Could the Red-Hot Market for Businesses Be Cooling Down?
The economy is red hot, and that fact is translating into lots of businesses being sold. However, it is possible that this record-breaking streak of sales could cool down in the near future. Entrepreneurs who are considering selling their companies say they’re worried about the future of the economy, according to an article posted on Inc. in February, 2019.
Some 319 business brokers, mergers and acquisitions advisors were surveyed by Pepperdine University’s Graziadio School of Business, the International Business Brokers Association and the M&A Source.
A whopping 83% of survey participants believed that the strong M&A market will come to end in just two years. Perhaps more jarring is the fact that almost one-third of participants believe that the market would cool down before the end of 2019.
The participants believe that the economy will begin to slow down, and this change will negatively impact businesses. As the economy slows down, businesses, in turn, will see a drop in their profits. This, of course, will serve to make them more challenging to sell.
Laura Ward, a managing partner at M&A advisory firm Kingsbridge Capital Partners, told Inc., “People are thinking about getting out before the next recession.” The Pepperdine survey found that a full 80% of companies priced in the $1 million to $2 million range are now heading into retirement. In sharp contrast, 42% of companies priced in the $500,000 to $1 million range are heading into retirement. Clearly, retirement remains a major reason why businesses are being sold.
Is now the time to sell your business? For many, the answer is a clear “yes.” If the economy as a whole begins to slow down, then it is only logical to conclude that selling a business could become tougher as well.
The experts seem to agree that whether it is in one year or perhaps two, there will be a shift in the number of businesses being sold. Now may very well be the right time for you to jump into the market and sell. The best way of making this conclusion is to work with a proven and experienced business broker. Your broker will help you to analyze the various factors involved and make the best decision.
Copyright: Business Brokerage Press, Inc.
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Read MoreMarketing Strategist to Speak Aug. 21
Find out how you can harness a marketing strategy to grow your business when internationally known author, marketing and business strategist Diane Conklin speaks on Wednesday, Aug. 21, to the Georgia Association of Business Brokers. The GABB is the state’s largest association of professionals dedicated to buying and selling businesses and franchises.
The GABB meets at the Georgia Association of Realtors at 6065 Barfield Road, Sandy Springs, GA, 30328, and the meeting will last from 10:30 a.m. to noon preceded by a free light breakfast networking session at 9:45 a.m. Rob Tamburri, CPA PFS, managing partner of Balog + Tamburri, CPAs, is the sponsor of the meeting.
Diane is a direct response marketing expert who specializes in showing business owners how to turn their businesses into money making machines using rapid profit acceleration, leveraged business growth and strategic implementation by integrating their online and offline marketing strategies, media and methods, to get maximum results from their marketing dollars with Complete Marketing Systems.
For more than 25 years Diane has been leading small businesses to bigger profits through her coaching, consulting, marketing funnels, systems, live events and by providing done-for-you services to clients all over the world. As the founder of Complete Marketing Systems, Diane has been involved in many campaigns grossing over $1,000,000.00 several times in her career, and she routinely helps people grow businesses to six figures, and beyond. Diane was voted Glazer-Kennedy Marketer of the Year for her innovative marketing strategies and campaigns and was nominated for Atlanta Business Woman of the Year.
The monthly meeting begins at 10:30 a.m. and is preceded at 9:45 a.m. by a free light breakfast and networking session. There is networking with coffee and pastries from about 9:45 to 10:30 and the meeting will last from about 10:30 to somewhere between 11:30 and noon.
The GABB is the state’s largest and oldest association of professionals who specialize in brokering the purchase and sale of businesses and franchises. Broker members help owners determine the asking price of their business, create marketing plans and strategies for selling their business, identify and qualify buyers, and have the knowledge, experience and skills needed to help maintain the confidential nature of the process. The professionals of GABB relentlessly pursue professional development so they can provide superior, ethical services for all customers and clients. Affiliate members include bankers, lawyers, appraisers, insurers and other professionals who work closely with brokers to help owners and buyers get to the closing table.
For more information about GABB, please contact GABB President Dean Burnette at 912-247-3209 or dean@b3brokers.com, or GABB Executive Director Diane Loupe at diane@gabb.org or 404-374-3990.
How to Create A Business Plan
A business plan, which projects 3-5 years ahead, is your road map for your business. It outlines how a company plans to reach yearly milestones, including revenue projections.
Read MoreWhat Kind of Buyers are You Most Likely to Meet?
Selling a business can be an exciting and rather lucrative time. But going through the sales process means embracing the notion that you’ll have to be very prepared for whatever might be thrown your way. A key aspect of preparing to sell your business is to know what types of buyers you’re likely to encounter.
It is only logical to anticipate the types of buyers you may be dealing with in advance. That will allow you to plan how you might potentially work with them. Remember that each buyer comes with his or her own unique desires and objectives.
The Business Competitor
Competitors buy each other all the time. Frequently, when a business is looking to sell, the owner or owners quickly turn to their competitors. Turning to one’s competitors when it comes time to sell makes a good deal of sense; after all, they are in the same business, understand the industry and are more likely to understand the value of what you are offering. With these prospective buyers, a great confidentiality agreement is, of course, a must.
Selling to Family Members
It is not at all uncommon for businesses to be sold to family members. These buyers are often very familiar with the business, the industry as a whole and understand what is involved in owning and operating the business in question.
Often, family members are prepared and groomed years in advance to take over the operation of a business. These are all pluses. But there are some potential pitfalls as well, such as family members not having enough cash to buy or not being fully prepared to run the business.
Foreign Buyers
Quite often, foreign buyers have the funds needed to buy an existing business. However, foreign buyers may face a range of difficulties including overcoming a language barrier and licensing issues.
Individual Buyers
Dealing with an individual buyer has many benefits. These buyers tend to be a little older, ranging in age from 40 to 60. For these buyers, owning a business is often a dream come true, and they frequently bring with them real-world corporate experience. Dealing with a single buyer can also help expedite the process as you will have fewer individuals to negotiate with.
Financial Buyers
Financial buyers are often the most complicated buyers to deal with, as they can come with a long list of demands. That stated, you should not dismiss financial buyers. But just remember that they want to buy your business strictly for financial reasons. That means they are not looking for a job or fulfilling a lifelong dream. For financial buyers, the key point is that your business is generating adequate revenue.
Synergistic Buyers
A synergistic buyer can be an excellent candidate. The reason that synergistic buyers can be such a good fit is that their business in some way complements yours. In other words, there is a synergy between the businesses. The main idea here is that by combining the two businesses they will reap a range of benefits, such as access to a new and very much aligned customer base.
Different types of buyers bring different types of issues to the table. The good news is that business brokers know what different types of buyers are likely to expect out of a deal.
Copyright: Business Brokerage Press, Inc.
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Read MoreFive Industries with Great Growth Potential for Small Business Buyers
By Peter Siegel, Founder of BizBen.com (California Businesses For Sale), the BizBen Network
When you buy a small business, you want to be successful. But to do that, you must be able to look objectively at the company and determine whether or not it is a business that will be able to grow into the future. Many small businesses have succeeded by being on the cutting edge at one time or another. Businesses that survive long term, growth industries, are those that can change and grow along with the changing needs of their consumer. Regardless of what the financials say, a business that is not adaptable may be at the end of its life cycle.
As you look at potential business opportunities, think about where the business is in terms of its life cycle and try to find a vision for future growth if the current owner doesn’t have a plan in place. If you’d like to know that the small business you are buying is going to be in demand for a while, consider buying one in an industry that is projected to grow. Here is my list of small business opportunities in industries that are expected to grow.
#1 – Green Construction
The construction industry was hit hard by the recession. The industry has had to suffer through consumer’s pulling back on doing large home improvements and from building new homes because they couldn’t afford to and because there was a level of uncertainty around what the future would hold. As the economy starts to improve, many consumers are still focused on ways to save money and live more efficiently so going green is becoming a priority.
Consumers aren’t the only ones interested in going green. Business owners are also following this trend as a means of being more efficient and spending less. With that, I anticipate that companies certified in creating green spaces will be in demand in the future. As more and more consumers go green, they will want their homes and their businesses to follow and the demand for companies that can provide green spaces will increase.
If you are considering buying into this industry, I recommend you know something about construction. Experience will be beneficial in running a successful business. Consider buying include construction companies certified in green building, companies that install solar panels or a green consulting company which evaluates a space and make recommendations on how to improve its efficiency. You can find businesses that are either franchises or independently owned in this category.
#2 – Fast Casual Dining
While fast food franchises still remain a popular option for meals on the go, a new trend in on-the-go eating has emerged over the last several years and I anticipate it will continue to grow into the future. The movement to fast casual dining is taking the restaurant industry by storm. Chains such as Panera Bread and Chipotle have grown tremendously since entering the market. Consumers seem to like the ability to be able to sit down for a casual meal that is better quality than fast food but not as time consuming as a restaurant.
Another trend in this industry is the birth of the food truck. We’ve been hearing about them for a while now and some food trucks have really gained quite a large following of loyal customers. Small business opportunities in this industry for you to consider buying include food trucks and restaurant franchises. Even though fast casual dining is a bit different than a full blown restaurant, you should still understand what you are getting into before you buy into this industry so do your due diligence before making any decisions.
#3 – Professional Services — Accounting, Healthcare, Consulting
As the world that we live in gets more complex, the need for professional services increases and I’m seeing a particular demand in accounting businesses, consulting, and private healthcare practices. Accounting may not be the “sexiest” occupation, but accountants and their services are in demand. As people’s finances become more complex we are seeing less do it yourself accounting and more individuals turning to a professional to help with everything from monthly accounting to annual tax preparation. Most businesses use a professional accountant in one way or another but again, as the complexity of our global economy increases, more businesses are requiring additional services from professional Accountants.
As Baby Boomers continue to age, they are creating a demand for more healthcare-related professional service businesses. This includes everything from private healthcare practices to healthcare specialists like physical therapists to home healthcare aides. The population is going to continue to age and need these services. On top of that, with the introduction of the Affordable Healthcare Act more Americans will have access to health insurance so the demand for healthcare professionals may again increase as a result.
Let’s not forget about Consultants! Starting a business and staying open is becoming harder and harder as the economy, consumers and technology continues to change. Businesses are hiring Consultants to help them navigate this unique business environment and you can find a Consultant that specializes in just about everything these days. This increasing demand for professional guidance in specific areas of business is causing this to be a growing segment of the professional services industry.
While buying a professional services practice may sound like a great idea, these are three areas where I’d definitely recommend you have experience before buying. So what I am saying is if you are a restaurant owner looking for change, buying an accounting practice probably isn’t going to be the right fit but if you’ve just become a CPA and the practice you interned at is up for sale, you should consider buying it because it is likely to be a business that will be around in the future.
When it comes to the professional services industry, many of the small business opportunities that are available for you to purchase are likely to be independently owned. Also, be aware a lot of professional practices don’t get sold on the open market. Many change hands by being passed down to family or employees so finding one for sale may be more difficult than finding other types of businesses.
#4 – Repair Services
Consumers are hesitating to buy new. Instead of replacing it, they are repairing it. For millions of Americans who are still recovering from the recession, repairing has become a way of life. Repair businesses from home improvement companies to car repair businesses have seen an improvement in their business when other companies were slowing down.
Small business opportunities in this industry for you to consider buying include home repair businesses, auto repair shops, a clothing repair or alterations business and computer repair.
#5 – Self-Help and Individual and Family Services
We have become a nation of people who are constantly trying to better than themselves. A group of people trying to do more, be more and live better, Americans are looking for help in finding out how they can be the best they can be. The result is that the self-help industry is booming, and I anticipate its growth to continue well into the future. Self-help and self-improvement initiatives started gaining momentum as early as the 1930s and today Americans spend around $11 billion on this industry. Falling into this category is everything from motivational speaking seminars, networking and wealth-building instructional DVDs, guidance books and more. This segment of the industry presents an opportunity for a solopreneur to write a book, produce a DVD or become a speaker so if you have experience and are successful in an area of life that many people struggle in, you may have an opportunity to create a small business out of it.
Also growing in popularity is the individual and family services industry. In my opinion, self-help and this industry go hand in hand because they are both focused on improving lives. When it comes to individual and family services, more and more people are going to start hiring professionals to help them get through whatever is plaguing them; drug addiction, marital problems, mental issues, etc.
This presents an increasing demand for another branch of professional service businesses that are going to grow into the future. As I said before, these are businesses that you should really have some experience in before buying one.
About The Author: Peter Siegel, MBA, is the Founder of BizBen.com (California Businesses For Sale), the BizBen Network, and is the Director of the successful BizBen ProBuy Program (90% success rate) for business buyers. He has recently published an eBook on How To Buy A California Small Business that is available online. If you need assistance in your search to buy (or finance the purchase of) a California business and would like to speak with Peter Siegel, phone him direct at 866-270-6278.
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