BizBuySell Insight Report Shows Growing Small Business Confidence Amid Economic Uncertainty
The latest BizBuySell Insight report shows growing confidence among small business owners, many of whom are optimistic about the potential impact of the upcoming US Presidential election.
The report, based on BizBuySell’s Confidence Index of Buyer-Seller, shows that seller confidence rose four points to 50, while buyer confidence rose two points to 54, marking the first year of growth in confidence between the two groups.
According to findings by BizBuySell, 54% of business owners believe they could get an acceptable price if they were to sell today. Additionally, 43% expect business values to increase by 2025, while only 18% see a decrease.
The report underscores the importance of the election result to many small business owners, with 67% indicating they believe Donald Trump will have a positive impact on the small business sector compared to 28% for Kamala Harris.
Rick Murray, owner of Blue Heron in Oregon, commented, “It depends on who wins the presidential election. My business made more money under the last Trump administration, and things have gotten worse under Biden. “
Strong Q3 Growth in Small Business Purchases
The commercial real estate market saw a 5% increase in acquisitions in Q3, marking the fifth consecutive quarter of year-over-year gains. Despite a 2% dip in the previous quarter, total sales for Q3 reached 2,399 businesses, representing a business value of $2 billion—20% higher than Q3 2023.
Buyers focused on service and retail businesses, with service sector prices up 16% and retail prices up 11% due to strong demand. Restaurant purchases increased by 15%, while manufacturing business purchases increased by 20%.
However, while revenues for businesses sold were generally strong, with average profits up 8% and cash flow up 3.5%, the average sales price fell 13% from last quarter’s peak of $375,000 to $325,000 in Q3.
Katrina Loftin of M&A Business Advisors noted, “We’ve definitely seen a shift from full price to reduced price—typically less than 10% below asking. We also see many buyers asking for seller financing at a lower rate than the SBA rate.”
Robin Gagnon, CEO of We Sell Restaurants, noted, “Retailers are adjusting their prices to reflect the realities of financial costs.”
Seller Financing and Interest Rates
Dealer financing has become more common, with 28% of dealers now open to offering it, up from 24% last year. Meanwhile, high interest rates have led buyers and sellers to explore creative deal structures, such as credit service options and favorable terms.
Brian Powell, a buyer based in Washington, shared, “I’m going to use dealer financing so prices don’t really affect my decision.” Meanwhile, Jon Pastoor of Calder Capital noted that the recent rate cuts had little impact on deadlines, with 70% of retailers and 64% of consumers saying the price changes had no impact on their plans.
Inflation and labor costs remain a challenge
Despite some signs of slowing inflation, 79% of small business owners report higher costs compared to last year, with rising costs of materials, labor, and overhead affecting profitability.
Davinder Singh, owner of Bonita Market in California, highlighted the ongoing struggles with rising costs, saying, “Managing these rising costs is a business imperative.”
Labor challenges also persist, with 55% of small business owners saying the labor market has not improved. Yanni Bulaba Diessa, owner of FamilySoft in Ohio, noted, “Attracting and retaining top talent remains difficult, leading to increased labor costs and requiring strategic investment in workforce development.”
Market Outlook and future trends
As the business for sale market enters the final quarter of 2024, nearly 20% of business owners surveyed plan to sell in 2025, with retirement, burnout, and higher business values among the top reasons for exit.
On the consumer side, 86% plan to buy within two years, encouraged by favorable prices and emerging market opportunities.
M&A experts are still optimistic about the growth of the market. Jon Pastoor expects a strong finish in 2024, noting, “We saw an increase in activity in Q3, and with the sentiment of retailers on the rise and interest rates starting to come down, I think it’s a way to finish strong this year.”
For more information, visit BizBuySell.com to access the full BizBuySell Insight report, which provides quarterly data on retail business transactions, price trends, and market sentiment across more than 70 US markets and 65 industries.
