Many business owners who have been planning to sell and cash out from their life’s work have been concerned that they may not be able to do that for a while because of the COVID-19 pandemic. The coronavirus outbreak has certainly impacted every business in one way or another, but this does not necessarily mean you will not be able to sell it for a decent price in the near future.
Not every business and industry felt the impact of the pandemic equally; and selling a business will definitely be more challenging for some than others. Looking forward, there is much reason for optimism, and a lot of sales should be able to move forward without too much trouble. The important thing is to be properly prepared when you put your business on the market.
Here are some factors that might help business owners who are looking to sell in the near future:
- Obtaining Financing is Historically Easy: Interest rates are at historic lows, and the federal government has pumped trillions of dollars into the lending markets to help revive the economy. These factors should make it easier for qualified buyers to obtain the financing they need to purchase a business. There are also numerous alternative financing sources available in the marketplace, and sellers who are willing to at least partially self-finance can attract even larger pool of prospective buyers.
- A New Group of Buyers is Emerging: Higher unemployment always results in more individuals who are looking to get into their own business. What is unique about COVID-19 is that many of the people who are being laid off are well-paid managers of larger organizations and similar professionals. These types of individuals tend to have more assets, a better credit rating, and the skills and drive necessary to own and operate a business.
- An Economic Recovery is Probable: While no one can be entirely certain about the future, the amount of stimulus that the government has injected both on the business and consumer sides make a strong economic recovery more likely. There will, of course, be long-term ramifications for all of the borrowing that we are doing, but in the near term, the steps that the government has taken should be enough to boost our economy and make things more attractive for business buyers.
Important Steps in Preparing to Sell Your Business: Regardless of the external conditions, there are a number of things that owners should do to prepare for a successful business sale:
- Clean Up your Financials: Get with your CPA and make sure your financial documents are clear, easy to read and understand, and present an accurate picture of where your business is. Prospective buyers will want to know, in as much detail as possible, what your financials look like, what your real profits are, how your profits are generated, and similar information.
- Upgrade your Technology: If there are any software systems or pieces of hardware or equipment that you need to stay competitive or to stay ahead of your competition, now is the time to implement these upgrades. Just as home buyers prefer a move-in ready house to a “fixer-upper”, entrepreneurs want to buy a business that is already operating at maximum efficiency.
- Identify and Mitigate Risk Factors: Take a close look at your business to uncover any problems or red flags that might scare buyers away and address them. For example, if you have an ongoing contract dispute with a supplier because of changes that were necessitated by COVID-19, do everything possible to resolve this dispute before putting your business on the market.
- Develop a Post-Pandemic Sustainability and Growth Plan: We all know that the coronavirus outbreak is forcing businesses to make changes in their operations, but some of these changes may not be totally hashed out yet. Before selling your business, it is best to have a comprehensive plan in place for how you will do business in a post-pandemic world.
Contact an Experienced Business Intermediary: One more important step to successfully selling your business during a global pandemic is to work with a reputable business broker. Also known as business intermediaries, business brokers have extensive experience with the sales process, what owners need to do to attract qualified buyers, and the most effective ways to market your business listing discreetly and confidentially. By partnering with a business broker, you will be able to bypass the common mistakes sellers often make and put yourself in the best possible position for a successful sale.