Small businesses take twice as long to sell

The global financial crisis is leading budding entrepreneurs to turn away from the idea of buying a small business, according to a new survey from sales broker Manenti Quinlan and Associates.

The global financial crisis is leading budding entrepreneurs to turn away from the idea of buying a small business, according to a new survey from sales broker Manenti Quinlan and Associates.

The survey, which examines business sales in NSW, reveals that the time it takes to sell a business has almost tripled in the last 12 months. In 2002, selling took an average of 52 days, while in 2007 the average was just 34 days. But in 2008, the number has risen sharply to 93 days.

The data, which has been compiled since 2000, shows the interest in sales of cafes and restaurants has declined the most, while interest in liquor stores and motels have remained stable.

“It appears the delay is directly related to the availability of funding and financiers’ attitudes to risk industries,” the survey says.

The survey also reveals the five major concerns of SMEs are falling revenue, funding availability, economic turmoil, higher interest rates and possible retrenchment of employees.

Manenti Quinlan director Gerry Quinlan also says rent is a major concern.

“That is the largest factor for SMEs. As their revenue has dropped, control of overheads is the thing they should have been focused on, and they haven’t. Wages you can have control over, rent you don’t. There is no flexibility.”

But the survey also reveals the economic downturn will actually provide a boost to business sales and a wave of retrenched workers looking to buy businesses.

Quinlan says the numbers of inquiries has “already started”.

“People have been retrenched from the finance industry and are now moving into self employment. It hasn’t risen in the high value dollar businesses, but in the entry level businesses.

“But they are being cautious. They’re going into business for the first time on their own – they’re not wanting to risk the money.”

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