The good news for sellers is that the demand for small businesses continues to be strong across the majority of sectors throughout 2015 and into 2016. Most recently, Verified Businesses has seen new enquiries for ‘businesses for sale’ across the Sunshine Coast up by a massive 38% for the two months ‘December 2015 and January 2016’ compared with the corresponding months of the previous year. Food and Hospitality again featured as the most popular sector in the last few months, with over 39% of sales coming from that particular group, with the strongest ‘band of interest’ being in businesses below $150,000. Good volumes of buyers continue to seek Cafes, Takeaways, Restaurants and Convenience Stores on the Sunshine Coast, with demand continually still outstripping supply at several price points under the $150K mark. Home-based, Services, Cleaning, Wholesale/ Import, Automotive/ Mechanical, Transport/ Distribution, and Construction/ Manufacturing type businesses have recorded good sales over the past 12 months, with businesses in least demand being in the Hair and Beauty sector. Retail businesses have been quiet with a small amount of sales being recorded.
There are many reasons why it’s a good time to sell during periods of low inflation, low wage growth, low capital growth and low interest rates, similar to conditions like we have right now. Owning a successful small business is still a proven and reliable method of creating wealth, (Jarot’s Guide). Many buyers out there are beginning to realise this! This can also be seen in the Australian Institute of Business Brokers (AIBB) ‘market sentiment indicator’ which has moved from a ‘buyer’s market’ to a ‘neutral position’ signalling the likelihood of better news for sellers for 2016. So, even though there is much talk about a looming oversupply in the market as baby boomers retire and exit their businesses in masses over the coming years, as yet, that just hasn’t happened. At present, solid businesses still achieve good selling prices, and are in strong demand and short supply.
What we have found at Verified is that even though buyer enquiries are on a high at present, sellers must consider that time is money, and correct market positioning and timing is still essential! Most potential vendors always ask the same question before listing their business, i.e. Where is the right buyer for my business going to come from?
We answer that question by explaining that the following four factors must intersect before a buyer will actually purchase!
Buyers in the ‘buying zone’ for your business will usually come from ‘existing buyers’ on our database or from ‘new buyers’ scanning websites for advertised businesses for sale. Both groups make up a ‘current pool of buyers’.
Serious buyers in the ‘current buyer pool’ are generally ready to act at the ‘right time’, when a business that they are interested presents itself. These become the ‘right buyers’ for your business when it’s a business of interest that is around the ‘right price’ they can afford. After investigating the business further, a buyer will only act if they perceive that the business holds the ‘right value’ for them to invest in, at that price, even if they have to do some borrowing to make it happen.
As professional business brokers, we can help drive the buying process through by not only introducing ‘new and existing buyers’ to new business opportunities as they arise, but by highlighting the special value features of a particular business, and pushing for site inspections of businesses so we can help reinforce value. However, the salient fact remains, a buyer will still not act until they see value in the business on offer.
In some cases unfortunately, what sellers often don’t understand or lose sight of, particularly in todays market, is that many buyers that are ready to act are the most educated on ‘value’, because they have done the most research on businesses for sale in that sector around a particular price point. So our feedback to the vendor is paramount in these cases. Why? Because if a business continues to be incorrectly price positioned for an extended period, vendors could simply be missing out on buyers and consequently selling their business, which is clearly not the desired outcome.
The first step to selling is totally free, so if you are a business owner and are genuinely interested in selling your business, and in particular you would like to capitalise on the current volume of buyers around, you really should give us a call for a free business assessment. After completing your free business assessment, we can help confirm the likely outcomes and selling ranges of your business, and help you plan future exit strategies, by reinforcing your decision to either sell or hold on to your business. Craig Campbell, Principal, Verified Businesses.