Despite the credit squeeze and a probable recession, entrepreneurs are still finding the finance to buy businesses and are taking advantage of competitive prices.
Almost half (48%) of respondents to a survey by entrepreneur website BusinessesForSale.com said the current economic conditions were an advantage when it comes to buying a business.
Just over a third (36%) believed that businesses for sale were more competitively priced as a result of the downturn. Of the 1,000 currently active business buyers who took part in the survey, two thirds (66%) found banks to be accommodating to their needs, while a third found their search for funding more difficult than expected.
“Interest rates are still historically low and asking prices can be lower as sellers look for an exit,” says BusinessesForSale.com director Tony de Vizio. “It’s a good time to buy your way into business ownership.
48% of respondents to a survey by entrepreneur website BusinessesForSale.com said the current economic is an advantage when it comes to buying a business
“Lenders still need to lend and look favourably on those looking to buy a business with cash flow in place,” he adds. Sarah Busby, a finance broker – meaning she secures funding for entrepreneurs – for Birchwood Business Finance, believes that start-ups are likely to be more profoundly affected by the credit crunch.
“I think start-ups will find it tough this year.
“What I would recommend is maybe to not consider startups unless they’re 100% pressing the right buttons. Maybe go for an established business where they can actually see the track record of the business and where you’ve got a steady income from the word go.”
Amid a housing market in dire straits and many share prices in freefall, 28% of respondents viewed buying a business as a safer investment than equities or residential property.
Six in every 10 surveyed said that buying a business was a way of taking control of their life in difficult times. According to Dean Edwards, chairman of the recently formed British Business Brokers Association, it’s a win-win situation for all. “There will always be reasons for selling a business – regardless of the economy – people retire or they want a change,” he says.
“For buyers there is the real prospect of buying a good business at a competitive price and seeing the value of that business dramatically increase when the economy turns around.”
