If you’re like most business owners, the first quarter of the year was progressing like any other. Then, suddenly a world-wide pandemic hit. As the world started shutting down, some businesses had to start closing their doors and rethinking their sales strategies. Perhaps you’ve stabilized your company, or you might still be experiencing the worst of it. Either way, you’re probably a different person and business owner as a result of this pandemic.
While we all hope for a quick return to pre-coronavirus activities, it’s hard to estimate when that will happen. Below we discuss two constructive options business owners can consider to help overcome the virus stress.
Option #1: Rebuild a More Durable Business
Another constructive reaction to this crisis is to commit to building a more durable business that can better withstand shocks to the system in the future.
Option #2: Sell
Many owners—especially those that experienced the brunt of the 2008–09 global financial crisis—have been so traumatized by this pandemic that they don’t have the stomach for another disaster. As a result, they’ve decided to start planning their exit proactively.
How to Add Value
If you find yourself choosing to rebuild or sell, your immediate action plan will be the same. There are some things you can do now that will make your business more durable in the long term as well as more sellable:
- Focus on the products and services where you have a point of differentiation. You’ll have more pricing authority in the short term, have better cash flow, and be more attractive to an acquirer in the long run.
- Create recurring revenue streams that generate sales while you sleep. These can be in the form of service contracts, subscriptions or maintenance plans. Aim to get the majority of your revenue automatically.
- De-risk your business, ensuring you’re not too reliant on a single customer or supplier.
- Create an employee handbook and systematize your processes to lessen your dependence on a key employee, or you calling all of the shots.
- Clean up your bookkeeping.
- Generate as much cash as possible from customers up front to create a positive cash flow cycle.
Speaking to an advisor about how this pandemic has impacted your business can be therapeutic and help pave a way forward, and Anders is here to help. Anders can help your business add value to build a more durable business coming out of the pandemic and help transition the business when you’re ready. Learn more about our Business Transition Planning or COVID-19 Business Recovery services or contact an Anders advisor below.All Insights