You wouldn’t think that now is a good time to buy or sell a business. However, even in the midst of a recession the timing might be just right, creating opportunity for small business owners looking to retire and inspiring entrepreneurs looking to control their future.
Why it’s a Great Time to Buy
More sellers are willing to consider seller financing. If you have had difficulty getting a traditional bank loan to buy a business, seller financing could be an option to discuss with your broker and the business owner. Seller financing differs from a traditional SBA loan because the seller essentially extends credit to the buyer against the purchase price of the business. This allows more flexibility with payment options, which is good news for the buyer.
Baby Boomers are retiring. For many boomer business owners it is retirement that is driving them to sell, not the economy. In fact, sellers looking to retire are choosing to sell while their business is showing a profit - showcasing that despite the economy, their business is going strong.
In contrast, some baby boomers that are retiring (or being retired) from their corporate America jobs are looking for a less stressful situation and a way to have more control over their future earnings. Social security alone isn’t enough anymore, so boomers are buying businesses that will give them an additional income stream but conforms to a more relaxed lifestyle.
Taking over a business when business is slow is a great time to learn the ropes in preparation for when the economy takes off again.
Why Selling is a Real Option
Serious sellers are out there. Not all small business owners are prepared to sell, they’ve decided to ride out the economy, which means those sellers who are committed to selling will have less competition. Buyers know that businesses for sale now are serious about striking a deal.
People are making a switch. Unfortunately with a poor economy come job layoffs. Many people who have lost their jobs and even those that fear job loss are choosing to explore an alternative to traditional employment by going into business for themselves. Today’s recession can be a tough time to start a business, but buying an existing business lowers the risks. And if a seller can offer seller financing, they will be in a great position to get their business sold at a good price.
Some businesses aren’t affected by the economy. Service industries are faring much better than retail businesses and are still considered to be a good investment for buyers. In addition, businesses in the health or medical field, especially companies dealing with aging adults are going to be in demand for quite some time so the growth potential is a significant selling point. But the bottom line to remember is that regardless of industry, the businesses that will sell are those that have organized books, show a consistent profit and growth potential.
What You’ll Need
Whether you are looking to buy or sell a business, working with a team of professionals is essential to your success. Working with a certified business broker can help separate fact from fiction when you are considering buying or selling a business. Your broker can also connect you with real opportunities and offers. In addition to a broker, enlist your attorney and accountant to help you wade through financial records, insurance policies and other items critical to a successful business.
Remembering that there is more than the state of the economy at play when it comes to buying or selling a business can position you to start your new career as a business owner or to hand off the business and enjoy your retirement years.
About The Author: Ron Hottes, with Business Team has a business brokerage team of 42 highly skilled and seasoned professionals with offices in Torrance, Woodland Hills and Newport Beach. Our business brokers have over 100 years of cumulative experience and the expertise to help you buy or sell a business in the Los Angeles County area. Reach him by phone at 310-539-8300.
|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.
|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.
|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.
|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.
|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 Orange County high volume restaurants, fast food independents and chains, bars and liquor stores. Call 714-292-5448.
|George Lanza, Business Broker, At Plethora Business Sales
Plethora Businesses, a division of A Premier In Services, Inc., is a Business Intermediary Consulting Firm headquartered in Orange, California. Plethora specializes in the listing and sale of small and medium sized private businesses.
|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.
|Elizabeth McGovern: Escrow Services - SF Bay Area
McGovern Escrow Services, Inc., is a leading independent escrow company. We are a trusted partner with our clients, assisting them through the tangled bulk sale & liquor license transfer process. We provide attentive, quality & innovative customer service. Phone Elizabeth McGovern at 415-735-3645.
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