Lion Business Brokers Provides Guidance to Small and Medium Business Owners

I am not going to regurgitate the “trying times” and “focused on the safety and well-being” speech – you’ve heard it and if you’re like me you are tired of it so here’s some information and suggestions you can actually use:

1. 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.
2. We are also seeing buyers that are interested in taking more control over their financial destinies having been laid off or hours cut.
3. 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. LBB is a member of several commercial real estate organizations and we are seeing that these requests are now the norm. They are expecting to be asked and those who inquire first are most likely to see the benefits sooner. You may choose to do this for your residence as well.
4. 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 than later. https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources
5. As does Goldenleaf: https://www.goldenleaf.org/news/golden-leaf-deploys-15m-for-nc-covid-19-rapid-recovery-loan-program/
6. 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. Many leaders in the industry are working on a detailed process for Recasting Small and Medium Business Financials in the Post COVID-19 Environment.
7. 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).
8. 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.
9. 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.
   • Install a firewall at your home office. Hacking reports are up exponentially as hackers know many are working from home with less secure networks. https://www.firewalls.com/ is an excellent resource.
   • 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 – its cash flow management) again this is a contingent liability until redeemed
   • Perform a deep cleaning in areas that haven’t been recently
   • Update your website, PPC/SEO campaigns
   • Update your company social media pages
   • 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 complementary 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
   • 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 Lion Business Brokers! We are here to help and support business owners 365 days a year whether there’s a pandemic going on or not.

Let us know how we can help.

Thank you,
—
Joshua Carnes
Lion Business Brokers | M&A Advisors