Demand for Small Businesses Is on the Rise, Says Report

We often think of businesses buying and selling goods and services, but rarely consider how many people want to buy businesses themselves. That’s right: Your SMB could be a hot commodity in today’s market. Some entrepreneurs choose to auction off their company to the highest bidder once it has its footing; others want to maintain control of operations and continue to grow their “brain child.”

Take a closer look at why small businesses are currently in demand, and brush up on what your SMB needs to appeal to buyers. For instance, comparing small business insurance quotes now can help protect your fledgling company while you grow it—and ensure it’s ready to “leave the nest” when the time comes.

A Seller’s Market

One online marketplace for exchanging companies, BizBuySell, recently reported that closed transactions are up 31 percent since last year (to 2,534). It’s a seller’s market right now, with businesses fetching a good price. The same source reported that the median sales price for SMBs was $229,000 last quarter—a 15 percent increase from last year’s $199,000 median price!

What Makes a Business Attractive?

Maybe you founded a startup aimed at disrupting the tech industry. Or perhaps you run a convenience store, laundromat, restaurant, boutique shop or clothing store. Chances are, someone has envisioned owning such an establishment before. If you’re looking for a solid return on investment (ROI) and a change of pace, you may consider selling your business.

An appraiser can determine the business valuation for your company, which in turn influences the listing price. You may even be surprised at how much it’s worth. But any debt that you’ve run up running your business will ultimately count against negotiations.

Most business owners have to take on debt to handle start-up costs. There’s commercial space, equipment, hiring, license and permit fees, advertising and more to consider. But this debt can present a huge drawback for selling your business. As Forbes writes, “Many entrepreneurs take on so much deb that, when it’s time to sell the business, very little cash flows to the entrepreneur at the closing table. The truth is that a buyer will pay an entrepreneur for what the business is worth to them and not a penny more.”

Streamlining the Selling Process

On average, it takes two to four years to sell an SMB. One way that you can expedite the process (and make your company seem mighty appealing to potential buyers) is to consistently update your financial records. That way, you’ll have a thorough history ready to go when a buyer comes calling. Compiling up-to-date tax information, sales figures, growth projections, licensure, proof of insurance and more will help you deliver a strong pitch.

The trick to selling your business is waiting long enough to have all your ducks in a row, but not so long that you miss your prime window of opportunity. Keep an eye on demand and take note of when it’s high. That way, you’ll earn the highest ROI on your company.

Looking to protect your SMB’s finances with insurance? Compare small business insurance quotes from top providers today with CoverHound.