Lies, Damned Lies and Statistics

28/04/2009 by info.

You can often get hold of the wrong end of the stick when looking at statistics.

American listing website for businesses for sale bizbuysell.com have recently issued statistics showing that the average price of a business sold via their website fell by 17%.

A reporter for cnnmoney.com reports that “it’s a lousy time to sell your business” presumably on the basis that if you sell the value of your business will have reduced by 17%.

These business sales however have included an element of distressed sales, and of course if you needed to sell your business because you were not doing as well, you had to be realistic with your expectations.

They are right with one aspect of the market that is there are fewer businesses being put up for sale. Baby boomers who would normally be looking to retire, are now delaying that decision, due to fear, thoughts that they may not be able to sell their business for top dollar price, or maybe because their investments have reduced elsewhere.

These are the businesses that a lot of businesses buyers would be interested in buying.

The fact is that business buyers are always interested in buying the best businesses, and if you own the best restaurant in your town or city you will STILL be able to sell for a good price.

But are business owners taking the wrong decision in delaying their retirement?

Profits are a function of the enthusiasm that a business owner has about running their business, and if they feel that they have no option but to carry on trading, perhaps they will start to feel resentful and their enthusiasm may start to wane.

It is this phenomenon that may lead to a reduction in the value of their business not the economic conditions.

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