We see stock quotes every day, but what’s happening with the prices of Subways and nail salons? Although the title to this article indicates that the price of small businesses in Las Vegas are on the upswing, you don’t have to read down very far to see, “It’s definitely a lot tougher market than it was two years ago, but people feel it’s on the rebound,” [BizBuySell general manager Mike] Handelsman said.
With unemployment in Sin City approaching 14%, the unemployed are looking to buy themselves a job, while selling business owners have had enough after suffering through not only the real estate bust, but hikes in taxes and the minimum wage.
Does it seem like there are too many pizza joints and hair salons in your town? Same in Vegas, “A hair salon on Sahara Avenue that once sold for $170,000 is now listed for $35,000,” according to business broker Jeff Nyman who elegantly sums up the institutional financing environment, “I don’t care what they say, banks are not loaning money.”
So how are any deals getting done? Seller financing. But if the seller wasn’t making enough cash flow to pay the bills, what’s the likelihood the new buyer is savvy enough to turn the business around, pay the bills and service the seller carry-back note?
Just as too many strip shopping centers were built in the boom, too many sandwich shop tenants opened to lease space. “The problem is they overbuilt,” Nyman said. “We just did a sub shop and the seller walked away with $190 in his pocket. Pretty sad.”
Meanwhile, the minimum wage for the average small retail employer in Nevada will reach $8.25 this summer. In May of 2007, the minimum wage was $5.15. What does that do to business valuations?