Even during these financially uncertain times, businesses are being bought and sold. As you would expect, the better managed and performing businesses are attracting more attention and commanding higher prices. Below are several suggestions that you, as a business owner, can implement in order to make your business more marketable and valuable, either now or when you decide to go to market.
Team of Employees
Start with your team. Do you have the right people in the right positions to navigate the current environment? If not, you may find that the high unemployment rate has created a pool of talent that was not available several months ago.
Are your employees engaged in reconfiguring your business model to survive and grow? Some of the best ideas for my business come from the team members in the trenches. They may have the direct contact with clients and customers, are able to identify inefficiencies, and make it easier for people to do business with you.
Don’t forget your outsourced advisors such as accounting, legal, banking, and insurance professionals. Make sure they are helping you to find the best and most cost effective products that you need.
Financial Statements
Review your financial statements with your team on a line-by-line basis. This includes both your Balance Sheet and your Income Statement. On your Balance Sheet, determine if you have enough cash to weather the economic storm. Now may be the time to increase your Line of Credit. This may also be the time to examine your credit policies to make sure that your receivables are collected in a timely manner and to examine your inventory policies to convert excess inventory into cash. On your Income Statement, look at ways to cut costs and increase profits. Do you really need the same level of outside services that you employed prior to the COVID disruption? Getting your accountant and banker involved may bring additional eyes and benefits to the process.
Planning Ahead
Will you be communicating with your clients and customers ninety days from now in the same manner that you did ninety days ago? Will you be delivering the same products and services the same way that you did ninety days ago?
Update your written business plan now and make sure that you are disciplined in its execution.
In our communication with lenders we are repeatedly being told that the ability to forecast future earnings is critical to the acquisition lending process.
Those businesses that are willing and able to adapt and successfully implement change will survive. Those businesses that are unwilling to change will suffer a different fate. The team at The FBB Group, Ltd. has a wealth of experience and is available to provide guidance. Please contact us for a confidential, no obligation discussion of our services.
(originally published in the June 2020 eNewsletter)