Economic pressures fuel entrepreneurship
Monday, August 03, 2009 9:58 AM
Apparently, entrepreneurship looks more attractive in a down economy.
As the new owner of Just For Him, Christian Hutson says he has no big plans to change the store but may look at adding product lines.
Springfield business brokers say in recent months they've seen an uptick not only in the number of would-be business owners, but also the number of owners who don't want to be owners anymore.
"It's highly active," said Steve Whitfield, managing partner at CBI-Sunbelt Business Advisers, though he didn't disclose statistics.
William B. Martin, president of First National Business Corp., said a slowdown earlier this year in business sales resulted from several factors, including the timidity of business owners to sell, concerns potential buyers had about buying a small business in a down economy and financing difficulties.
That began to turn around in May, Martin said, partly due to changes made by the U.S. Small Business Administration, which temporarily waived upfront fees for its 7(a) loan program and boosted its guarantee cap to 90 percent of loans through that program.
He also cited lower interest rates as another reason for the shift.
"The financing challenges aren't over, but boy, have they really lessened big time in the last few months," Martin said.
Layoffs are also a factor in the increase of business sales, Whitfield said.
He describes the type of buyer he frequently sees: Someone who's been in the corporate world for 10 or 20 years, in their 50s or early 60s and has toyed with the idea of their own business over the years. When the security of working for corporate America is suddenly taken away, owning a small business becomes more appealing.
Whitfield himself falls into that category. After 10 years managing international sales for Tyson Foods, he got "squeezed out in October and decided to get into the brokerage business with a longtime friend." It's something he said he'd looked at for several years, and the time was right.
Martin said there will always be a certain number of sellers on the market, regardless of the economy.
While some may hold out until business picks up or the economy stabilizes, most sellers are motivated by personal reasons.
That was the case for Bob and Judy Gravett, who sold their men's gift and tobacco shop, Just For Him, for an undisclosed amount in July. Bob Gravett has health problems, Judy Gravett said.
"When he retired and got out of the business ... it was more difficult for me to run it on my own," she added.
The Gravetts, however, didn't enlist a business broker, because their buyer already was on the payroll.
New owner Christian Hutson had worked at Just For Him, 1334 E. Battlefield Road, for four years. He knew it was a solid business; he knew he could manage it well; and he was familiar with its customers. And Gravett said when they decided to sell, Hutson told them he was interested.
Hutson and his wife, Jessica, had been looking for the right opportunity for a few years. He'd previously worked as an aquatic ecology research specialist. Hutson used a $200,000 loan backed by the U.S. Small Business Administration from Liberty Bank, according to the Springfield SBA branch office.
"Although I loved biology and thought I was pretty good at, it turned out I really didn't like working for the government as much as other people," Hutson said. Entrepreneurship was more appealing.
Despite the economy, he's confident the store he co-owns with his wife will continue its 20-year history of success with help from "fiercely loyal" customers.
For the most part, Hutson doesn't have big plans to change the store, though he may explore some new product lines.
No matter the reason - and regardless of economic issues - Martin said now's a fine time to buy a business.
"Prices ... are more competitive and financing is cheaper, interest rates are low, origination fees have disappeared," he said. "So if a buyer is patient and they will shop intelligently, they can find a good business with good records and good cash flow that's priced right."