What is the demand for small businesses throughout the year?
Over the last 25 years Benchmark Business Sales & Valuations has seen a trend emerge in demand for small businesses. Demand rises and falls in a predictable way, and through mapping the monthly rates of buyer enquiry over the 20+ years we have noticed some clear trends emerge.
Traditionally the busiest months are:
- January
- February
- April
- September
- October
- and early December
The quietest months are always:
- August
- and March
May, June, July and November are also quieter. October is a strange month for buyer enquiry because it is usually quiet in the first weeks (long weekend and school holidays) but then (for unknown reasons) the second two weeks are usually very good (except in Victoria).
Aberrations such as elections will influence demand, but overall the increase and decrease in buyer demand has proven to follow the same pattern year after year.
Here is a graph which illustrates how buyer demand rises and falls during each year.
What does this mean for the location of your Business?
Some cities will vary slightly in January. For example, demand is slow to build in January in Adelaide and Melbourne, but in Queensland demand starts from about the third day of January and rises. Another example of regional variation is the lull that occurs in Melbourne in the last week of October and the first week of November. We believe that this is caused by the Spring Racing carnivals and Melbourne Cup.
What does this mean for business owners?
All this information points to the reality that each year there are “good” and “bad” times to be selling. Demand influences price, and therefore it is best to have a business on the market when demand is starting to peak.
Preparing to sell at a “Peak” time (such as February) can mean that not only will the business sell for a higher price but is will (usually) sell more quickly. Conversely, trying to sell in June, July or August will be likely to see the business sell more slowly, and in trying to expedite the sale business owners often drop the price and achieve an inferior outcome.
So, it is a good idea to look at the buyer demand volumes and plan to sell when demand is at the highest levels.
What does this mean for business brokers?
Experienced business brokers plan ahead and actively work to gather new listings to have them ready for the annual buying “frenzy” that occurs in January/February. OK, it is not quite a frenzy, but over 25 years we have seen it proven over and over again, that this is the peak time of the year for sales, and those brokers with the best listings will make the most sales.
The demand for small Businesses rises and falls throughout the year. Benchmark Business Sales analyses data of the last 20 years and can notice trends.
If you need further information for businesses in Australia in general visit https://www.business.gov.au/
For over 12 years Benchmark Business Sales and Valuations have published a
State Of The Market
report comparing and analysing movements in small business values, and supply and demand across 66 different sectors. Find out which sectors are experiencing most demand, and how values in different sectors have been affected by changes in supply and demand, and as a result of other factors.
Download your free State of the Market Report here:
http://benchmarkbusiness.com.au/state-of-the-market
Written by Bruce Coudrey
Principal Benchmark Business Sales and Valuations
Bruce Coudrey has been Principal of Benchmark Business Sales & Valuations, since 1999. Benchmark is one of Australia’s largest national business brokerages. Bruce is a Registered Business Valuer and has acted as a court-appointed expert witness.
