Who is going to buy your business
Who is going to buy your business?
It’s an interesting question.
Do you own a business and are wondering who is going to buy your business?
Baby boomers are ready to retire and sell their business. The statistics speak for themselves as I shared in an article last month.
The businesses-for-sale marketplace in the 2nd quarter of 2018 continues to break records based on the survey from BizBuySell.com.
According to the report there were a total of 5,383 businesses sold in the first two quarters of 2018 which puts 2018 on pace to surpass the record number of businesses sold in 2017 of 9,919 transactions.
For the 2nd quarter of 2018 alone, the number of businesses that sold was 2,705 which is an increase of 6.7% over the same time last year and the most of any quarter since data was being tracked starting in 2007; as the graphic below shows.
Who should you target to buy your business?
So, we know there is a good supply of businesses for sale and they are being acquired but who is going to buy your business?
From a survey of 2300 small business owners and buyers, a small business study by BizBuySell.com came up with the following.
What is the gender break down of business buyers?
According to the report, 77% of small businesses are owned by males and 23% are owned by females.
What is the age break down of business buyers?
According to the report, the breakdown by age is as follows:
20 to 29 years of age: 4%
30 to 39 years of age: 19%
40 to 49 years of age: 29%
50 to 59 years of age: 32%
60 to 69 years of age: 13%
70 years of age or older: 2%
What’s amazing from this set of statistics that 47% of business buyers are 50 years of age or older and they are thinking of buying a business. Who would have thought?
What is the highest level of education of a business buyer?
Some high school 1%
High school graduate 8%
Some college 22%
College graduate 36%
Trade/technical/vocational training 6%
Some post-graduate work 3%
Post-graduate degree 24%
What’s interesting from this set of statistics is that 31% of business buyers have not graduated from college.
From what ethnicity do business buyers come from?
Black/African American 7%
Asian/Pacific Islander 14%
What political affiliation do buyers come from?
What is the United States Citizenship Status of a buyer?
Natural born citizen 70%
Naturalized citizen 19%
Permanent resident 7%
Visa holder 2%
Applying for permanent status 1%
What is interesting is that of those who are not natural born citizens, 64% percent are first-generation U.S. immigrants; 16% are second-generation.
India was the most commonly selected country or origin by a wide margin.
What percentage of Business Buyers parents and/or grandparents owned a business?
Parents owned a business 27%
Grandparents owned a business 8%
Parents and grandparents owned a business 15%
Neither parents or grandparents 51%
What is interesting is that this statistic goes both ways. 49% of buyers had a parent or grandparent own a business while 51% had no parent or grandparent with business ownership.
When do business buyers plan to begin the process to buy a business?
Currently looking 26%
Less than 3 months 21%
3 to 6 months 18%
6 to 12 months 19%
1 to 2 years 13%
3 to 5 years 3%
Based on the above statistics this means this is an active market as 65% plan to begin the process to buy a business in less than 6 months.
What is the most challenging part of buying a business?
Finding the right business 58%
Coming up with the down payment 12%
Getting approved for financing 10%
Negotiating the price with the previous owner 2%
Understanding the value of the business 13%
One final statistic. 45% of business buyers have previously owned a business. This is interesting as it’s my opinion that being an entrepreneur is a gene you have or don’t have. That is, it’s not something you can learn or go and buy. Either you want to own and operate your own business, or you don’t. it’s as simple as that.
Final thoughts on businesses ownership
The above statistics show a cross section of different information from age to ethnicity to education to household income and more.
What these statistics don’t say is what it takes to own and operate a business and be successful. Or perhaps they do? Perhaps what they do say is that there is no age, ethnicity, marriage status to successfully own and operate a business. Anyone can be successful and therefore anyone can try but as 80% of businesses fail in their first two years, success is not for everyone.
What these statistics don’t show is that only about 25% of businesses ever sell.
If you are ready to sell your business, it should not be a function of the value of your business; which is important. But what is more important is making sure your chances of selling your business are strong by having all the variables you control as positive as you can.
Are you thinking about selling your business and move to your next challenge? Would you like to know the value of your business? If you would like more information, please visit my website <a title=”Certified Business Broker Sacramento” href=”http://www.rogersonbusinessservices.com/services/business-valuation” target=”_blank”>Business valuation.</a>
For more immediate help you are welcome to send <a href=”mailto:email@example.com”>an email to Andrew Rogerson</a> or give me a call on 916 570-2674.