The Business Buyer of Today

The Business Buyer of Today

 American buying trends reveal a lot about who we are and what's happening in the country. Not only is it important to understand the trends but also the people that are driving the trends. Just as American demographics are changing, so is today's business buyer. Transworld brokers consistently keep their finger on the pulse of today's business market to help our clients become better positioned when buying or selling a business. The "small business-for-sale" market shows few signs of slowing down so it's more important than ever to gain insight into potential buyers' backgrounds, preferences, and motivations.

Today's Buyer Community

Today's small business sellers are a mix of soon to be retirees and serial entrepreneurs. Across the country, small business owners are cashing out in order to retire, relax, and, in some cases, move on to their next business adventure. But who will step in and capitalize on this market? Today's buyer community is slightly younger than today's sellers. Less than half (48%) of buyers are in their 50s and 60s (compared to 54% of sellers) and 21% are in their 20s and 30s (compared to 15% of sellers). Younger buyers are more ethnically diverse than their elders. Nearly half (49%) of 18 to 29-year-old buyers identify as a minority, compared to 19% of buyers who are age 50 or older. Today's buyer community is more ethnically diverse than the general American population. About 70% of prospective buyers identify as Caucasian, slightly lower than the 77% identified by the US Census Bureau in 2016. Similarly, 12% of buyers identify as Asian/Pacific Islander, double the 6% of the US population. It may not be a surprise to learn that business ownership runs in the family. More than half of sellers (55%) have a parent or grandparent who was a small business owner. Although today's buyer community is younger and more diverse as compared to recent years, the seller and buyer audiences remain dominated by Caucasian men. Today's business buyer is typically male (78%) and at least college-educated; more than half (58%) hold a college or post-graduate degree. As younger buyers continue to enter the market, however, it's likely that the small business community will continue to diversify.

Booming Industries

There is a variety of industries that drive buyers' interests. Prospective buyers rank the restaurant sector, including fast-casual dining, as their preferred vertical for purchasing a small business. In addition, as the world grows into a more global economy, industries such as logistics and supply chain management as well as translation and interpretation services will continue to be in demand. As the world we live in gets more complex, the need for professional services will increase and the demand for accounting businesses, consulting, and private healthcare practices will continue. Modern life in the digital age of the 21st century affords technology and technology-related services to continue to grow including e-commerce and online services such as Internet publishing and broadcasting. Sustainability, renewable energy, and green construction will also continue to grow, including waste management, recycling, and remediation.

Motivation

Business sellers are a diverse bunch with a variety of motives for selling that differ based on a variety of factors including age, gender, and ethnicity. Freedom drives the desire for small business owners as much, if not more than, earning power. A majority of buyers (63%) cited the primary motivation for purchasing a small business is the chance to be your own boss. Just over half (52%) are driven by the opportunity for better income. For younger sellers, burnout is a significant issue, with 30% of sellers in their 30s and 26% of sellers in their 40s citing it as their reason for selling. A better understanding of who makes up the buying and selling communities helps Transworld brokers be better positioned to help you buy or sell a business giving their clients a better chance of achieving their small business goals. As the small business industry continues to evolve, so will the buyers and sellers. As "Baby Boomers" retire and "Gen Xers" and "Millennials" enter the marketplace, Transworld Business Advisors is here to help you collaborate and negotiate with prospective buyers across the spectrum of age, ethnicity, and purchasing motivations.

Contact us today for help selling your business!