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Time to Get Going!
November 1st, 2008 | NH Biz Scene, Selling A Biz, Buying A Bizby Leon
Time to Get Going:
by Glen Cooper, CBI, CBA, BVAL
Vice President, New Hampshire Business Sales, Inc. & President,
Adapted from the Fall 2008 issue of Business Buying & Selling
The quarterly newsletter of Maine Business Brokers
Today’s global changes in telecommunications, science, economics and politics are overwhelming. People around the globe are seeking new ways to cope with these changes. We are right in the middle of the mess that will be tomorrow’s “best thing that could have happened to us.”
For those of us who are entrepreneurs, these are exciting times.
When I really take stock of what I have in life, I remember that I can’t complain – I get to live in
Okay, I’ll admit: we have our problems. Well, actually, I would be bored if we didn’t.
The
Owning our own small business is also the best kind of investment. First, WE are in control. Second, owning our own business is the single best way to shelter income from excessive taxes, precisely BECAUSE we are in control. Maybe the best thing about owning a small business is that it is an invigorating and growth-producing experience. Yes, small business ownership is hard work. But that’s good. Because it is hard, it makes us tough.
A Once-in-a-Lifetime Market!
It is, in fact, a great time to sell OR buy.
“How could it possibly be both a great time to sell AND a great time to buy?” you ask. Am I nuts? No, I’m a little creative sometimes, but not nuts. This really is a once-in-a-lifetime business buying and selling market.
Today’s unique population demographics, fast-paced telecommunications, scientific advances and temporary chaos of world financial markets are all combining at once to create this one-of-a-kind market situation.
Precisely because most people hesitate to act in a time of uncertainty, it is the ideal time to make our move, to become a leader in our field. People follow leaders. This situation offers a unique opportunity for each of us to lead the way in whatever we do.
It’s a great time to sell IF it’s our time to do so, or if we need to sell in order to buy something else. It’s a great time to buy IF we can. So, within that context, it’s both a sellers’ and buyers’ market!
Time to Sell?
If it’s our time to sell, now is a good time because capital gains tax rates – now and in the near term future – are likely to remain low, or get even lower, for small businesses. They ARE low right now. Both major political parties have also indicated they favor further capital gains tax reductions for small businesses in the future. The definition of a small business differs, but it often is set at “under 50 employees.” That’s about 95% of all businesses in the
A second reason it’s a good time to sell is that third party financing (from banks and other lenders) is still available at low interest rates and on pretty creative terms. This unsettled banking environment will bring out more alternatives, not fewer. Just watch and see!
A third reason it’s a sellers’ market is that the hesitant sellers have withdrawn from the market, lessening the number of competing businesses for sale. Many sellers pull back in times like these, even though there really isn’t a good reason to do so.
Finally, if our sales are up in this down economy, we will get extra amounts of buyer attention. Most businesses are experiencing a sales downturn, so the ones that are stable or growing are getting second and third “looks” by motivated buyers.
Time to Buy?
If we are potential business buyers, there are businesses to buy that are bargains right now. It’s a great time to take that second or third “look,” especially at businesses whose sales and profits are temporarily down. Some business owners simply must sell and can’t wait. In that circumstance, most sellers will offer reasonable prices and generous seller financing.
When available seller financing is combined with still-available loans at still-low lending rates from third parties, the resulting down payment requirement and loan package combination can be quite favorable. Lenders actually get more creative when times are tough, especially for well-qualified buyers.
Finally, differences in technological and/or business savvy between a seller and a buyer can often create an opportunity for the buyer. Today’s rapid changes and generational differences contribute to this current phenomenon. The seller may not see a particular opportunity at all, or simply may be unwilling to pursue it.
Many sellers, for example, just don’t want to computerize their businesses or develop a marketing strategy that involves using the Internet in what is being called “social media networking.” There are many businesses that can be re-invented and grown quickly with better use of today’s technology.
We Have More Power Today
When the system is broken, we actually have more power. That doesn’t seem intuitively correct, but it is. Let me explain.
We are witnessing vast changes in the variables I mentioned in the first paragraph of this article – telecommunications, science, economics and politics. Nothing is likely to stop these changes because they are worldwide, interconnected and growing geometrically.
These changes are bringing more power to each of us as individuals, no matter what else happens. A single individual can now be heard worldwide. That applies to our businesses as well.
For the first time in human history, the whole world is linked by instant voice and visual communications. And, the most commonly shared language, lucky for us, is increasingly English! Whew! For example, did you know that there are more people in
Think about that for a moment. It’s scary and thrilling at the same time.
This is just one example – albeit a major one – that predicts major economic change in our favor. From an entrepreneur’s point of view, new markets are forming!
People from all over the globe – even though there may only be a few in any one physical location – can now get just about anything they want from an entrepreneur willing to supply their unique and special needs. Many small businesses – even very small ones – already serve worldwide specialty markets.
That’s the power I’m talking about.
A Tipping Point?
Many people have read – or at least heard of – Malcolm Gladwell’s The Tipping Point, a well-reviewed book published in 2000. In it, he defines tipping points as “the levels at which momentum for change becomes unstoppable.” He says it’s a sociological term meaning “the moment of critical mass, the threshold, the boiling point.”
In so many ways and in so many different fields, the changes we are witnessing are creating multiple and cascading tipping points. This is why it’s time for leaders in every field of endeavor to move forward.
If it’s our time to sell, we should, by all means, move forward without hesitation. The buyers are there. The financing solutions are still there. The next chapter of our life beckons!
If it’s our time to buy, the opportunities are everywhere.
Because we now can talk to each other worldwide, maybe we can forge worldwide solutions that prevent the very large problems we seem to face.
Because we are making unbelievable advances in biotechnology, maybe we can cure, heal and otherwise fix things we never before thought we could.
In a world financial crisis, we may find our way to essential reform of the system.
In our current national election, we may really get some long-needed changes.
Not all change is good, of course. It never will be. But change is now coming faster and faster worldwide. We don’t have any choice about it.
In the meantime, let us continue celebrate our American blessings by actively choosing to do something. We need to go ahead and take that next step now. It’s NOT time to hesitate.