15 Jan Know What Sells
When new entrants to the business of general business brokerage ask for advice, one area we always discuss is what sells. We think it’s very important for new people to understand that a critical key to success is listing businesses that people want to purchase. The response of these new brokers is then, “Well, what businesses do people want to buy?”
Obviously, buyers want a business that is profitable, one that they would be comfortable in operating, often one fairly close to their residence, and certainly one that they would be proud to own and run.
So, what type of businesses should business brokers spend their time and effort in listing? Forgetting the brokers that specialize (more on that in an upcoming article), here are some statistics from past and present surveys covering this subject. One of the very first actual surveys was one we commissioned (as founder/manager of the International Business Brokers Association (IBBA)) with Babson College, one of the leading business schools in the county.
Following are the responses to the question: What is the percentage of your total listings by Industry?
From the first annual survey in 1990:
27.0% Service
22.1% Retail
17.5% Food & Beverage
16.0% Manufacturing
9.81% Distribution
7.49% Other
From the 1992 survey:
30% Service
13% Retail
12% Fast Food
08% Restaurants
08% Manufacturing
06% Dry Cln
06% Groc Store
05% Distribution
03% Bars
01% Liq Stores
And, here is the information from the most recent survey (2014) done by Business Brokerage Press:
29% Service
21% Food & Drink
11% Retail
10% Manufacturing
07% Auto Related
06% Prof. Practices
06% Distribution
03% Other
10% Not available
To purchase a copy of our most recent survey (2014), visit our web site.
Following is a breakdown done for BizBuySell for their annual survey (2014):
40% Service
30% Retail (non-restaurant)
22% Retail (restaurant)
04% Manufacturing
07% Other
BizBuySell does a lot of survey work for the business brokerage business. Their main business is obviously is to advertize businesses for sale. However, they provide a lot of information of interest (and importance) to the business brokerage industry. They also do an excellent job of marketing businesses to the general public for business brokers. For information visit www.bizbuysell.com.
Comment
It is very clear that food & drink, retail and service businesses make up the vast majority of businesses sold.
67% 1990 Survey
80% 1991 Survey
61% 2014 BBP Survey
92% 2014 bizbuysell.com Survey
This doesn’t mean that one should ignore the other types of businesses, but the numbers speak for themselves. The new business broker should play with the numbers and spend their listing time accordingly. A good solid business will almost always sell unless it’s too “way out.” But, it seems to us the new business broker should play the odds and go with what sells.
