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This article is based on the Business Insight Report published by BizBuySell.
According to the report, small business acquisitions grew by 10%, and the sale price for profitable restaurants jumped by 9% in the first quarter of 2024 compared to the same period in 2023.
On the surface, these numbers seem to imply that the environment for business sales is improving and that business owners can feel optimistic about selling their businesses.
However, business owners need to understand one very important thing: Most businesses do not sell.
The table below shows the number of active businesses listings for sale, by quarter, in the Greater Sacramento area.
The table below shows the number of businesses that were sold, each quarter, in the Greater Sacramento area.
As we can see, only a small percentage of the businesses actively listed for sale will actually be sold.
The data is a little skewed because not all businesses that are sold are properly recorded by the business broker representing the sale, but the rule of thumb is that only 20% of businesses will sell.
There are two things that can substantially improve the odds that your business will be one of the few that sell.
A reasonable asking price. It has to be financially viable for a buyer to attract a buyer to acquire your business. This seems like common sense, but many sellers set their asking price so high that they scare away prospective buyers.
Offer seller financing. This will often make the business sale more attractive to SBA-approved lenders, making it easier for a buyer to finance. Keep in mind that just because you are willing to offer seller financing does not mean that you have to offer it to every buyer. You would still qualify the buyer and require them to submit a personal financial statement, promissory note, personal guarantee, and collateral.
The most important part of the insights report comes at the end.
“In today’s market, sellers can increase their chances of a successful sale by developing a strategy of looking at it from a buyer’s perspective.”
Too often, sellers price their business based on what they want, failing to consider the prospective buyer's perspective. The buyer takes on the most risk during the sale of a business, so it is essential that the seller think about ways to help provide as much information as possible and price their business in a way that is financially sustainable for the buyer.