Over the past several weeks I’ve been talking to business owners who are either current, prospective or past clients of mine about how COVID-19 is affecting their business.
I’ve been telling them while the number of buyers seeking information about businesses that are currently for sale has declined over the last several weeks, for the first 12 weeks of 2020, economic indicators consistently signaled a strong and growing economy. Rate of inflation has been: LOW. Unemployment rate has been: LOW. Housing demand is: UP. Consumer Spending is: UP.
Depending on the industry, some businesses, like commercial construction, accounting service firms, B2B and B2C services, certain IT sectors, and government contractors are still doing well continuing work on current jobs and submitting bids on future work. Other business owners, however, are now feeling the effects of COVID-19 on their business.
So, what should a seller or a potential seller of a business do until the COVID-19 curve flattens out and this problem virus is history?
- Continue running the business hard, fast and lean.
- Call and talk to all your customers. Ask how the virus is affecting them.
- Prepare a short-term cash flow forecast.
- Review your short-term business plan.
- See if your company can provide services and/or products to support the fight against COVID-19.
- Review your bank covenants.
- Contact your bank and other financial providers and obtain their continued support. In addition, financing and other assistance is being offered at the Federal and State levels.
- If you were planning on selling your business this year, prepare and place the business on the market now since it may take up to a year to locate the right buyer as the economy improves. Also, many people who have lost their jobs due to the virus will be considering buying a business as an option to finding another job. Banks are still lending and the U.S. Government, through agencies like the Small Business Administration and the Veterans Administration, as well as state governments will have programs to help buyers purchase small businesses. This helps both sellers and buyers.
- Connect with me at Harvest Business and let me help you if I can. Even if you just want to talk, I’m happy to have a conversation.
If you have a good business with consistently solid financials and strong business attributes now is a good time to think about your exit plan and perhaps even begin preparing to put your business on the market. Whether you want to sell your business now or at some later time, my best advice is to stay focused, keep going and use this time to plan for the future.
(If you find yourself with a little time, we wrote an ebook – “Ten Ways To Increase the Value of Your Business Before You Sell” – that might be the perfect thing to read!)
This post was written by Richard Stopa, Harvest Business Advisors Partner