good 2014!
About: Peter Siegel, MBA is the Founder & Advisor (ProBuy & ProSell Programs) at BizBen.com and the BizBenNetwork (Online Community). He advises and consults with business buyers, business sellers, brokers, agents, investors, & advisors on a daily basis. Reach him direct at 866-270-6278 to discuss strategies regarding buying, selling, (or financing a puchase of) small to mid-sized businesses.
|Helpful Resources To Assist In Selling And Buying California Businesses|
|Diane Boudreau-Tschetter: Escrow And Bulk Sale Services
California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.
|Janet Carrera - Escrow & Bulk Sale Services - SF Bay Area
Redwood Escrow Services, Inc. is a full service, licensed independent escrow company. We are EAFC Fidelity bonded, fully insured & licensed with the Department of Corporations. Committed to offering our clients the most comprehensive variety of escrow services available. Phone Janet at 510-247-0741.
|Mark Chatow, Esq.: Legal Services For Buying, Selling Businesses
Mark has a broad range of small business purchase & sale experience from analyzing potential acquisition targets to successfully guiding buyers and sellers through the purchase & sale of small businesses. Mark can assist with contracts, negotiations, legal matters, etc. Reach Mark at 949-478-8393.
|Helen Yoo: Escrow & Bulk Sale Services - Southern California
New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151.
|Brad Steinberg, Broker - Laundromat Specialists
PWS is the leading laundromat broker in California. Since 1968 PWS has brokered over 2,500 laundromat sales. With over 90 employees dedicated to the coin laundry industry, PWS has 18 licensed agents, a 3 person in-house finance department, 10 service technicians and a 20 person parts department.
|Joe Sandbank, Esq. - Legal Services
I have provided legal counsel to business buyers, sellers and brokers for over 17 years. With prior experience as a business broker and SBA loan officer, Joe brings both a practical and legal approach to all aspects of the business acquisition process.
|Ranvir S. Sandhu, Esq. - Legal Services For Buyers And Sellers
I've worked at top Bay Area law firms and have extensive experience with business entity formation, mergers, dissolutions, conversions, employment matters, including experience in reviewing and negotiating transactional documents such as leases and purchase agreements.
|Willard Michlin, CPA, Certified Fraud Examiner, Due Diligence Services
Willard Michlin, CPA #106752, offers buyers step by step training & assistance in doing Due Diligence Services when they are thinking of making an offer, or are in process of investigating a business purchase. He helps to determine the actual net profit even when there is cash. Call 805-428-2063.
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