We will cut to the chase with this: If you are looking to sell your small business right now, don’t, unless you don’t have any choice. That’s the best advice when faced will this chilly small business market.
Thinking about making changes to your business? ProStrategix knows how to help. Read some of our other articles below, or feel free to connect with us and get a complimentary thirty-minute consulting session.
2nd Quarter Trend Continues
As we mentioned back in July in our post How to Benefit if the Small Business Market is Cooling, small business valuations started to cool in the 2nd Quarter of 2019. The market has continued to be chilly the 3rd and 4th quarters.
Perhaps the 2Q marked the low point, but it’s too soon to tell.
What Should You Do if You Can Wait?
As we mentioned before, there are a couple of important steps you can take. Here’s our advice for surviving the cooling market.
Make the needed repairs while the small business market cools
To re-use the analogy to the housing market now is the time to invest in renovations that will make the house more valuable when the market eventually turns. What are those fixes you can make?
- Clean up your business model: Take the time to fine-tune and root out the inefficiencies
- Strengthen your brand: Continue to delight your customers, and with their help, promote your business within their networks and with the broader market at large
- Improve your profitability: By fine-tuning your business model this may be a natural outcome, but if not, look for ways you can pare back costs without sacrificing quality.
Continue to invest to make those repairs and grow your business
In a previous post, “5 Proven Methods for Accelerating Small Business Growth”, we covered several hacks you can deploy to help keep your business moving forward.
If you can make these investments, you are likely to be in a much better position when the market rebounds.
Our Advice as the Market Cools...
Sometimes you just can’t wait. What should you do if some life event made it impossible to continue?
Manage your expectations
Know going in that it’s a buyers‘ market. People are looking for deals. They are not paying premiums right now. According to Washington Post, “median sales price for a business edged up just 0.1% during the third quarter from a year earlier…[while] asking prices rose 3.3%”. So, obviously sellers had to drop the prices to make the deal. Unfortunately, this is price for a quick exit right now.
Put Your Best Foot Forward
Good companies will always be valued. “Although sales are down and prices have lost their momentum, companies can still be a good buy because they’re generally in good financial shape after years of economic growth” BizBuySell.com. Try to get you financial house in as much order as possible. Look at how you might be able to value intangibles like good will and customer base. You may not be able to use those to get a premium, but they could be bargaining chips to get closer to your asking price.