Link to article
By Donna Probes, M.B.A. Donna spent 10 years as a small business owner. She is retired from the Traverse City Area Chamber of Commerce and is active as a SCORE mentor as well as a professional musical performer.
This may sound crazy, but right now could be the perfect time to buy a business. And, both the buyer and seller will probably come out winners.
Many small businesses are suffering terribly right now, barely hanging on. Some are facing the thought of just shutting down. But suppose someone came along with cash to invest, someone who has the financial reserves to wait out the recession and be in a position to revitalize the business.
Struggling business owners may be more likely to want to sell during COVID-19, so they can cash out and hand the reins to a new owner with the drive and resources to carry it on. This could be a way for a small business owner to recover some of the sweat equity and investment they put in, rather than simply closing the doors and suffering a sad ending.
The selling price of a business is determined by a formula that includes the sales figures for the last several years. With revenues down, the selling price of a business could be very favorable after such a drastic slowdown in the last nine months.
With job security a real concern for many, buying a business could give you greater stability for the future, depending on the industry and your skill set. Considering all these factors, now may be the perfect time to contemplate buying an existing business, especially with interest rates at an all-time low
Nearly every industry has experienced significant changes and shifts during the COVID-19 pandemic. With the economic decline, it may seem like right now is a risky time to begin your entrepreneurial journey. However, buying an existing business rather than starting your own from scratch can help mitigate some of those risks.
You’ll cut down on the usual ramp-up period. Every new business requires time and money to get off the ground. If you choose to buy an existing business, your investment should be more or less turnkey. You’ll save money on employee recruitment, equipment purchases, cost of customer acquisition, and the establishment of goodwill.
You’ll also save time and money by not having to develop a new concept and create your brand, marketing strategy, logo, website, social media presence, and client list.
The sales history and track record of the company should all be available for you to study. So, you’ll be able to see how the business did before the onset of the pandemic, plus have hard data to do a cash flow projection.
And best of all, the previous owner can guide you in the transition. You may even be able to shadow the owner before you take over and learn the ins and outs from the person who launched the business.
SCORE can offer you a confidential consultation, just as it did for me when I bought a business years ago. I showed my mentors all the numbers and they encouraged me to move forward with the purchase. I did and have never regretted it.
If you are thinking about buying or selling a business, please contact me at:
Eric J. Gall