4 Tips for How to Sell a Business During the Pandemic
There are a lot of people who are struggling right now. The coronavirus pandemic has upended a lot of people’s lives − socially, economically and, unfortunately, physically.
No one in the United States needs to be told that business has changed dramatically due to statewide stay-at-home orders that began and (mostly) ended in the spring. While all businesses have been impacted by the pandemic, that effect it’s had on businesses has not been even.
For some industries, it’s been devastating. For others, it’s resulted in a huge boom. For all, it’s been an adjustment, to say the least.
Stories of business struggle and business failure abound everywhere. It’s times like these when entrepreneurs often have the ability to capitalize on what, for some, can be a “buy low” moment.
If you’re looking to sell your business, this may mean you’ll be faced with buyers looking to acquire your company at a discount. It may mean you’ll be faced with buyers looking to take advantage of the economic situation.
As a seller, it’s very important that you prepare yourself for the unique challenges you’re likely to face when trying to sell your business during the pandemic. Here are four tips that will help you maximize your value.
1. Tell a Good Story
Having a good story to tell is always important. It’s even more essential when times are challenging, though.
Many buyers will assume that you’re selling your business because it’s failing due to the pandemic. Essentially, then, you will have two paths to take.
If that is the reason why you’re selling, it’s OK. You are certainly not alone. But, don’t allow buyers to run all over you because of it.
Your goal should be not to convey a story of pity, but to convey one of promise (more on that in a bit). You don’t want potential buyers to feel bad for you; you want them to empathize and understand.
If the reason you’re selling isn’t because your business if failing due to the pandemic, be honest and tell your true story — just as you would in “normal times.” Be prepared for buyers to be skeptical, though. You’ll need to show them the proof in the pudding (again, more on this in a bit).
2. Be Transparent
During challenging economic times, it’s always a good idea to be extra open with potential buyers. This will engender them to your “cause,” which, hopefully, will attract them to your business even more.
If your business has suffered a drop in business during the pandemic, own up to it. Don’t just show numbers, though.
Explain to buyers some things you may have done differently had you been able to prepare for the pandemic. Would you have embraced remote work or advanced technologies earlier? Would you have preserved more cash so you had a larger reserve?
Maybe you will have some of these ideas to share. Maybe you won’t. The point is that simply blaming the pandemic for all of your business’ failures is not a good idea.
Unless, of course, the pandemic is the SOLE reason for a drop in revenue. And if that’s truly the case, again, be prepared to prove it.
3. Show Buyers How They Can Make Money Now
One of the biggest challenges to life right now is that nobody really knows when the pandemic will end. Medical experts believe a vaccine will eventually help eradicate COVID-19, but when that happens is anyone’s guess at this point.
This uncertainty makes planning — in any form of life — very difficult.
Buying a business is all about forecasting. A buyer needs to be able to forecast the path ahead in order to feel comfortable in making a sizeable investment. The problem is it’s very challenging to create that forecast during the pandemic.
As a seller, you can do wonders for your sale by helping potential buyers create that realistic forecast. A big part of this is showing them how they can make money now, before the pandemic ends.
Open your books to show the buyer how your business is performing now. If you happen to be making a profit, that’s great. Highlight this, of course — especially if you’re profitable without having to institute furloughs and/or layoffs. If you had to go that route, show a forecast of what the picture would look like fully staffed.
If you’re not making a profit now, outline changes the buyer could make to get there. Every buyer will understand there will be time involved in gaining ROI. The shorter that time period, the more attractive your business will be.
4. Show Buyers Why Your Business is Sustainable
The pandemic has upended companies across all industries. It has called into question the long-term sustainability of businesses large and small — from brick-and-mortar retail, to airlines, to restaurants and bars.
Even the biggest risk-taking buyers will be wary of the future prospects of business due to the pandemic.
As a seller, it’s your job to, once again, tell the positive story of why your business is sustainable. And, again, relying solely on the fact that you were doing well before the pandemic hit will not be nearly enough.
Some examples of this could be describing:
- How your industry is essential, and will always be in demand
- How your business is unique within your industry, and will stand out among the competition
- How a new buyer could embrace new ways of doing things or new lines of business to grow revenue even more
Many buyers will have their own ideas of how they can make your business successful over the long-term. Having a story prepared that can help them create a blueprint will serve you well in your efforts to sell.
Talk to a Sunbelt South Florida broker about selling your business today!
Sunbelt Business Brokers of West Palm Beach provides dedicated business brokerage services for all of your selling needs. Whether you are an established business owner nearing retirement and looking to sell, or an ambitious entrepreneur seeking your next investment opportunity, there is no reason to look beyond Sunbelt Business Brokers. Visit us at 800 Village Square Crossing
Suite 216 Palm Beach Gardens, FL 33410 or contact us at (561) 832-9222.