2021 is around the corner and the business sales market is poised to continue booming in the new year. January is historically a very popular time of year for business owners to put their business on the market. For business owners who are wondering, “What will it take to sell my business?” we want to give you some insight into what buyers are looking for right now. We’ve got the inside scoop when it comes to current buyer trends in the market, and here are the top three things that buyers are looking for when they make a choice to buy a business.
Essential Businesses/Recession Resistant
The number one question I get asked by people looking to buy a business is, “What type of business should I buy?” The answer I have always given, and the answer that I still give today is that the smartest business to buy is one that is recession resistant. A business that is in demand and will stay in demand, even in the event that we see an economic downturn. So in Florida, businesses that are service or construction-related, such as HVAC, plumbing, roofing, lawn care, pool maintenance, pest control etc are a very good bet. Obviously, going through the past 10 months of a pandemic has shown us that this buying strategy is smarter than ever. Buyers have come to us in record numbers looking to buy these types of businesses, and we don’t see this trend disappearing anytime soon.
Management in Place
More and more we are speaking with buyers who want a business that has a manager in place who can run the team or run the business in an absentee owner situation. Businesses with an employment structure like this are more in demand than ever and truth be told, small businesses that have management like this in place are few and far between. Businesses that have been set up with processes, procedures, and trained key employees are much more desirable than a business that relies on the current owner to run the day-to-day details of the business.
So, for sellers who want to make their business more attractive to potential buyers, now is the time to set your business operations up in a way that you can start removing yourself as a necessity. If buyers can see that the business is able to run smoothly without the current owner as a central figure, the perceived value of that business is much higher. There are many buyers out there right now looking for this type of management structure, but there aren’t very many businesses for sale that fit the bill. This is a great opportunity for business owners who want to sell your business in the near future. Making this big change in your business operations can mean the difference of selling or not selling and could result in a higher purchase price as well.
With the current economic situation our country and our world are in, it is very understandable that banks and the SBA are being very careful which business acquisitions and which buyers they lend to. For businesses that have seen a downturn over the past 10 months due to COVID, it is going to be very difficult to get a loan approved and funded. Also, SBA loans have steep fees and costs to the buyer, and during a time where every dollar counts, buyers are looking for alternative lending options. It is for these reasons that buyers are looking for business listings that offer seller financing more than ever. Businesses for sale that offer seller financing are twice as likely to sell in a normal market situation, so in today’s market, it is more important than ever. As a seller, if you are willing to entertain holding a note, then advertise it proudly, and make it a huge selling point. Your listing will generate a lot more buyer interest than a business that doesn’t offer seller carry.
Just a note on seller financing, it normally requires buyers to put down a large down payment, most commonly 50%, and if the buyer defaults on payments, the seller will receive the business and its assets back. If you are selling your business and want to learn more about offering seller financing, speak to your business broker about your options.