May 22nd, 2020 edition. ISSUE V
COVID-19 and Business Valuation Continuity Planning for COVID-19
It is an astonishing statistic that even in “normal” times, 98% of the owners of privately held businesses do not know what their business is worth. At the same time, 78% of those same business owners say that they plan someday to fund their retirement through the sale of the business. What does this mean, as we are clearly living through a special period in history? (read more) . . .
In the past, business valuation has been a costly and time-consuming process. That is probably why it has been pushed to the side by business owners involved in day-to-day operations and, in times like these, plain old survival. Still, given the importance of the business in the financial life of most owners, there is a powerful argument to be made that every business decision should be taken with current and future valuation in mind.
So what should business owners be doing to maintain and grow value during this crisis? A quick list might look like this:
- Professionally audit your business accounts
- Update projections continuously against ever-changing conditions
- Think about new products, services or markets during the COVID-19 epidemic, which might be around for longer that we think
- Watch cash flow projections, revising frequently
- Stress test relations debtors and even more, your creditors
- Monitor business expenses as closely as sales, and press for economies
- Get a handle on the value of your business and evaluate decisions based upon how they might affect the value of the business in the short term and the longer term.
Stonehouse is ready to assist you with getting a handle on the value of your business, as well as helping to connect you to government programs that are available and constantly evolving to assist small business owners.
Another area we at Stonehouse Insurance can help you is financial planning to make your company more resilient when the next crisis hits, through strategies that will build cash, grow it tax free, make it available to handle emergencies like the one we are going through today, protect you from market fluctuations and taxes and make it possible to preserve and transfer business value for you family in multiple scenarios, even like now when there are limited buyers in the market.
Call me at Stonehouse and let us show you how to navigate the current crisis and be prepared for the future, no matter what comes. We can consult with you to create a business valuation document to guide your business decisions for the maximum business value growth. What better way to spend a crisis . . . by making sure you’re ready for all the future crises?