With COVID-19 affecting business confidence around the world, it may seem like a risky time to consider selling your business.
But in truth, business owners looking to sell should begin the sales process immediately. Selling a business takes time and work, and a global recession is an ideal time to focus on what makes your business unique in the market. Don’t let a recession get in the way of achieving your goals in business.
So, why sell during a recession? If you’re considering selling your business — likely your life’s work — you have probably given the idea plenty of careful consideration. If you’re looking to divest, you may also lack the enthusiasm to continue growing the business. This is a good indication that it’s time to sell. You can get more details at CGK Business Sales site.
Before you begin selling your business, it’s important to understand that the process will likely take between 6 and 8 months. This will allow you plenty of lead-in time to improve your business in a variety of ways. For example, you could update your website and systems, revisit your management and corporate governance structure, and even conduct a thorough audit of your finances.
The most important thing to understand is that quality businesses will always sell, regardless of the global financial climate. Businesses can still sell at a high value during a pandemic and recession, especially if they boast some or all of the following elements:
- Competitive advantages and unique selling propositions
- Comfortable profit margins and cash generation abilities
- Successful, proven business models
- A quality upper and middle management team
Prospective buyers that are interested in your sale will understand that most businesses have been affected by recent downturns. This is a mutual understanding common in all current business sales transactions, which should give you the confidence to proceed with your sale.
The most prominent effect that recent economic downturns have had is on business earnings. Lower business earnings have impacted almost all businesses in all industries. Because of this, assessment of business earnings should be applied to an entire industry, not just the business being considered for sale.
Over the last 6 months, agile businesses have been able to pivot into new markets with relative ease. For instance, Australian gin distilleries have been hard at work manufacturing hand sanitiser at the request of the federal government. Other bricks-and-mortar businesses have transitioned seamlessly into online sales and delivery. These businesses will survive, and will still retain a high value in the eyes of a potential buyer.
However, some businesses have not been as versatile. The less opportunity a business has to respond to changing regulations and trends with agility, the less likely they are to be valued highly. Due to operational constraints, tourism companies are a key example of this. It can be safely assumed that many local tourism businesses will continue to record huge losses, which may continue past the point of survival.
What will happen in the future remains uncertain. A vaccine for COVID-19 is still likely more than 12 months away. Fortunately, the fundamentals of sales still remain the same. Buyers know what makes for a quality business. They also know that the current recession will pass, and that customers will return to start spending money in once-popular sectors, like tourism.
In the end, if you’re gearing up to sell your business, now is as good a time as any. Save yourself the stress of planning out future growth, and instead focus on consolidating what you have into an appealing offering for prospective buyers.