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Business Buyers Face Problems And Opportunities In The New Economy

Business Buyers Face Problems And Opportunities

Small business buyers in California face some interesting challenges along with opportunities in the New Economy that has evolved out of the mortgage meltdown, the banking crises and the recession. Here are three of each - challenges and opportunities.

Challenges facing today's California small business buyers:

1. The uncertainty about the future of the economy can affect owners and buyers of small and mid-sized California businesses as they try to plan intelligently for the future. Many business owners are hesitant to make any moves as they notice the mixed signals conveyed by major economic indice "some positive, some negative" and the news of continuing fiscal crises coming out of Washington. The resulting problem is experienced by a Californian ready to buy a business from someone postponing retirement because of their uncertainty.

2. The value gap can make it hard to negotiate an agreeable selling price with a business owner. The recession's negative impact on company earnings means that many businesses for sale have declined in value. They aren't worth today what they were a few years ago. Try telling that to a seller who is absolutely certain that earnings will recover any day now. He or she wants to be paid what the business was worth in 2005, because as the seller's thinking goes - it will soon begin performing as it did before the economic crises.

3. Thanks to the booming demand for good businesses, discovering a solid company on the market at a reasonable price might be good news, but it also presents the problem of intense competition with other interested buyers. More and more Californians are losing their faith in corporate employment to provide them consistent and substantial earnings through their careers. So they're among the thousands of new buyers crowding California's business for sale market, confusing sellers and making it more difficult to be the winner in this competitive environment.

For the smartest buyers, those equipped to succeed in today's marketplace and the years following, the New Economy also represents an environment that offers fresh opportunities.

1. Easier access to business purchase funds. One consequence of the banking crises is that financial institutions recovered from lax loan approval practices that led to trouble, by nearly discontinuing their business expansion and acquisition funding services. To some observers, it seems that many lenders overreacted, not just ending the practice of making bad loans but also refusing to fund solid business projects by capable, credit worthy customers. Thanks in part to federal legislation aimed at spurring the economy, it now is becoming easier for a prospective business buyer to find the financing needed to complete a deal.

2. Smart business buyers are discovering they can achieve their goals, despite considerable competition from other purchasers, by adopting innovative practices and using newly developed tools, such as the ProBuy Program. While the majority of would-be business owners are focused on responding to for-sale ads and relying on the ideas of a few business intermediaries, more successful buyers have other, more creative means of uncovering good businesses for sale and working with sellers to reach agreements.

3. Innovative buyers also adopt creative strategies for overcoming the value gap that often prevents a buyer and seller from reaching agreement. One tool, for example, is the earn out method of purchasing a business. If done correctly, it enables the seller to receive the price he or she feels the business is worth, while protecting the buyer from having to overpay for the business.

Like many segments of the New Economy, the business for sale market in California is troubled by the remnants of the recession and by the slow and uneven recovery. That means potential small business buyers are confronted by some challenges that were less prevalent before the economic troubles we experienced in the middle of this decade. But the smart and proactive business buyer is adapting to this environment with innovative strategies and effective new tools.

Peter Siegel, MBAAbout The Author: Peter Siegel, MBA is the Founder/Senior Advisor (ProBuy & ProSell Programs) at (established 1994, 8000+ CA businesses for sale, 500 new & refreshed postings/posts daily) consults with buyers, small business owners/sellers, business brokers, agents, investors, and advisors). Phone him direct at 925-785-3118 to discuss strategies regarding buying, selling, (or financing a puchase of) California businesses.

Categories: BizBen Blog Contributor, How To Buy A Business

  Helpful Resources To Assist In Selling And Buying California Businesses
Taj Randhawa, Business Broker Specialist - Gas Stations, Liquor Stores

If you are interested buying or selling a gas station, liquor store feel free to phone me for a consultation. My vast experience & specialization in gas stations & liquor stores helps me in serving my clients with full confidence, trust & sincerity. Serving Central Valley, SF Bay Area. 559-259-4247.

William Park, Business Broker - Southern California

Highest Volume Broker in California, Simply Check our HUNDREDS of Listings! Over 25 Associates, Speaking Dozen Languages, Helping Buyers and Sellers of Small Business since 1982, Centrally Located between Los Angeles and Orange Counties, while Riverside & San Bernardino Counties are Very Accessible.

Harry Sidhu, CBB, Broker: SF Bay Area, Central Valley, SAC Region

Assisting both sellers and buyers of businesses - dealing mainly with Liquor Stores, Grocery Markets, Gas Stations, Smoke Shops, Restaurant Related, Retail Related, Service Related. Serving SF Bay Area, North Bay, Sacramento area. Call Harry Sidhu, CBB for assistance at 510-366-6130.

Joanne Weber, Broker - Preschool Specialist - Southern California

The Ryan Craig Company is in its 35th year as the recognized expert in Southern California, dealing exclusively in the sale of preschools, Montessori schools, day care centers, and private schools. Our extensive list of references speaks for itself. Phone Joanne at 818-760-3684 for more info.

Joe Ranieri, Business Broker: Orange, LA County Areas

Having owned retail/restaurant businesses for over 20 years, my interest turned to listing and selling businesses rather than owning them. I specialize tend to specialize in high volume restaurants, fast food independents and chains, bars, and liquor stores. Call me direct Or Text 714-292-5448 Cell.

Bob Baumgarten, Business Broker: Southern California

National Business Brokerage is a full service brokerage company that has been serving buyers and sellers of Southern California businesses since 1994. We are dedicated to providing the highest standards of professional service for our clients. Phone Bob direct at 949-588-8727.

Lee Petsas, Business Broker - Southern California Area

Lee Petsas has been selling businesses with UBI Business Brokers in Southern CA since 1981. In 1999 he became the Owner and Broker for UBI. He has been approved multiple times by Courts as an Expert Witness in the area of Business Valuations.

Chris Seaman, Business Broker: Southern California

Founded in 1994, First Choice Business Brokers has accelerated to become one of the most successful Business Sales Organizations in the world. Our team of agents have gone through extensive training to become experts in the field of business brokerage. Call Chris at 858-578-4111 for more info.

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