Why Now is the Time to Sell a California Manufacturing Business
There’s a lot of talk about manufacturing in the news, everything from trade and tariffs to Brexit and other current events, like the attempt to contain the spreading coronavirus. What all of it really means is that there are some great opportunities for domestic manufacturing companies. There’s really a no better place for these companies than in California. If you’re looking to buy or sell a California manufacturing business, now could be the time.
Beyond the headlines, there are several advantages a California manufacturer has over those in other states and countries. Here are some of the reasons the time is right to sell a California manufacturing business.
World Trade and Tariffs
The current trade situation internationally is uncertain at best, and many companies are turning to reliable domestic manufacturers. This is in part because the transportation of goods and tariffs can create costs that must be passed on to the consumer. This can take a company from being competitive to being outside the budgets of its clients and customers.
This offers an opportunity for those who manufacture domestically, who can offer the same products as their competitors overseas without the same price uncertainty, shipping costs, and possible supply chain disruption.
This is especially true in California, where being located near tech industries like those in Silicon Valley makes these businesses very appealing to both customers and potential business buyers.
Location, Location, Location
This brings us to location, one of the most vital parts of any business. Many industries call California home, including those in medical robotics and healthcare advances, high-tech and startups in Silicon Valley and San Francisco, and other companies around the state.
We’ve helped sell manufacturing companies from medical robotics manufacturers to those who manufacture architectural structures, and all of them have a unique advantage because of their great location in California.
Many businesses in our state are in need of manufactured products from the things they sell to their customers to parts for their own plants and equipment unique to their industry. Being able to source these locally and sustainably is important. This makes the manufacturing industry in California both appealing to potential buyers and a lucrative business opportunity.
Your company is only as good as the people who work for you, but here in California, we have some of the most qualified employees in the world. Universities like Cal Tech and USC produce graduates ready for the high-tech and fast-paced manufacturing industry. Employees come to California for these very opportunities from places as far away as Korea, Japan, and even parts of Europe.
Because of this talent pool to choose from, your company can have some of the best employees in the world. That makes selling your company even easier. The buyer can rest assured that there will be no shortage of skilled workers to continue to make your company a success even under new ownership.
Buyers look for companies that are healthy, growing, and in a stable and growing industry. Your California manufacturing business fits all of those categories.
The proximity of California manufacturers to a place like Silicon Valley means that leading-edge technology often becomes available in California first. This means companies have an opportunity to be on the leading edge in developing processes and implementing more efficient procedures simply because of where they are.
This means your manufacturing company will not only be more appealing now, but it has the potential to be more appealing going forward as well. Your buyer will know they can leverage the relationships your company has built to advance their new company to the next level, making it more profitable.
This simply means they can potentially recoup their return on investment quickly, something every business buyer looks for when making a purchase.
California offers another advantage over other states. Sustainability and protecting the environment are much more advanced and even regulated in California. While this does present some challenges, it also means there are opportunities for adopting green initiatives, sustainable energy sources, recycling programs, and more.
These can be used in the marketing of your business to both clients and buyers, as they should. Your commitment to the environment sets you apart, and studies show that consumers are willing to pay more for sustainable products and to companies who are more involved in protecting the world we live in.
Business buyers also see the benefits of being involved with a company that already embraces these values, and your business broker can help you emphasize these advantages to potential buyers.
Challenges in Selling a California Manufacturing Business
All these positives don’t mean there aren’t challenges in selling a California manufacturing business. It’s best, to be honest with these, and let your buyer know about them upfront. Not disclosing important information can kill your business sale. Here are a few examples.
- California Regulations: Environmental and other regulations are stricter in California than in other states. While this is good for consumer and environmental protection, it does make some businesses more difficult to run. Be sure you tell your buyer about regulations that apply to your industry.
- Higher Wages: Typically wages are higher in California than in other places. This is in part due to a higher minimum wage for even entry-level positions, but it is also due to the high cost of living. With unemployment low, a manufacturing business may have to offer higher wages and better benefits to win the best employees from their competition.
- Taxes: Tax laws differ in California from those in other states, and it is a good idea to remind your buyer, especially if this is the first business they have owned in California, that it is important to talk to a business broker or financial professional about the way they structure their business and the way the sale of your business is set up.
When you’re ready to sell your manufacturing business in California, call or contact Andrew at Rogerson Business Services. He’s helped business owners successfully sell their businesses in California for several years, and he’ll put his experience to work for you.
From a business valuation that will help you determine how much you can expect to get for your business to make sure everything is complete at the time of closing, Andrew Rogerson can help you every step of the way. If now is your best time to sell, give us a call today.