Selling a Small Business in the Current Economy

In the current economic situation, selling a small business will not be as easy as it was in previous years.  The economy has collapsed, buyers are hesitant, and lending has tightened up. With this much insecurity in the market, for many it will be challenging to sell a business in the years to come. However, there are steps you can take to help maximize the selling potential of your business regardless of the economy.

Construct a business plan: Having a good business plan is essential for any business, but is particularly crucial at a time when the market is plagued with uncertainty. Creating a business plan that clearly indentifies current marketing strategies and future projections will greatly enhance the selling potential of your small business. Be sure to include sales strategies that are proven to be currently successful.

Re-evaluate current contracts: Renegotiating your lease agreement, and deals with vendors and employees can help to evenly disperse the financial burden in tougher times. Instead of allowing the business to bear the full force of the economic downturn, bargaining with your accounts payable will gradually reduce your expenses and increase your bottom line.

Implement creative marketing strategies: Thinking ‘outside the box’ with new marketing ideas can boost sales and introduce your business into new markets. Forming partnerships can create great sustainable value and therefore increase the net worth of your business. Ensure your business utilizes social networking outlets, as all businesses can benefit from the increased exposure and resources they can provide.

Provide Financing: With funding increasingly difficult to obtain, a business that is seller financed is all the more attractive to potential buyers. A seller who does not wish to finance is at a disadvantage and may not be able to achieve their asking price. Your willingness to finance the sale affords you substantial bargaining power. It will often result in a higher end price, plus you will be paid interest until the loan is paid off.

Although selling a small business in the current economic conditions can be a daunting task, following and implementing these steps can be beneficial and expedite the sale of your business. 

Buying a Small Business in the Current Economy

Due to the current economic conditions, many people will face tough challenges in regards to investment decisions in the years ahead.  A large number of people have lost most of their investments in real estate, stocks, bonds, or even their job in the past few years. Purchasing a small business can present an opportunity to begin to regain your losses and get back on track financially. This investment typically provides both a high rate of return and control, and can provide better returns than the majority of other investments.

The expected rate of return on an investment directly correlates to the perceived level of risk. Business ownership ordinarily presents the highest perceived risk, and therefore the maximum yield of returns. Small businesses usually give rates of return from 20% to 50% - up to five times as much as other common investments. This provides you the prospect of regaining your losses far faster, as well as leaving you with an investment that will continue to perform well in the future.

In order to successfully deal with this increased level of risk, it is important to purchase a business that complements your skills and past experience. Do not be tempted by businesses that promise a high rate return, but that you have no experience in. It is advisable to purchase an underperforming business which you can grow and improve rather than an opportunity in which you have no background. A good business advisor or broker can assist you in managing this risk.

Owning a small business gives you the ability to control your own investment. You personally manage decisions which determine how the business performs, both now and in the future. Due to the current economic situation, many businesses are selling below market value and sellers are more inclined to provide financing.  You may also be eligible for a small business loan through your local bank or a SBA government program.

Ultimately, this is an ideal time to pursue your dreams of small business ownership in order to help secure your financial future. With careful planning and risk management, the returns and rewards can be well worth it.