Small business owners in Canada share many of the same challenges as their counterparts in the United States: government regulations, access to credit/capital, taxes, finding new customers and retaining existing customers. But selling that same business is a whole other matter—think growth, in contrast to the gloom and doom of the current American market, where it seems that some sellers have reached their breaking point and are now settling for less.
Online marketplace BizBuySell.com has reported that sales of businesses with roughly $350,000 in annual revenue have risen 8% in the U.S. over the second quarter in 2010.
I can tell you that sales have also increased in Canada, but in healthy double digits and at prices that are reflective of anticipated economic success. Business owners are getting fair value for their businesses and buyers are having success as the new owners. Most businesses show an increase in revenue of 15% to 30% the year after the transfer of ownership. The new owners come with energy, enthusiasm, and some new skills and ideas. This has not changed. Sellers are having to finance a greater portion of the purchase price but they are getting fair value and 99% of the transactions at Sunbelt are working out well for both parties.
Who is selling and when
Some of our business sellers are serial entrepreneurs. They tend to be younger than 55 when they sell a business. But the vast majority of our sellers aren’t serial and they’re not entrepreneurs. [While business owners can be entrepreneurs, many are not.] They hang on to the last moment, when they are turning 71 or 72. For most, freedom 55 is a myth.
In fact, a 2010 survey by Businessesforsale.com, found that 20% of business buyers in Canada were over 55! You can read more about this and our tips for baby boom buyers here.
The average life expectancy was only 61.7 years when the U.S. set the retirement age for its social security program at 65. This was in 1935. By the time our CPP was established some 30 years later, life expectancy had hit 70. It has now hit 81. Puts things into a very different light doesn’t it.
Whether you’re thinking of selling and retiring or starting a second or third career, we can help you reach your business goals. Contact any of our offices across Canada for a complimentary consultation.
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