3 Reasons Why Now is the Time to Sell Your Business
In today's economy, many business owners are trying to adapt to some rapidly evolving changes, and they are seeking the best path forward for their business. While some owners have been struggling through the pandemic and feel they need some time to recover before selling, others have been able to flourish and continue to grow. In either case, for any entrepreneur that’s thinking about selling their company in the coming years, they may want to consider putting it on the market sooner rather than later. Here are the top three reasons for why you don’t want to wait another year or two.
1) Mass Exodus of Baby Boomers
The Baby Boomer generation makes up a whopping 41% of small business and franchise owners. There are roughly 28 million small business owners in the US, which means Boomers make up about 11.5 million of them. The years they were born range from 1946 to 1964, and that means we are smack in the middle of their retirement range. It was expected that a lot of them would have already retired and sold their businesses beginning in 2011 when the first of them reached 65 years old, but that has not been the case. As we move closer and closer to the end of their retirement range in 2029, we will start to see a massive exodus of Boomers placing their business on the market. More competition means longer times on the market and lower offers. So, it makes sense to be on the market now before it becomes too crowded.
2. Effects of Covid-19 on Essential, Pandemic Resistant, and Online Businesses
The pandemic has been going on for a year and a half now, and the effects on businesses have been two-sided. Although some industries such as bars and restaurants have struggled, other industries have been booming. They include delivery services, grocery stores, liquor stores, fitness equipment companies, game developers, furniture dealers, home remodeling services, material suppliers, tele-health and home health services, landscapers, gardening suppliers, mask producers, online teaching and home tutoring services, and pretty much anything in the e-commerce and online industry.
These industries now have a full year of data that shows huge increases in profits. Some will continue to grow in the coming years, while others will return to pre-covid sales figures. Buyers are enthusiastic about these industries and have been capitalizing on any opportunities to buy them up. If your business is in any of these fields and you experienced a bump in revenue last year, now is the time to sell while figures are high and before we return to a more normalized market.
Just keep in mind that any good buyer will understand that last year's numbers don’t represent a normal year in business, so this means you will need to price accordingly to not over value the company. Look to your broker for advice and help with a proper valuation.
3. Supply and Demand
According to BizBuySell, the number of small businesses sold in 2020 were down by 22% compared to 2019. In 2020 there were 7,612 small business acquisitions, while in 2019 the number was around 9,746. At the same time, businesses that did get sold were up 12% on sales price in 2020 compared to 2019. The reason for this is because many sellers believed it to be a bad time to sell their business and have decided to wait until the pandemic is officially over. However, buyers are more interested in the opportunities during this time to buy businesses that are either performing better or ones that are a good bargain because they are performing less.
There is simply more demand in the market right now and less supply, creating a perfect seller’s market. This is expected to change though as more people get vaccinated, return to the office, and resume going out to places like restaurants and events. In order to take advantage of the current seller’s market, now is the time to get listed before supply returns to normal.
To Sum Things Up
The conditions are perfect for anyone wanting to sell their business and take an excellent profit on it. If you would like to find out how much your business is worth and develop a great exit strategy, please feel free to contact our team at Almond Tree Group. We would love to assist you with getting the most for your business and navigating the sales process during these most unusual and opportunistic times.
