Is It Time To Sell?

URL: http://www.entrepreneur.com/article/199016

It might seem crazy, but now could be a great time to sell your business. Data from BizBuySell, an online business-for-sale marketplace, showed that in the second quarter of 2008, asking and final sale prices for businesses were higher compared with the same period in 2007.

Nationally, the businesses sold had a median revenue of $395,000 and a median sale price of $200,000 in the quarter ended June 30. The businesses had a median cash flow of nearly $95,000. Close to 2,100 businesses changed hands through bizbuysell.com in the second quarter, up from 1,559 in second-quarter 2007.

What explains the strong market for businesses for sale amid an economic downturn? BizBuySell general manager Michael Handelsman says the law of supply and demand is keeping prices high. Though his growing site continues to see rising listings, he believes the total number of businesses for sale nationally has declined, as many business owners are waiting for the economy to improve in hopes of getting a better price.

Meanwhile, Handelsman notes, more executives are being laid off with severance packages that might enable them to purchase a business. So supply is down, but demand is up, keeping prices firm.

One notable trend: Businesses sold through BizBuySell in 2008 had a bit more revenue. The median was $395,000, compared with $364,500 in mid-2007.

Handelsman offers these tips for selling a business in today's economy:

Clean up the books. Pay off small debts if you can, and make sure your records are ready for buyers' review.

Keep revenue strong. Continue marketing and bringing in customers to show buyers that your business is still flourishing.

Consider your sector and market. The downturn isn't the same in every city or every industry. Research businesses sold in your sector or town to see if now is a good time to sell.