More area businesses have put up the “for sale” sign. Nearly 100 Milwaukee-area businesses are listed for sale on the BizBuySell web site. The number of local businesses for sale on the site has increased by 70 from the previous year, according to the general manager for BizBuySell, Mike Handelsman.
The area businesses that are for sale come from a variety of industries including retail, service and manufacturing. Service establishments, such as auto repair, health care, salon, dry cleaning and laundry businesses comprise the largest portion of Milwaukee-area businesses for sale on the site, totaling 40, said Handelsman. Retail businesses, such as restaurants, bars and convenience stores, also accounted for several local listings.
BizBuySell data indicates that the median revenue of businesses for sale in the Milwaukee area is nearly $518,000, while the median cash flow is around $118,000.
BizBuySell (www.bizbuysell.com) is an internet site dedicated to the buying and selling of businesses. Individuals interested in starting their own business can peruse the site by state and county for businesses for sale in that area.
Business owners or brokers can pay a designated subscription fee to have their business for sale posted on the site for a period of time. They then provide background information on their business such as, reasons for selling, cash flow and asking price. According to Handelsman most are small to midsize businesses, and the average asking price for listings in the Milwaukee area is $393,000.
“The biggest obstacle when buying a business is getting comfortable with how the business operates and getting access to financing,” said Handelsman.
Karen Rehn, president and broker of Pewaukee-based ABA Services, Inc., says this is a seller’s market and advises buyers get educated about how to find the right business for them before stepping out into the market.
“Buyers really need to get an education on how to find the right business and learn what will work best for them,” she said. “They need to understand cash flow, and there are different business advisors that can teach people that as well as how to understand how much money is needed. Many buyers are under-funded. They have enough money to buy the business but not necessarily enough for operating capitAl.”
Buyers need to determine how much they can afford to pay for a business, factoring in the amount they may be able to borrow from a bank, friends and family, or the business seller, said Handelsman.
ABA Services offers a “buy site practice” to assist buyers.
“We will do an assessment on you; your background, your finances, and conduct a pointed seek and search service,” Rehn said. “We service the buyers, not just the sellers. We will give them a contract and find them the right business.”
Some buyers enlist the assistance of a broker to help them with their search and others utilize their own resources and various online listings.
“Technology offers a great starting point for aspiring entrepreneurs who are in the market for their first business,” said Handelsman.
Rehn encourages buyers to visit a variety of avenues when searching for the right business to purchase.
“Entrepreneurs should look at listings not on the competitive market as well, through brokers and other organizations,” she said. “Once a business is in the competitive market, you get four or five interested bidders and that brings the price up.”
Sellers are required to provide certain information to buyers for their due diligence. It is standard practice for potential buyers to receive access to historical financial statements, historical data, and reasons for selling the business, said Handelsman.
“It is important for people to look at the proven financial records of the business, not the potential behind the forecasted numbers, that can sometimes throw a buyer off,” said Rehn.