Emerald Coast Business Intermediaries Provides Guidance to Small and Medium Business Owners
In response to the significant economic impacts from COVID-19 in Florida and Alabama, Emerald Coast Business Intermediaries is providing information that we think might be helpful to you in your business.
Here is some information and suggestions that you can actually use:
- Small and medium business transactions are likely to take more time to complete. An experienced business broker is more important now than ever. It’s not just about completing a transaction; it’s about completing your transaction at the highest enterprise value possible. This requires experience in creative structuring and high-level negotiating skills. Savvy buyers are entering the market that have been intentionally waiting for buying opportunities. These buyers will pay pre-pandemic market multiples if the broker properly explains the relevant financial recasting considerations. Additionally, we are seeing buyers include full-time employment or contracting provisions for sellers who want them.
- We are also seeing buyers that are interested in taking more control over their financial destinies after having been laid off or having their hours cut.
- If you pay rent or mortgage on your business space, contact your landlord/mortgage company and inquire about rent/mortgage payment abatements, deferrals, refinancing and/or permanent rate reductions.
- The SBA is offering “Economic Injury Disaster Loans”. If you have the need, apply now. There is a huge amount allocated, but it will not last forever. Again, take action sooner rather than later. https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources
- Important links for Florida include: https://floridadisaster.biz/BusinessDamageAssessments and https://www.flchamber.com/follow-facts-not-fear/ and https://www.savefloridabusiness.com/
- Important links for Alabama include: http://asbdc.org/sba-disaster-loans-for-covid-19/ and https://www.madeinalabama.com/why-alabama/covid-19-resources/
- The value of your business has not decreased to the extent of the public markets. In fact, as time goes on, there may be little, if any, impact to business values. Small and medium business valuations will recast much of the temporary economic impact to your profit and loss as a one-time, non-recurring event. Jeff Snell, principal broker of ENLIGN, has written a detailed white paper on Recasting Small and Medium Business Financials in the Post COVID-19 Environment. It was written specifically as an industry update for the International Business Brokers Association membership, but if you would like a copy let us know and we will send you a copy.
- If you process credit cards and are giving refunds or accepting returns, offer to make the refund by check. This saves you the return merchant credit card processing fees (generally ~3% of gross sales).
- In businesses with physical inventory, return eligible inventory that has become ‘excess’ as a result of social distancing. Cash is king, you can reorder later and they will be happy to sell it back to you.
Lastly, consider using this time to make improvements that you have been too busy to start. Here are some ideas:
- File your 2019 taxes. There is a 90 day filing and payment extension, but if you have the time to work on them now you should. We all hope to be really busy later.
- Make sure you have adequate firewall protection at your home office. Hacking reports are up exponentially as hackers know many are working from home with less secure networks.
- If you have inventory, go through it (return excess per #9) and throw out stale/dated/damaged goods.
- Consider offering gift cards or gift certificates perhaps at a modest discount to help even out cash flow (make sure these are recorded as contingent liabilities until redeemed).
- Consider a Groupon or similar offer (but be VERY careful not to sell below your real cost. This is not new client acquisition – it’s cash flow management) again this is a contingent liability until redeemed.
- Perform a deep cleaning in areas that haven’t been cleaned recently.
- Update your website, PPC/SEO campaigns.
- Update your company social media pages.
- Update your personal CV or resume if used in your business.
- Review and update your marketing materials.
- Think creatively about how you can continue to deliver your goods/services to clients.
- Print a profit and loss statement and look at expenses line by line then cut all non-essential costs.
- Consider implementing a CRM system, a new point of sale, or other automation software tools.
- Take some time to research new vendors and products that are complimentary to your business.
- Forward this to a fellow business owner.
- Shop local and support your fellow business owners.
- Consider giving blood as it is in short supply.
- Join a virtual networking group and participate at least until quarantines are lifted.
- Spend some time on social media discussing what you are doing business wise to make good use of this time (feel free to steal from this list).
- Ask for referrals!
- Remind your clients of products/services you offer that they might not know about.
If you know anyone considering selling their business, please refer Emerald Coast Business Intermediaries. We are here to help and support business owners 365 days a year whether there’s a pandemic going on or not. Emerald Coast Business Intermediaries not only sells businesses, we also provide advice, consulting and business valuation information.
Let us know how we can help.
Emerald Coast Business Intermediaries