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ARE THERE ANY GOOD BUSINESSES TO BUY?

By March 22, 2017 No Comments

Here are some responses to that question:

First: The Small Business Administration reports there are over 5.7 million businesses in the U.S. with at least one employee other than the owner. Formal and informal surveys indicate that approximately 20% of all businesses are for sale. For many reasons, of the 1.1 million businesses that are for sale, about 20% of those will actually transact a deal. On the Utah front, the Utah State Department of Commerce reports about 170,000 total businesses. Extrapolating, there are close to 34,000 businesses for sale in Utah. Not all businesses are “openly” on the market; business brokers, others by owner, represent many.  However, you do the math, at any given time there is an impressive number of businesses on the market.

Second: Since there are many businesses that sell every year, the next question is how good are they? Businesses, like beauty, must be judged with a discerning eye. In other words, it’s really dependant on what you the buyer are looking for. Categories of interest may include business size (revenue as well as employees), geography (headquarters close to your residence, and how many additional branch offices), type of industry (manufacturing, distribution, etc), profitability (typically judged by EBITDA – Earnings before Interest, Taxes, Depreciation and Amortization), and competition. Fortunately, there are businesses on the market constantly that fall into these categories at different levels.

Every business will attract a different buyer. A good friend of mine with a plumbing background decided to buy a Port-a-Potty business. Not exactly a “sexy” business to most buyers, but to his discerning eye a real find. He has owned it now for several years and is very profitable; he could not be happier with his choice.  Many buyers come in to our offices saying they would like a smaller manufacturing company, with good profits, and a defensible niche, located close to their home.  Unfortunately, the supply and demand for that category of business is not quite at equilibrium. It is important however, to be “ready, willing, and able” when the right business is located.  There will always be a high demand for businesses in certain manufacturing and distribution sectors to mention a couple; if you see one that seems to be a good fit, pursue it until you know if it’s the one.

Third: The final question is whether there are businesses that fit your individual needs as it relates to the mentioned categories. The supply of businesses seems to be constant, so my suggestion to buyers is to determine what makes a good fit for you individually, and hit the market with your wish list. You just may find exactly what you are looking for, but do not be surprised if a not-so-sexy business catches your eye.

Bradley G. Marlor MBA, CBI is a Managing Partner and Certified Business Intermediary at Utah Business Consultants, a full-service Business Brokerage and Valuation firm.