Positive signs for small businesses as sales, optimism rises and asking prices fall

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Small business optimism and sales of ventures were up in December 2011.

Positive signs for small businesses as sales, optimism rises and asking prices fall
1/20/2012 7:32:34 PM
Category: Business Finance

Asking prices for small businesses are down, while sales of these ventures is up and optimism is improving, according to a number of new reports.

Sales of small businesses increased for the second year in a row in 2011. Inc. Magazine reports that acquisitions were up by 3.3 percent after the past year. During this time frame, revenue growth from businesses being sold was up 6.7 percent.

The Milwaukee Business Journal explains that the amount of business financing needed to buy a venture declined again in the fourth quarter of 2011, as the median asking price for a small business in the region dropped to $240,000, following a nationwide trend. In the third quarter, the mean price was at $260,000, while in the fourth quarter of 2010, the figure stood at $275,000.

These dipping prices have opened the door for many aspiring entrepreneurs across the country - a population that was often stifled by the economic hardships posed by the recent recession. As the economy improves slowly, business owners are increasingly seeing the light at the end of the tunnel.

According to the National Federation of Independent Business, small business optimism is following the upward trajectory of sales. The NFIB Optimism Index increased by 1.8 points for the fourth consecutive month in December 2011. Following a rise in the beginning of 2011 only to meet a decline in the index in March and April of that year, the situation appears to be improving once again.

"Much of December's gain resulted from the fact that concerns about business conditions over the next six months have subsided and because many small-business owners have improved their expectations for real sales gains in the coming months," said NFIB Chief Economist Bill Dunkelberg.

However, small businesses are not quite out of the storm, Dunkelberg adds, explaining that "the economic winter is still here. Similar gains in the early part of 2011 quickly faded, and the Index is still well below where it should be at this point in the recovery. The economy appears to be slowly recovering, resolving imbalances in debt, housing and the like. But, it is unlikely that growth will be much better than 2011 even with a solid fourth quarter GDP growth. There is still a lot of work to be done."

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Business Finance (14)


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