Maybe you are a business owner who is surviving the global pandemic and are thinking, “OK, I made it through this thing so far, and I am not getting any younger – I wonder if I can sell this business to someone else?” Or maybe you (or your client) are thinking, “We had a really good year (like the online home decor business on my new company’s SuccessionMatching platform), and we love this business, but to make it grow further, we will need a bigger partner”. Wherever you are on the business succession spectrum, you would be wise to focus on your “Since COVID Results”.
What I mean by that is to look at your business from March 2020 to March 2021. To a buyer or investor, your 2018 and 2019 results may as well be from 1999. That makes them nearly irrelevant when it comes to business succession.
So where to start? Here are four questions to ask yourself (or if you are an advisor to business owners, to ask your clients):
- What are your business succession goals and why have you chosen them?
- How would you define your ideal buyer?
- Who are they? (A regional competitor, someone outside your industry, a family member, or employees?)
- Why would they would want your business as it is today? (Realistic opportunities for growth, how the business helps customers, how the business helps your community, etc.)
- Once the pandemic and ensuing lockdowns took place, what actions did you take to ensure your business survives? These should include all areas of the business:
- Strategic Goals (in-store versus online sales for example)
- Marketing (digital (SEO, email, social, website, and print/radio, if any)
- Purchasing (adding/trimming vendors, product lines categories, etc.)
- Costs controls (changes to staffing, overhead, operating hours, etc.)
- Compare your results March 1, 2020 to Feb 28, 2021 versus March 1, 2019 to Feb 28, 2020 (using QuickBooks or similar bookkeeping
- Revenues ($ and % change)
- Net Operating Profits ($ and % change)
- Staffing Headcount/work hours
- Other metrics (social media followers, mentions in other media, awards/accolades), etc.)
When you take the time to analyze these questions, you are now getting serious about a business succession. This becomes part of “your story” and why a buyer/investor should listen. That is important, because buyers are always risk averse. When you can show not only how you have addressed COVID lockdowns, etc.,but have thought more deeply about WHY you are selling and your Ideal Buyer, you reduce buyer’s risk and increase your ability to eventually find your “honorable successor”.
Author – Paul Cronin