Don’t Overlook Hidden Market of Sellers
Oct 23rd, 2009 | By admin | Category: Finding Businesses for Sale“Most small business deals are made without a go-between.” Changing Times magazine. Business brokers ultimately list some of these firms for sale. Meanwhile, you can buy for less if you access the hidden market of businesses quietly for sale by-owner. You will learn more about the industry you are shopping; you will discover more sellers; and you can make a smaller down payment on a lower purchase price.
Why are there so many over-priced mediocre businesses for sale advertised on the websites used by sellers and brokers?
There so many “over-priced mediocre businesses for sale” because there are so many mediocre businesses. don’t blame brokers. As for asking prices, the key word is “asking.” Sellers get real if they want to sell, or they go out of business.
The “hidden” market of businesses being quietly offered for sale by-owner is where one finds owners who are serious about selling their business. Owners who publicly advertise are often gambling, hoping to find the “greater fool”, i.e., someone willing to pay more for the business than it is worth. Most brokers do a good job advising their owner clients about price and value. Like all business people, however, brokers must sometimes deal with owners who have unrealistic expectations.
I believe that the businesses that truly hold value are sold without being advertised and probably sold to one or more current employees — the ones that in many cases have the best understanding of the business, it’s value, and how to grow it.
I am looking for a distribution company of industrial components and consumer goods to buy. Any suggestions as where to find them?
BJ, I would be glad to communicate with you directly on how to find a distribution company. You can reach me at 425-576-1814 or john@johnmartinka.com. I can then send you some information that will help.
A timely article you can use. It shows under- and unemployed people why theyshould buy a business.
“Life on Severance: Comfort, Then Crisis”
From: front page, Wall Street Journal | November 10, 2009
“Unemployed Americans who have used severance pay and savings to maintain their lifestyles are still out of work, and running out of funds.”
http://online.wsj.com/article/SB125780714976639687.html?mod=WSJ_hpp_sections_news
But it does not have to be as bad as it appears in the article.
Turns out that many of the people who qualify for a severance package have the ability to manage a small or midsize business. My advice to them is this:
Don’t squander your severance package. Buy a fairly priced mature profitable small business.
People with sufficient cash for a down payment on a business purchase can control when they restart their income and then control their financial security . . . if they buy the right business the right way.
Info: http://partneroncall.com/index.php?buying_a_business
This is good information. I am still learning about how to run a business. I am tired of working for someone else. Partner on call sound like a good starting point.
My husband and I have been looking to buy a cocktail bar – but so many we’ve seen are losing money (at least on paper!) Why should we pay turnkey money for a business that’s not profitable? If we’re not fortunate enough to find the hidden market of for-sale-by-owners, what’s the next best alternative? Leasing a space that used to be a bar and transferring a liquor license? Any suggestions?
Laura, like most restaurants (cocktail bars) upwards of 70% fail within the first 2 years. In that business one must really look after the pennies and be ruthless with staffing only to meet the existing demand. Another issue is often with the current owner in that they give lots of free drinks etc. to their friends. So essentially, you are paying for a brand and location which basically translates into good will. If you can see why its not profitable and you can value the good will, you may find a bargain that you can turn quickly to profitability.
Is there such a thing as a “buyers’ broker”? I want someone who I know is on my side who will help me find, analyze and negotiate for the right business for me.
Yes, Laura.
Check out http://partneroncall.com/index.php?buying_a_business
These Business Buyer Advocates ® have been around since the 1970s.