February 26, 2021 | Mark Dorman, AIF, CLU, ChFC, CEPA, CFBS, President
Change hit us all in 2020 – with some businesses flourishing in the COVID-19 pandemic, some hanging on by a thread and others closing their doors for good. And now we’ve got a new administration in the White House making even more changes. Some industries will benefit, such as green energy companies, while others like the fossil fuel industry could be decimated.
How does all this change affect you, your employees, your customers, and your business?
Many small business owners are relatively isolated and don’t know what others are facing. I feel very fortunate to be in the unique position of being able to hear from a lot of business owners – including my own clients and those in the Western Reserve chapter of TAB (The Alternative Board).
The stories I hear are all over the board. While most of our clients applied for and received round one of the Paycheck Protection Program, only some will be eligible for round 2 of PPP as their revenues from 2020 took a dive of at least 25% in any given quarter.
So I’ve learned to be cautious and tactful when speaking with business owners. I remind myself that while one business may have grown despite the pandemic, others have struggled mightily and doing all they can to keep their doors open.
Be sensitive when talking with other business owners. I know of one professional services firm that received over $4 million in PPP and yet had the best year in their history. Many lawyers and accountants had banner years helping businesses apply for these loans. But at the same time, I’ve seen people closing up shop for good in a beloved family business.
Be honest: what’s going on with your own business?
Things are never as bad as they appear. My advice is to take a step back from your business and make an honest appraisal of the situation.
Revisit your business’s strengths, weaknesses, opportunities and threats in a SWOT analysis. For example, while a legislative change could be threat to some, for you it may be an opportunity worth seizing.
When the COVID-19 pandemic gradually ends, certain industries will reap rewards of pent-up demand, including entertainment and travel. Some businesses are already recovering as COVID-fatigued consumers book air tickets and reserve tables at their favorite restaurants.
For small businesses, the pandemic revealed our unique ability to pivot on a dime. That’s our genius – and the kind of flexibility that large companies don’t have. Some of my clients did that quick pivot and flourished. Others tried but just couldn’t escape the disastrous downturn in industries like tradeshows or event management. The disparities are stunning. I’ve walked into meetings where 30 to 40% of the owners are at death’s door and the rest are having their best year ever. What a contrast!
Do you exit now – or stick with it?
At Legacy Business Advisors, we help small business owners with exit planning and succession strategies. And what I’ve heard in the past year is all over the map. Some owners say they are tired of the volatility. They rebuilt after the 2008 recession and now they’re ready to exit or sell. Others see an opportunity to acquire a business from older owners who are ready to pass the baton.
The only consistency has been inconsistency.
Now that we’re one year into it – ask yourself how you feel about your business. Do you still have that get-up-and-go or has it gone up and went? Or do you find yourself with a stronger balance sheet than you’ve ever had, and you’re ready to expand your business or acquire new ones?
My best advice is to be critically objective about your own business right now. Are you good with committing more capital in a time of economic uncertainty? Are you just trying to hang on and pay your bills?
One of our clients brings in about $80 million in sales annually but had been spending hundreds of thousands on travel and entertainment monthly. That dropped to nearly zero in 2020, while at the same time, sales increased. So the question is: when you come out of COVID-19, what does your business look like? If you’re like me, you’ve become more comfortable in the Zoom environment, and have rethought your travel and entertainment expenses going forward.
Set aside time to think about the future of your business. What does next year look like, three years from now, and beyond? And what role do you want to have in that business?
If these are questions you’d like to discuss, we are here to chat. There’s never a bad time to work on your business. And now may be the best time ever.
Mark Dorman is passionate about helping small businesses plan for success and achieve peace of mind. He’s worked with business owners for more than 30 years and is founder and president of Legacy Business Advisors. For the past 15 years Mark has focused on transition planning and exit strategies. He is also founder and managing partner of TAB Western Reserve (The Alternative Board), a peer coaching and advisory group for small business owners.
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