Carmen Campos spent two years seeking the right location for her second Carmen's Burger Bar.
Campos wanted a more visible building than her original restaurant, which sits tucked in a residential neighborhood in Santa Rosa's Town & Country Village. She found it in a small strip center next to the Wells Fargo Center on Mark West Springs Road at Old Redwood Highway.
Campos and her husband, Alvaro Ramos, bought the shuttered pizzeria on that site and last month opened it for business. Already the couple and 14 employees are matching the sales at the original location, even though the new site is still awaiting a full liquor license.
"We're making more burgers than they are," Campos said Thursday afternoon at the Larkfield location.
Carmen's is a bright spot in the battered world of small business sales.
More common are tales of owners reeling from depressed business values, buyers who can't get loans and business brokers who, over the past three years, have seen transactions plummet.
"I think the industry's probably off 50 percent from what it was," said Al Statz, owner of Exit Strategies, a business brokerage in Petaluma.
Sales of Sonoma County small businesses — cafes, markets, auto parts stores and more — declined 44 percent from 2007 to 2009, according to BizBen.com of Dublin, an online website for the sale of businesses. Sales statewide declined 46 percent.
For the county, 258 small business sales completed escrow in 2009, compared with 462 in 2007. For California, 14,277 sold in 2009, compared with 26,238 in 2007.
The value of the businesses declined, too. Total sales at Tom Barnett's Santa Rosa Realty fell to $4.8 million last year from $7 million in 2008.
In many cases the actual market values are "easily half what people think they ought to get for their businesses," he said.
If the U.S. economy is to improve, small-business owners play a key role when they hire new workers and provide new products and services.
Roughly 85 percent of all Sonoma County employers have 15 or fewer employees, said Ben Stone, director of the county's Economic Development Board. "We're at heart a small-business county."
The percentage is smaller nationwide, but small businesses still make up a large majority of American companies, said Sonoma State Economics professor Robert Eyler.
"Small business is an engine that runs the entire U.S.," he said.
As a result, attention is focused on Washington next month as Congress considers a proposed jobs bill. One component would cut fees and increase federal guarantees for small business loans.
The Small Business Administration ended those incentives in May after it ran out of stimulus funds. In the aftermath, the volume of such lending was cut in half, according to the SBA.
"It's been a vital piece of trying to get the economy back on its feet," said Sherrill Stockton, a senior vice president and SBA loan manager at the Exchange Bank in Santa Rosa. Increasing the federal guarantee to 90 from 75 percent of loans often amounted to "a make-or-break part of the deal" for lenders who provide the SBA-backed financing, she said.
During the recession, many business owners saw their net incomes decline, a key factor in the value of their companies.
"It's really tough to find a buyer for a business that used to make $80,000 a year and now makes $30,000 a year," said Mike Handelsman, general manager for BizBuySell.com of San Francisco, an online website that lists businesses for sale.
Owners have found it hard to come to terms with how far their properties' values have fallen.
"The number one reason small businesses don't sell is that they're overpriced," said Peter Siegel, founder and CEO of BizBen.com. He offers some bracing advice for owners looking to sell: be prepared to finance a portion of the price.
Others agree that owner financing has become much more common in the last few years. One reason is that conventional lenders like to see owners retain a stake in helping the buyers succeed.
The upshot is that owners near retirement often face a difficult choice — either delay exiting from their businesses or sell their companies for far less generous terms than they had planned.
"These are people in their 60s ... who thought they'd never be in this place," said Steve Herron, a senior vice president in commercial lending for Exchange Bank.
Mark Quinn, director for the SBA's Northern California division, said he hears from small-business owners who don't want to sell but need financing to survive.
"A lot of them are looking for any means to help them hang on," he said.
Buyers reportedly are out there, including those who have lost jobs to layoffs and company closures.
Lorraine DuVernay director of Santa Rosa Junior College's Small Business Development Center, said many potential buyers are thinking, "If I have my own business, I'm in control of my own destiny. I'm not subject to the next corporate downsizing."
However, she said, they often have unrealistic expectations, "particularly how much money it takes to be in business for yourself."
As in the residential real estate industry today, loans for business sales are difficult to obtain. Many interviewed agreed buyers won't get loans unless they have sensible business plans and enough experience that lenders feel confident they can succeed.
Most said the market for business sales has bottomed and stabilized. National business sales for the second quarter were up about 6 percent, according to BizBuySell.com.
And some owners are waiting for the economy to improve before they sell.
Statz, the brokerage owner, said even an improving economy can frustrate would-be sellers because it may trigger large numbers of baby boomers list their businesses and try to retire.
"I think we're going to see a steeper wave" of businesses going on the market, he said.
Many agree that current conditions favor existing business owners like Campos, who can buy another business without taking out a loan. "I'm a saver," she said.
Dieter Meier, a volunteer counselor with Service Corps of Retired Executives, said some who want to get into business are looking outside traditional brick-and-mortar establishments. Instead, they want to sell cakes, crepes, vegetables or other prepared foods from special vans, similar to taco trucks.
"That's getting around high rent, and they can do it themselves," Meier said.
Broker Harry Sidhu helped sell a closed gas station in Butte County on which a bank had loaned about $700,000. The bank took a loss by selling the business for $300,000 and even loaned the new owner $210,000.
"You go out there. Deals are there," said Sidhu, owner of Mission Peak Brokers Inc. in Fremont.
You can reach Staff Writer Robert Digitale at 521-5285 or robert.digitale@pressdemocrat.com.
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