Exit planning now?? Yes, for most businesses, this is probably the toughest year over the last few decades. The recession 12 years ago was devastating but 2020 has been a catastrophe in many more ways.
Yet, coming up with an exit plan is more important than ever.
“Should I sell my business now?” We have been fielding this question almost daily since COVID-19 started. In good times it seems that we field that question a bit less. Generally, that should be the reverse. Like with the stock market, business owners too often ride the wave up and assume it will keep rising until they reach the exact moment – and value – that they want. That isn’t going to happen for the vast majority.
Of course, the answer at any given moment depends on so many factors:
- YOUR personal situation
- Family considerations
- The overall economy
- The health of your industry
- Perhaps most importantly the state – and transferrable VALUE – of your Business
Should I sell? Should I wait? When? Price? The answers are different for every one of you reading this article. Our current clients (mid-COVID) range from $0 in revenue to having their best year ever. What is the same for every business, however, is the series of questions and considerations to design an exit plan.
If the value of your business is down during COVID-19, but still reasonable for your needs, consider selling. Get over the emotion of it being worth more at the beginning of 2020 and don’t gamble on the future. If you cannot jump out at the current value, get hyper-focused now on comprehensive, realistic exit planning. Call if we can help you think through your specific situation.
Whatever your situation, these 5 Action Items Apply:
- Get absolute clarity from your CPA or tax advisor and HR consultant on your obligations regarding employment laws under COVID-19 and loan uses / forgiveness. Do what you need to do to have your 2020 financial statements in order shortly after December 31st.
- Request an estimate of value based on your best forecast for 2020. This is not an exact science (it never is) but a mid-COVID estimate will give you a baseline for decision-making. Get this done now, you can quickly update it when your numbers are final.
- With items #1 and #2 as a foundation, set out a preliminary goal (target date and value) for the sale of your business.
- Design a plan to get from today’s value to your target value by your exit date. Your exit planning should consider: What is working, what needs work, how to get creative…in these 8 areas:
- Brand / Marketing / Business Development
- Your Customers’ Experience
- Operations & Key Business Processes
- Human Capital and Human Resources
- Profit Improvement, Accounting/Reporting, Cash Flow
- Risk Management to include Disaster Recovery & Business Continuity
- Your Personal Finances and long-term plan
- Make sure that all your advisors are communicating and coordinating as a team on your behalf! If anyone is not doing so, kick them to the curb!
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Always happy to have a conversation to provide some guidance!
Stay Healthy & Safe!
David Shavzin, CMC
Exit Strategist – Value Growth, Exit Planning, Succession Planning, Transactions
Founder and President, The Value Track, Atlanta, Georgia
Co-Founder and President, Exit Planning Exchange Atlanta
Building Transferable Value for Sale