Small Medium Businesses: Are they still on the rise?
In the business world, there is nothing that will assure you of continued success. You will need money, patience, resolve, the best strategy, and a whole lot of luck to make your small or medium business fly.
Sometimes, because of failure in any of the above mentioned requirements for victory in the small and medium business world, a business breaks down and has to be put on sale before more financial damage is done to its owners. The problem is who will buy a small or medium business that is already in the red.
The seller: I do not want this anymore!
Online listings of small and medium businesses for sale have been on the rise in the last years. In the first quarter of this year alone, there was a 66% increase on businesses that are being put on the market. There have been a number of factors being blamed for this crisis: among them are tighter credit markets, rising costs and fewer customers.
This predicament is not concentrated on only one area of small and medium business; rather, it encompasses an assortment of businesses including delis, dry cleaners, dollar stores and gas stations. There is a big portion of the small and medium business industry that is hurting.
The difficulties being experienced in the market may sometimes even be coupled with retirement, maybe an illness, a divorce, or simple exhaustion. Even though most entrepreneurs do not want to see their vision die, they do not have any more means of managing their small or medium business well. The trouble is, since the business is not thriving, its sell ability is very low thus it needs to be priced at a lesser cost. A selling price that is reduced could entice potential buyers more quickly.
The buyer: I could make this work!
Most prospective buyers are in the category of the retired, or executives in other corporations, as they have financial capability to revive a business. They would like to enterprise on small and medium businesses because they think that it is relatively easy to manage as long as they are aware of all aspects that relate to it.
However, it is hard to see a clear financial picture of small medium businesses being sold off as most of them have inadequate records. This is also one of the reasons why most unsuccessful small and medium businesses are hard to sell.
The Middle Ground: Is it even possible?
So where does this leave the buyers and sellers of small medium businesses? It is hard to tell. The data is unclear and thus unreliable. Most businesses that are advertised nationally when it is up for selling usually goes local when it has already been sold. There are no public records of negotiations between buyer and seller after the sale so it is hard to determine nationwide sales prices.
One thing seems to be certain for now; this year, the number of sellers of small and medium businesses will easily surpass the number of qualified buyers. There is an overall trend of difficulty obtaining lines of credit, and brokers say there is no sign that it will pick up soon.
Tags: Small Medium Businesses