The actual number of businesses is difficult to determine because new businesses are starting up every day, and others are closing their doors. Some people own more than one small business, and some small businesses have more than one location.

The IRS handles about 30 Million business tax returns every year.

The US Census Bureau lists about 28 Million business establishments

Dun & Bradstreet lists about 25 Million businesses.

About 75% of these businesses are sole proprietorships.

Many are 1-man shows with no employees (salesmen, contractors, free-lancers, etc.)

About 95% have revenues under $1 Million.

About 75% have revenues under $100,000.

About 25% have revenues under $25,000.

Less than 1% of businesses have more than 500 employees.

About 50% of businesses have less than 5 employees.

About 50% of new start-up businesses fail in the first two years.

Only about 20% of new start-up businesses survive 5 years.

Most small businesses fail due to poor management. They run out of money before becoming profitable.

Only about 10% of business failures declare bankruptcy. 90% just close the doors and disappear.

There are perhaps 1 million businesses for sale at any one time.

Several websites list over 50,000 of them at any one time.

80% of small business sales occur without the services of a Broker.

Brokers admit that they sell less than 20% of their small business listings.

In reality they sell less than 10% (1 out of 10) of their small business listings.

95% of the small businesses that are sold have revenues less than $1 Million.

99% of small business sales are asset sales.

Business Brokerage as a profession did not exist until the mid 1970’s. Prior to that time small business sales were handled by real estate agents, accountants, lawyers, or were sold by the owners themselves.

There is no special licensing required for business Brokers. In 34 States they are totally unlicensed and unregulated. In 16 States they are required to hold a real estate license. Arizona is one of the States requiring a real estate license to sell a business.

95% of Business Brokerage offices today are franchised.

There are about 4,000 business brokers in America today.

About 1,500 leave the business every year, and about 1,500 new ones begin. A few are very successful, but many make less than three sales a year.

Your chance of dealing with a neophyte who hasn’t sold a business yet is about one in three.

There is no Multiple Listing Service for small businesses like there is for real estate, and most business Brokers do not cooperate with each other. Less than 2% of business sales have 2 different brokers involved. The one who took the listing is usually the one to make the sale

There are approximately 25 prospective buyers for every small business that is for sale.

95% of these prospective buyers have never bought a business before.

95% of these prospective buyers do not know what kind of business they want.

The average prospective buyer spends about 2 years looking before giving up in frustration.

Less than 10% of people who begin looking for a business ever acquire one.

85% of prospective buyers do not have an accountant.

90% of prospective buyers do not have an attorney.

90% of small business owners work more than 40 hours a week.

50% of small business owners work between 60 and 80 hours a week.

Most small businesses keep their books on a cash basis rather than an accrual basis. Many use a hybrid method of their own. Most do not prepare a Balance Sheet. It is difficult to analyze and compare small businesses because there is no consistency in their record keeping.

The average sales price of small businesses that actually sell is about 2.2 times “Owners Benefit”

The median sales price of small businesses that actually sell is about 1.8 times “Owner’s Benefit”

WHY SUCH POOR STATISTICS

95% of buyers have never bought a business before, and are unprepared for the process.

They do not know how to evaluate and price a business for their needs.

They rely for advice and assistance on the Broker who has been hired by the business owner to sell it as quickly as possible for the highest price and best terms possible.

They will spend weeks, maybe months shopping for a used car. They will insist on driving it before making an offer. They will pay a mechanic to inspect it before buying it.

They will spend months, maybe years shopping for a home. They will have it both inspected and appraised before they can arrange a mortgage.

They will spend hours on the internet to save a few bucks when planning a vacation, an air flight or a cruise.

They will clip coupons, and buy groceries when they are on sale to save a few dollars.

But when it comes to buying a business which is often the largest purchase in their lifetime they will believe the asking price set by the seller and his Broker are reasonable. They will not spend a few dollars to have the business evaluated by an uninterested party. If they make an offer for 10% less than the asking price they will assume they have negotiated a good deal. This could be the biggest mistake they will ever make.