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 BizBen.com 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.
About The Author: Peter Siegel, MBA is the Founder/Senior Advisor (ProBuy & ProSell Programs) at BizBen.com (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 866-270-6278 or 888-212-4747 to discuss strategies regarding buying, selling, (or financing a puchase of) California businesses.
|Helpful Resources To Assist In Selling And Buying California Businesses|
|Jack Oh, Business Broker - LA, Orange Counties
Business broker and real estate services in the Los Angeles and Orange County areas. 10 years experience with great negotiating skills. To sell a business or buy a business in the LA or Orange County Areas phone Jack and his team at 562-787-4989.
|Mani Singh, Business Broker, Inland Empire
I have successfully represented clients sell & acquire multitude of businesses ranging from Gas Stations, Liquor Stores, Markets, Super Markets, Smoke Shops, Postal Stores, Restaurants, General Retail, Auto and Construction related. Phone me for assistance with selling or buying at 951-296-7646 Cell
|Chris Seaman, Business Broker - San Diego County Area
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.
|Steve Zimmerman: Restaurant Broker Specialist
Steve founded Restaurant Realty in 1996. He has personally sold/leased over 900 restaurants, bars & clubs, & completed over 3000 valuations. The author of "Restaurant Dealmaker - An Insider's Trade Secrets For Buying a Restaurant, Bar or Club" available on Amazon. Reach Steve direct at 415-945-9701.
|Prabhjot Randhawa, Broker: SF Bay Area, Northern Central Valley
I'm a Business Advisor at Liberty Business Advisors of San Fransisco. I have over 20 years of experience in all phases of entrepreneurship. During the past 15 years my concentration has been in business of mergers and consulting. I have owned and operated over 10 businesses.
|Bob Baumgarten, Business Broker: Orange, LA Counties
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.
|Michael Floorman, Business Broker, BTI, San Francisco Bay Area
Business Team, San Jose (Campbell) located in the Pruneyard Towers at Bascom and Hamilton. Established in 1981 Business Team with over 6600 sales to date has 1000 business listings to choose from, paid Google advertising. We offer highly trained and experienced professionals.
|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.
|Related Articles, Events, Blog Posts, Discussions, Videos, Interviews|
|Buying A Restaurant With Financing: 5 Options For Restaurant Business Buyers
In this Discussion, Peter Siegel MBA (Business Purchase Financing Advisor at 866-270-6278) discusses financing of purchasing a small to mid-sized restaurant business (with or without real estate). When it comes to financing a restaurant, potential restaurant buyers have many options to choose from.
|Tips From A Restaurant Broker - Check A Restaurant For Karma Before You Buy
Jeff Back (925-736-8200), a SF Bay Area broker specialist who specializes in selling restaurants discusses what he looks for when sizing up a potential restaurant for sale. Do the restaurants you're thinking of purchasing have good Karma? See Jeff's insights into this topic on restaurant karma.
|Buying A California Gas Station: Top 5 Risks For Gas Station Business Buyers
Those seeking to buy gas station business opportunities need to know about five factors that can make this purchase particularly risky compared to other businesses. Peter Siegel, MBA (BizBen ProBuy Program & Business Purchase Financing Expert) at 866-270-6278 discusses this topic about gas stations.
|Why Restaurant Buyers Typically Fail: Best Pro Tips For Buying A Restaurant
Buying a restaurant (no matter what type) can have many pitfalls, and potential restaurant buyers should know how to avoid getting burned! Several restaurant intermediaries and advisors weigh in on this BizBen Discussion about the best way to find, purchase and run a restaurant successfully!
|Specialty Restaurant Broker Discusses Liquor Licenses & Working With The ABC
What you will read in this BizBen blog post you will probably not find in any manual or set of instructions provided by the ABC (liquor licenses in California). This blog post by Jeff Back (SF Bay Area Restaurant Broker Specialist) at 925-736-8200 discusses this topic of liquor licenses in detail.
|Liquor License Assistance - SF Bay Area - Jim Saxton
Jim Saxton - 20 years experience of local governmental requirements, such as Police Departments, Zoning / Planning Departments, ABC District Offices, my company Liquor Licenses of SF Bay Area is very qualified to resolve all of your concerns during the liquor license transfer process. 925-787-0770.
|FREE Webinar: Buying Or Selling San Francisco Restaurants - Best Practices
This informative 40 minute interview/webinar about buying & selling restaurants in San Francisco with restaurant broker specialist Cheryl Maloney is a real eye opener for restaurant buyers and sellers. Cheryl gives great advice to both buyers and sellers from her years of experience in the industry.
|How To Buy A Vending Route: Multiple Tips For Vending Route Business Buyers
Some business buyers think they might like to buy a vending business but have heard negative things about the industry & aren't aware of important facts about this type of business. Here are some guidelines by Peter Siegel, MBA (Vending Route Financing Expert) at 866-270-6278 to help buyers.
|See All News, Tips And Events|