With a significant rise in layoffs and unemployment as a result of COVID-19, thousands of people are out of work, with a possible recession bubbling just below the surface. While all of this may sound dire, it could also be the perfect time to consider buying a business – in fact, some of the greatest businesses were born out of economic downturn.
First Choice Business Brokers, a franchise assisting entrepreneurs in buying/selling middle-market businesses nationwide, has seen first-hand an influx in entrepreneurs seeking new business opportunities amid the pandemic. The below tips are meant to help those who are pondering the thought of a career shift or an investment to grow their existing business portfolio.
New Consumer Needs are Arising: COVID-19 has dramatically changed the way the world will operate moving forward. Healthcare, office spaces, spending habits and education are at the forefront of a complete overhaul. Analyzing and predicting what consumers need to navigate this new normal should lead and propel job and business searches. Buying into a company that provides online, or in-home services might be one avenue or you may consider starting a business or even funding a startup that meets budding consumer needs. The benefit of purchasing an existing business is that it provides a more secure option as the product and services of that business have been proven successful and you have a foundation for growth and advancement.
Lower Interest Rates: The current economic downturn still allows entrepreneurs to borrow business acquisition and start-up capital. While sellers may be willing to negotiate their asking price, if you can pay cash, financing is still proving to be a good option when possible, as the Federal Reserve announced that they are keeping the benchmark interest rate near zero – whereas before COVID-19, it was between 1-1.25 percent.
What does this mean for a purchaser of a business? The current low interest rates combined with up to 90 percent financing and easier credit requirements are allowing a greater number of would-be-buyers more access to reaching the American Dream of owning their own business.
Less Competition for Resources: As a result of the pandemic, many business owners have opted to be cautious. For some, that may mean limiting their spending, for others, it may mean only offering their services online, or pausing them all together. Those small changes can open the door for new business owners – there is less competition in the marketplace, whether that be for ad space, office equipment at a better price, or the number of applicants for an award, loan or grant.
It has been said many times that entrepreneurs will make lemonade out of lemons – and the current economic landscape is proving to have a lot of lemons if you search hard enough.
Larger Talent Pool: If you buy or start a new business amid the COVID-era, you have an immensely talented and available pool of employees at your fingertips. With layoffs and furloughs, these talented people are looking for all levels of positions and are clearly open to additional industries that offer a more secure future. For companies that are in competitive fields, this may be a great opportunity to bring in the employees who were not previously available.
Property is Available: When one door closes, another opens. The saying rings true, even amid the pandemic. If businesses permanently close landlords want to fill the space quickly. Business brokers working with commercial brokers may be able to help you find the best location for your business at the best price, and landlords may be flexible with lease rates and terms for new tenants – so buying now could save you money. Buyers of small businesses can reap the benefits of lower rents, which can make the purchased business more profitable due to lower overhead.
Timing is Everything: Many small business owners may decide that with the pressure of COVID-19 the time has come to sell their business, especially those that operated their business during the previous recession. Some owners lack the energy to see their way through the crisis. This presents a great opportunity for buyers with energy and resources to buy the business at a bargain price, especially if the would-be-buyer can look at the business’ financial history and visualize the path to recovery.
Jeff Nyman, CEO of First Choice Business Brokers, a franchise assisting entrepreneurs in buying/selling middle-market businesses nationwide. Since 1994, First Choice Business Brokers has sold over 1,000 companies for an aggregate transaction value in excess of $250 million USD. First Choice Business Brokers helps individuals sell their current business and/or help them buy their next business in the most professional, knowledgeable and effective manner possible. As leaders in the industry, First Choice Business Brokers and its methods, procedures and expertise are second to none.