Well,
spoiler alert, there is no market for small businesses.
You see for
a ‘market’ to exist, you need many buyers, sellers and a product or
commodity. For example, there is a
market for 4-door used cars and a market for 3-bedroom homes in each town and
city, but small businesses are very individual.
They’re unique.
Therefore,
they each have their own market!
In the video
I give an example of the process engineer who will never buy the highly
profitable flower shop. I used to see it
all the time when I owned my business brokerage.
As far as
pricing goes, it doesn’t change much over time except if certain industries are
perceived to be more or less risky.
Business are valued on their cash flow and what the buyer is willing to
pay is based on their perception of the risk that the cash will continue to
flow into the future.
There is one
exception though. It’s an old story
about market manipulation.
I’ve seen
first-hand that government programs meant to encourage immigrant investors are
causing price bubbles in certain categories.
Convenience stores, franchise food locations, Laundromats, gas stations.
Anywhere
someone with limited English can run a simple business and quickly learn enough
words to make change and serve customers.
I recently
worked on a case where a newcomer was willing to overpay by 40%... because he
was up against a time-limit and if he didn’t buy a business he would lose a
$75,000 deposit that he had made to get into the country.
Welcome to
Canada, let us into your wallet. I bet
he feels all warm and fuzzy about igloos, beavers and maple syrup.
Just like in
any market where politicians and civil servants decide to meddle, an artificial
urgency has been created and business sellers are taking full advantage of
these victims created by government policy.
For a full
education and help on buying a business, visit www.BusinessBuyerAdvantage.com
To learn how I can help you sell your business yourself,
visit www.HowToSellMyOwnBusiness.com
If you’d like to learn how to create high returns by making
local private lending and lease deals, check out http://www.LocalInvestingCourse.com
The Local Investing Academy starts in September. For a quick introduction, read Invest
Local. It’s available from Amazon stores
worldwide or as a .pdf here: https://gum.co/quoB
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If you would like to hear from me weekly before anyone else,
you can sign yourself up at www.DavidCBarnett.com If you need my help with your project, give
me a call at (506) 381-8416.
Do you live in the Maritimes? I’ve got workshops coming up on buying and
selling businesses in the fall. Book now
http://davidbarnett.eventbrite.ca
Thanks and I’ll see you next time.
