Selling a business successfully requires a number of factors, not only related to the quality of the company and the offering terms, but also the external influences working in the marketplace. Keeping records California business sales stats (the BizBen Index) has shown that one or a combination of the below factors greatly influence how many businesses are sold in California each month.
Selling a business influences include:
1. Holidays or life events: The Christmas celebration, or a milestone birthday of a seller, are examples of occasions that either can speed up or slow down the selling process. Holidays and other diversions that involve family events, often interrupt the marketing effort or delay scheduling the completion of an agreement. But sometimes the reverse is true. An owner who wants to sell by the end of the year, or before his daughter graduates from college, will be motivated to push for quick negotiations, a short due diligence period and a closing date scheduled ASAP.
2. Job market: Corporate downsizing in a community almost certainly will put demand pressures on the local selling a business market. While most people out of work seek employment elsewhere, there are entrepreneurs among the newly unemployed who plan to buy a business for sale.
3. Financing availability: The recent financial meltdown offers a clear case study of how a shortage of funds from lenders can negatively impact the demand for small and mid-sized businesses. The slowdown in volume of businesses changing hands in late 2009 and through much of 2010 was a direct result of the shortage of money needed to complete transactions. Loosening of the purse strings in the past few months has resulted in a more robust business sales environment.
4. Stock market and investments: When faced with alternatives, investors put their money where they expect the best combination of high return and low risk. But these motivations don’t always result in the same behaviors. A booming stock market influences some entrepreneurs to divert excess funds into corporate equities. For others, it’s a chance to profit by selling current investments and--encouraged by the more positive economic outlook--to enter the business for sale marketplace.
5. Real estate equity: The decline in home values and the pressures it put on the economy during the past three years, influenced many would-be business buyers to “watch and wait.” When entrepreneurs had substantial home equity, they were far more tempted to use their resulting borrowing power to purchase a small business for sale. As equity disappeared, however, individuals not only had less financial ability to make a business purchase, they also became less positive about their chances of success owning a company in a troubled economy.
6. Consumer sentiment/confidence: For the most part, someone considering the purchase of a small or mid-market business will delay moving forward on that idea when polls show that most people are worried about the economy. That's not the time to get into a retail company or even most business-to-business enterprises. For bargain-hunters in the business for sale marketplace, however, a decline in consumer confidence signals the possible opportunity to acquire a sound business at a "distressed" price.
7. Businesses for sale supply: Like any demand and supply dynamic, the availability of good businesses for sale strongly influences the market, the prices, and the likelihood of finding a buyer. During a healthy economy when business owners enjoy strong profitability, business buyers find it more difficult to find a desirable company for sale and to get sellers in agreement on prices that can easily be paid off. It's often the predictions of a sagging business climate that motivates more owners to quickly implement their exist strategies.
8. World events: Much like the stock market that reacts to news about changes to the political landscape and natural disasters, the market of small businesses for sale can be influenced by major events--even those events well outside of the business world. A retail business owner, for example, may delay her plans to sell if she concludes that a natural disaster in a nearby community will hurt the marketability of her enterprise for a while.
While it's important to look at the profitability and pricing of a business for sale to determine the chances that a buyer will be found in a short period of time, there are key external factors that can determine the likely success of someone selling a business.
The easy part is knowing some of the factors that can influence the marketplace for small and mid-sized businesses. The hard part is understanding which factors have the most influence at any one time, and exactly how each affects the marketplace. Some business owners do report, incidentally, that by following the BizBen Index and collecting ideas and information from the BizBen Blog pages, they are able to gain insights about how various factors might impact their plans for selling a business.
About The Author: Peter Siegel, MBA is the Founder of www.BizBen.com (established 1994 - 7000+ California businesses for sale), the Director of the BizBen Network and the BizBen Index - which reports the sales of California small and mid-sized businesses - which is updated weekly. Peter Siegel can be reached direct at 925-785-3118 for consultations.
|Helpful Resources To Assist In Selling And Buying California Businesses|
|Shalonda Chappel: Escrow & Bulk Sale Services - Southern California
Escrow services to brokers/agents, sellers, & buyers. Established 43 years. Extraordinary service. Experienced with handling difficult transactions. One stop for all your escrow needs: Bulk sales, lien searches, UCC searches, liquor license transfers, publishing & recording services. 951-808-3972.
|Diane Boudreau-Tschetter: Escrow & Bulk Sale Services - CA
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.
|William F. Ziprick, Attorney: Legal Services For Buyers And Sellers
Through creative problem solving, attention to detail, accessibility, & understanding that unnecessary delay is often a deal killer, I work closely with my clients and other professionals to consistently achieve a high rate of closings. Office: 909-255-8353, Cell: 509-951-7230.
|Janet Carrera: Escrow & Bulk Sale Service - 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.
|Brad Steinberg, Business Broker: Laundromat Specialist
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 - San Francisco 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.
|Helen Yoo, New Century Escrow - Escrow Services In 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.
|Related Articles, Events, Blog Posts, Discussions, Videos, Interviews|
|If You Plan To Offer Seller Financing: 3 Things Owner Sellers Need to Know
When selling your business, offering seller financing is a great way to help your business standout from others on the market and it is also a good strategy to consider that can help you close a sale. Peter Siegel, MBA (BizBen ProSel Program & Financing Expert) explains. Reach him at 925-785-3118.
|Tips For Faster SBA Loan Approvals For California Small Business Purchases
In this article on BizBen, business purchase financing advisor and SBA loan broker, consultant Peter Siegel (Business Purchase Financing Expert/Advisor & the ProBuy Program Director at BizBen) at 925-785-3118 shares his views of getting SBA loan financing faster for business purchase financing.
|Should I Buy A Business That is Losing Money? Feedback From Top Advisors
Are businesses worth taking a look at when they are losing money? Multiple Advisors & Business Brokers weigh in on this topic and say yes! (but be careful) on a BizBen Discussion. Some great feedback on this topic will make potential business buyers (and money losing sellers) want to read this info!
|Financing A Business Purchase With Limited Or No Real Estate Collateral
In my experience working with the "right banks and financial institutions" repayment ability sometimes overrules collateral pledged by someone needing financing for a business purchase or a down payment. Peter Siegel, MBA (Business Purchase Financing Expert) at 925-785-3118 shares his experience.
|Coronavirus: Advisors Discuss The Topic - Buying & Selling Small Businesses
During this time period of being "sheltered in place" we discuss strategies, best practices that business buyers, business brokers, agents, and owner/sellers are practicing or thinking about during these times of being immobilized. Also discussed are business types that may be good purchases.
|BizBen ProBuy Program - Professional Assistance With Buying A Small Business
Buying a California business can be a confusing and/or frustrating process for many business buyers. Statistics show that over 80% of all buyers never end up buying a business. The BizBen ProBuy Program assists potential buyers of California businesses with the process of buying a small business.
|Buying A Small Business That Is Not For Sale - Strategies For Business Buyer
Approaching business owners directly to see if they want to sell can sometimes work well for business buyers searching to buy a business. Another way is to broadcast your search criteria via the BizBen ProBuy Program to all brokers, agents, and intermediaries who sell businesses in California.
|Find Out Why 80% Of California Business Buyers Never Find And Buy A Business
First the dreaded statistic: 80% of all CA business buyers looking to buy a business in California never end up doing so! Peter Siegel, MBA BizBen.com Founder & ProBuy Director) covers successful tactics & strategies all business buyers of California small to mid-sized businesses should utilize now.