Herb McMillan For Anne Arundel County Executive
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MD Higher Education Commission Near Completer
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“Nationals October 2019

How to Value Your Company After COVID

| December 25, 2021, 01:28 PM

Business GeneralThe effects of COVID-19 are still apparent as the pandemic continues to claim lives and the winter months will force people into cramped indoor spaces. However, with 80% of Marylanders vaccinated, there is hope on the horizon.

What does this mean for you or your business? Inevitably, because many small businesses suffered and had to get creative to survive, the way a business is valued looks a little different right now.

Highlight Your Creativity and the Growth it Led to!

During a pandemic that locked down the economy and society at large, businesses were forced to shut down. Forced and unforced shut-downs and declines in revenue were products of consumer fears of exposure if businesses did not enforce masks and social distancing.

The immediate dramatic effect of profits for some business sectors was a harsh reality. The businesses that were able to get creative and reach their consumers safely, were the ones that were able to thrive.

There is a (semi-) famous book written by W. Chan Kim and Renee Mauborgne called Blue Ocean Strategy. In it, they talk about piloting your business away from competitors and towards what they term “blue oceans.”

A great example comes from a local training and education-based company that I was talking to. They realized that, while there is money to made giving lessons, providing some of the backend services on some of the standard equipment associated with that training can be an additional, and recurring, profit stream. And they noticed that it was a service that many of their competitors were not offering.

When valuing your business, highlight how you were able to get your oceans and how these new capabilities will likely continue to drive profitability in the future.

Month-to-Month Financials

In the past, business owners typically broke down profits into quarters. But looking at financials quarterly may not provide enough data to show that your business has turned a corner post-COVID.

While buyers are willing to accept that revenues declined during COVID, because after all – they lived through it too, they do want to see evidence that sales are returning to normal. Providing month-to-month financials can show signs of returning normalcy quicker than waiting on enough quarterly projections.

Let us look at an example of a company I am working with. We listed a restaurant for sale based on their 2019 financials even though their 2021 projected financials are still below 2019 levels.

Why?

Well, based on 8 months of figures, I have their 2021 end-of-year financials projected to come in around $65,000 below 2019 levels.  But their sales in January through March were actually more than $140,000 below their 2019 levels over those same months. Meaning, they made up over $75,000 in sales between April and August. That trajectory is enough to show interested buyers that yes, sales have returned to 2019 levels.

And, a large part of that is because of new capabilities that they implemented during COVID!

Liquified Creative Annapolis

Competitive Edge

How are you doing relative to your competition? Have businesses near you shut down? Were other businesses in your industry able to stay afloat? What did you do to differentiate your business model from the competition?

Needless to say, if your business is stronger than the competition, you are doing great. The ability to show that your business was able to survive, and even thrive, will make your business that much more valuable.

If you would like to see what your business is worth during or after the Covid-19 crisis, contact your local Transworld Business Advisors team for a broker opinion of business value. Or schedule a no-cost consultation with our local team of experts.

Category: Businesses, LIFE IN THE AREA, Local News, NEWS, Post To FB

About the Author - Steve Palmer

Steve Palmer is the Principal Business Broker with Transworld Business Advisors of Annapolis, and currently lives with his wife, Erin, and daughter Isla Mae, in Harwood, MD. Transworld is the largest business brokerage franchise in the world and has conducted over 10,000 business sale transactions across dozens of industry verticals since its founding in 1979. If you are, or have ever considered, selling or buying a business, please reach out to Steve by email at [email protected] or by call or text at (410) 842-6063.

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