Small business are suffering through enormous hardship these days. Never in our lifetime have businesses confronted mandatory closures for any length, with only gradual reopening in various stages of operations. Not all businesses have the resources, if not the will, to survive. Many will shutter for ever. Some will sell. Others may in fact grow. Still others limp along.
Below are ideas that may inspire you to action in one way or another. Each is not for everyone, but each has its own merits in a given situation. Perhaps there is something in here for you to provide hope to arriving at a satisfying conclusion to the dilemmas brought upon by Covid-19
1. Stop “living out of the business” and clean the books like your accountant always tell you!
This will be especially hard if your sales and profits are down or you were shuttered during Pandemic. But instead of slowly coming clean on expenses, try swallowing the whole pill. Your business broker or accountant will of course recast your financials for the prospective buyer, but the less work that is, the higher price you can command and the broader seller base you can appeal to
2. Have one NEW service offering OR product introduction OR customer segment OR location OR price point. You only need ONE.
You will be trying hard to maintain everything but you still need one thing to brag about, even it makes up only a small percentage of sale in the beginning. To buyers it will represent a hope, keeping up with the times, a nimbleness. To you, it may just be mental, help keep you going and getting you up early. Pivot; maybe add new services. Try taking advantage of competitors’ weaknesses. To boost sales, maybe use Google’s search network to advertise that one component. (see point 3),
3. Put a little more capital in?
I used a question mark because this might be really hard, especially if you have not been taking a salary for the first time in many years. Yes, cut expenses to the bone, yes, keep every employee very busy, (I know you are working nonstop yourself) maybe take jobs and contracts you formerly would have passes on, but what if that isn’t enough What about deals you can negotiate with suppliers for regular or volume purchases. A little paid-in capital might make operational issues a tad easier to handle
4. Be reasonable in all things, and try to minimize your emotional anxiety in decision-making.
Realize that this is a unique time in history. And while not yet having established a transaction history, many categories of businesses under 2MM in sales will not bring the 2-3 times owner compensation sale price that had been the standard for the last 10 years. It’s not you. It’s the market. Furthermore, expect people to be looking for a deal, making low-ball offers, and jerking you around for 6 months and then not making an offer. It can get ugly, but stay the course. There’s a good chance things will improve.
5. Try opening doors without yourself present
Your business is more valuable if it can be run during business hours by an onsite manager/employee. It also goes without saying a real absentee owned business is better than a semi-absentee one. You should have the option of working ON the business instead of IN the business, or even be able to take a vacation or two. Every owner wants to be around when things change (hours of operation, employee counts, different customers, etc.) and the pandemic multiplies these problems. Superior planning and some help (maybe a consultant) could ease the transition.
If you or anyone you knows is interested in buying or selling a business, please call me, Scott Stein, for a free ,no-obligation consultation on what you need to consider, which may be unseen to you, before you make a move!