Whether buying or selling a small business, most of the parties involved in such transactions increase spending, add products or services or switch vendors within the insurance industry during the transition process.
That’s according to a new survey by BizBuySell.com. Small businesses spend more than $3.9 billion annually on insurance suppliers and vendors during business-for-sale transitions, the online marketplace for business buyers and sellers reports.
Responses to the BizBuySell.com survey showed that 69 percent of new business owners added a new insurance provider or switched to a new provider entirely. An additional 16 percent added or switched to new insurance products after buying a business. Nearly 15 percent of business buyers extended the coverage provided by their existing policies.
More than one-in-five respondents in the survey who sold their business reported they added or switched to a new supplier prior to selling.
Another 9 percent of seller respondents indicated that they moved to a different insurance product, tacked on additional products, or extended coverage as part of an existing vendor relationship prior to selling, according to BizBuySell.com.
In aggregate, business buyers spend more than $3.4 billion on insurance products during the first year of business ownership, BizBuySell.com estimates. Additionally, the company says, around $460 million more is spent on these products by sellers to help prepare their businesses for sale.
With apologies to Mr. Rogers, can you spell “opportunity?” BizBuySell.com can.
“There’s no doubt that newly launched businesses provide an excellent opportunity for service providers,” Curtis Kroeker, general manager of BizBuySell.com, 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.”
Information from the U.S. government indicates roughly 500,000 businesses change hands annually, according to BizBuySell.com.
That’s a lot of buying, selling, transitioning — and opportunity.
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