Buying a business is like having a baby, a new survey has found, with small business owners reporting it takes nine months on average to find a suitable business within their price range.
LINK conducted a large survey of over 2,500 business buyers and sellers to measure current trends in business buying behaviour from both sides of the fence – those looking to buy and those looking to sell.
The managing director of LINK, David Fitzgerald believes it is the first time a survey of this kind has been done in Australia, and LINK plan to repeat it quarterly to measure emerging trends. “It is the first time anyone has taken the pulse of the engine of the Australian economy … investigating current trends in business buying behaviour certainly gives us a snapshot of where the money is going and the resulting flow on effects”.
The effects of the Global Financial Crisis are still being felt, with sales remaining strong but the average time from listing to sale increasing from 15 to 21 weeks. “This certainly tells us that buyers are still being careful with their money”, Fitzgerald deduces. Many respondents cited changes to lending policies by banks as a reason for re-evaluating the size and type of businesses they can afford. A massive 81 percent of buyers reported experiencing difficulties obtaining finance. An exception to the long sale period was home-based businesses, which decreased in popularity but only take, on average, 13 weeks from listing to sale.
Franchises, cafes and restaurants have decreased in popularity among buyers, attracting only 28 percent and 12 percent of enquiries respectively, despite strong offerings in both markets. And whilst the service industry remains strong (attracting 33 percent of buying interest), the building and construction business is down to 18 percent, despite the construction industry’s steady profit posting during the financial downturn.
Fitzgerald considers the market for small business a promising sector for future would-be investors, projecting continued growth. “It starts with them needing a place to live, then groceries, then furniture, then cars, then services, then schools, then clothing, then food and entertainment, then they need to buy a business, then they need an accountant and a solicitor and so on, and the money wheel turns with our whole economy benefiting”.
