San Francisco: According to a study by BizBuySell.com, businesses spend more than $2.5 billion annually with shipping and courier vendors during business-for-sale transitions.
BizBuySell.com also found that over 64 percent of buyers and another 24 percent of sellers of small businesses indicated that they either increased spending, added products or services or switched vendors within the shipping industry as part of the ownership transition process.
"These numbers show how important the substantial investments business owners make during an ownership transition are to the economy," said Curtis Kroeker, general manager of BizBuySell.com. "Prior to selling, owners usually invest in their business to support a higher asking price while post-sale, owners spend to drive business performance and get the business running the way they want."
The total expenditure numbers are based off BizBuySell.com and US governmental data which indicated roughly 500,000 business change hands each year.
The spending that takes place during a business transition presents a unique opportunity for shipping and courier vendors to add new business. According to BizBuySell survey respondents, nearly 43 percent of new business owners added a new shipping provider or switched to a new provider entirely and an additional 8 percent added or switched to new shipping products after buying a business.
Finally, another 13 percent of business buyers increased the usage of their existing vendors.
Fourteen percent of respondents who sold their businesses said they added or switched to a new supplier prior to selling, while an additional 10 percent of seller respondents indicated that they moved to a different product, tacked on additional products, or increased services as part of an existing vendor relationship prior to selling.
BizBuySell.com estimates that business buyers in aggregate spend nearly $2 billion on shipping and courier services during the first year of business ownership. Additionally, business sellers spend more than $550 million more each year in total on these vendors to help prepare their businesses for sale.
These shipping adjustments, driven by changes in business ownership, create substantial new account selling opportunities for shipping providers, as well as an opportunity to expand "share of wallet" with existing customers.
According to BizBuySell.com's survey results, the average business buyer spends $95,878 during the first year of business ownership, 25 percent more than the $76,704 spent by owners in the first year after launching a business from scratch.
"There's no doubt that newly launched businesses provide an excellent opportunity for service providers," Kroeker said. "However, this survey reveals a new opportunity that has largely flown under the radar – that owners selling and, especially, those buying established small businesses are a huge target market. It's a bit counterintuitive, but it makes sense. In most cases, someone who has recently purchased a business has more capital available, more concrete needs, and is managing a much larger business than his counterpart starting a business from scratch. That's definitely something all shipping and courier providers should keep in mind when pursuing new sales."