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VR Business Brokers' Small Business Sales Analysis

4 February 1999

VR Business Brokers' Small Business Sales Analysis Shows Improved Buyers' Confidence


    HUNTINGTON BEACH, Calif.--Feb. 4, 1999--Findings released Thursday by Huntington Beach-based VR Business Brokers, the oldest seller of businesses in North America with franchise offices nationwide, show that buyers' confidence continued to increase throughout 1998.
    The Small Business Sales Analysis reveals that small businesses are showing more profit, sellers are getting higher prices for their businesses and more businesses are selling.
    The average gross sales for businesses sold in 1998 increased 3% from $440,000 in 1997 to $455,000 in 1998. Business buyers were willing to pay higher prices for small businesses increasing the average sales price by 9%, from $146,000 in 1997 to $160,000 in 1998. In addition, the actual cash down payment increased proportionally to the increased sales prices remaining in the 63% range.
    The Small Business Sales Analysis monitors trends relating to the sale of small businesses. Since 1992, VR Business Brokers has tracked the sales of businesses through its proprietary database using thousands of actual sales transactions within its national franchise network.
    The 1998 Small Business Sales Analysis also shows that the average price for a retail business sold increased 19% from $178,000 in 1997 to $211,000 in 1998, and the number of days on the market for retail businesses dropped 16% from 220 to 184. The market share for florists increased 108%, and card/gift stores experienced an increase of 175%.
    While the retail business' statistics were impressive, the market share of sales for mail box/packaging stores decreased 19% from 2.7 in 1997 to 2.2 in 1998, and restaurants dropped for the second year in a row from 8.5% to 7.6%, an 11% decrease. But, the fast food market share increased 18% from 6.6% in 1997 to 7.8% in 1998. In line with this, it took 20% longer to sell a restaurant, 170 days in 1997 vs. 205 days in 1998, while fast food businesses took 7% less time to sell, 205 days in 1997 to 191 days in 1998.
    Also of note, the sales of gas stations went up dramatically with an 82% increase in market share of sales, from 1.7% in 1997 to 3.1% in 1998.