State of the Business Sales Market 1st to 15th July 2013

My last report indicated hope that the election maybe brought forward, my confidence was further boosted when I heard media reports that some of business’ heavy hitters met with Kevin Rudd to discuss the issue of the election date. That was nearly a fortnight ago and yet no announcement in regards to the federal election…….
The graph below illustrates very well my thoughts surrounding the decline in enquiries around the end of financial year period. I maintain my prediction that the enquiry level should remain pretty low for the remainder of July, with cautious growth up until we get the federal election out of the way.

I often get asked about if jobless rates affect the amount of enquiries on businesses. I heard a snap shot about Victoria’s jobless rate on the radio recently and I thought it may be a good opportunity to put my thoughts in writing. The question, do enquiries on business sales increase or decrease on jobless rates? My answer would be no. To elaborate there are so many variables related to what increases or decreases the number of business enquiries it is difficult to pin point what is the exact cause of change in enquiry level. When jobless rates are higher we do experience a slightly higher number prospects who are looking to buy a business or franchise because they have lost their job, but it doesn’t have much effect on the total number of enquiries. In my opinion it can prove very difficult to change human nature especially when someone has been gainfully employed for such a long time. Sure there are many instances whereby employed people who have lost their jobs have gone on to succeed in business, but I would argue this is a rare few. Many ex-employed business owners have made the conscience decision that they want to go into business and thus it was at their own choosing. I would suggest that it would be a very difficult personal shift for someone to make after been employed for a long time to change to self-employment. Thus we usually find there is a lag between an increase in jobless figures and enquiries from prospect who have unfortunately lost their job, again another reason why it is difficult to measure the effect. Many of the prospects I meet are looking to buy a business or a franchise for the first time, and thus I always have a mindset of, sell the idea of buying a business first, then sell them a business. In many cases prospects are not aware of the added benefits owning your own business has, as no one has opened their eyes to it previously. Naturally this conversation always leads to the prospects asking about the negatives of buying a business. A majority of the negatives (if not all) surround risk. No doubt speak to any experienced business broker and they will tell you, where there is risk there should be a return, and this is one of the golden rules behind pricing business correctly.