Updated: Mar 24, 2020
The impact of COVID-19 on small business will be staggering. We don’t know when and how we can get back to business as usual. I have had several conversations with small business owners that are heartsick with worry about their employees and potentially having lay-offs due to forced shutdowns. Small business owners who are preparing to exit their business are unsure whether they can keep their business afloat, let alone maintain attractive operations for prospective buyers. A majority of small business owners are baby boomers who were looking to harvest some value prior to riding into the sunset. This pandemic has the potential to destroy retirement plans.
I have some thoughts on how retiring business owners should approach the next few months in order to preserve the value of their business. Keep in mind that these are merely thoughts based on experience looking at businesses who have endured hardships on a smaller scale, where the macro-economic situation was vastly different than it is today:
1) Think positive. There are plenty of naysayers and prognosticators that will tell us that the sky is falling, and the recovery will be slower than usual. Our economy and business owners have proven time and time again to be resilient. Recovery and prosperity will return, possibly faster than we think.
2) Consumer behavior will shift, and your business needs to be ahead of the curve. Spend some time working on your business and understanding where you might take advantage of new opportunities. There are always new opportunities with change.
3) Understand more fully now than ever before who is most likely to be interested in taking over your business. Then put all of your energy towards being attractive to that prospective buyer group. This includes understanding funding options for your prospect, as well as dynamics that give you a competitive advantage.
4) Get outside perspectives. If you don’t have a team of trusted advisors, now is a time to get some. Your spouse/significant other should be on the team. Surround yourself with productive, solutions-oriented people who offer a realistic view and ultimately help uncover opportunities as well as threats.
These are unprecedented circumstances, and we don’t know what we don’t know. The full effect of the disruption and mandated shutdowns will likely not be known for years to come. However, this is not the time to throw in the towel and admit defeat. Opportunities still exist, and there will always be buyers for an attractive business. The smart business owners will dedicate time and effort to understanding how to remain attractive in challenging times.
Einar D. Schow