July 21, 2024
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Small-business sales make tentative recovery in region


The number of small businesses in the Tri-Counties that have changed hands so far this year is up 4.2 percent compared to the first 10 months of 2011, but the recovery varies widely by county.

Statistics from BizBen.com, a clearinghouse that connects buyers, sellers and brokers of small businesses and franchises, show that in Ventura County, deals were up 2.2 percent compared to a year earlier, to 235 transactions as of October. But compared to pre-recession transactions, sales in Ventura County are off almost by half, down 47.9 percent compared to 451 in the first 10 months of 2008.

Santa Barbara County has seen a much more robust recovery, with small-business sales up 23.4 percent to 169 through October of this year, compared to those same months in 2011. When stacked against the number of sales in the first 10 months of 2008, however,  deals in the county are down 26.8 percent, compared to 231 in the first three quarters of that year.

And in San Luis Obispo County, sales this year are down 12.5 percent to 112 as of October. Compared to 2008, small-business transactions in the county are down 37.1 percent from 178 in the first 10 months of that year.

“It kind of reflects a lot of what’s happening in the state as a whole,” BizBen founder and President Peter Siegel told the Business Times. “These numbers are like the major indicators in the economy — they go up one month, and down the next.”

Statewide business sales were 1,022 in November, according to BizBen’s calculations, representing an increase of more than 7 percent over the 952 deals recorded throughout California in November 2011.

But the month-to-month volatility appears to be concentrated in smaller metro areas such as the Tri-Counties. “The second-tier metro areas are really the ones that are still all over the place,” Siegel said.

BizBen uses business sales data from city and county governments to tabulate its figures.

Year-to-date, 13,084 small businesses have changed hands in the Golden State, down about 34 percent compared to the 19,885 deals in the first 11 months of 2008.

Siegel said the drastic drop is a direct result of the banking crisis, when credit markets froze and many people lost their jobs.

“A 34 percent drop in activity means at least one third fewer people were able to buy a business in each of the last four years, even though there has been increased demand for small and mid-sized businesses in the state,” he said in a statement. “Behind the demand pressure are thousands of Californians who’ve decided that owning their own company is a better long-term financial plan in this economic environment than working for someone else.”

While bank lending requirements remain tough, Small Business Administration-backed loans have increased significantly this year, and Siegel said that has been a source of financing for many of the transactions. The Los Angeles district office of the SBA, for example, reported that its loan volume in fiscal year 2012 remained near the high-water mark of 2011, with $1.5 billion in SBA financing in the district.

Siegel said a lot of dealmaking has been held back by political wrangling in Washington, D.C. “I think that with uncertainty about what’s going on — there are a lot of tax ramifications that may take place — a lot of buyers are waiting, putting their plans on hold.”