Fact Sheet

Small Business Succession or Continuation

Small business overview

·         98% of America’s 9.5 million businesses employ less than 100 people.
·         90% employ less than 20.
·         1.5 million Americans operate home based businesses.
·         Small business accounts for all growth of the GNP
·         Responsible for creation of essentially all new jobs
·         Less than 1% are Public companies
·         160,000 new businesses are created monthly

Succession expectations

·         50% of business owners plan to pass their business on to family.
·         10% anticipate selling to a competitor
·         30% plan to sell to employees
·        10% expect to sell to outsiders

Succession realities

·         15% pass to a second generation, and 5% of the second generation businesses pass on to the third.
·         10% sold to competitors
·         5% sold to employees
·         10% sold to outsiders
·         Balance are closed and liquidated
·         A recent survey of more than 5,000 businesses owners revealed that 76% closed their doors in order to “move on” -- only 24% of the businesses succeeded the owner or were sold
·         100,000 go out of business monthly

Why selling a business is difficult and different

·         Confidentiality must be maintained (Don’t let anyone know the business is for sale, but sell it quickly)
·         Buyers don’t know exactly what they are looking for
·         No one really knows what a business is worth but everyone has an opinion
·         Banks are reluctant to provide acquisition funding
·         Future profitability is totally dependent upon new owner, past performance cannot predict future results
·         Most private business owners strive to minimize profits making “real earnings” difficult to discern.
·         Usual buy/sell rules cannot be applied when selling a business
·         A highly charged emotional atmosphere complicates the purchase and sale of smaller businesses
·         The buy or sell decision requires a careful balancing of personal as well as financial considerations
·         Business buyers and sellers are unfamiliar with the unique process employed to safely transfer ownership
·        Buyers, sellers, and their advisors fail to recognize the real motivation of buying or selling and instead focus solely on financial matters
·         There are very few buyers for a business that has to be sold

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For additional information contact:

Ted Burbank, FCBI
508 791-9380 or Email bizval@bizbooksoftwareHome Page  
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