The United States has over 30 million small businesses, including over 8 million that are minority owned. These businesses employ just under 50% (Approximately 60 million) of all working individuals in America. The COVID-19 virus has put these entrepreneurs pursuing the “American Dream”, their trained & committed teams, and the families they support in financial jeopardy. Many businesses, like individuals, live month to month paying employees, rent, and overhead out of direct cash flow. I encourage everyone in all communities to think about these businesses and people when making purchases. The dollars you spend with them currently and once the Corona Virus storm passes could be the difference between these businesses being in operation in 2021 and not.
IBA, as the oldest business brokerage firm in the Pacific Northwest, has served the entrepreneurial community in Washington, Oregon, Idaho, & Alaska as an experienced, knowledgeable, highly skilled professional resource since 1975. During this time period, we helped entrepreneurs successfully navigate the high interest rates of the 1980s, media & fear driven environments that had a worse bark than bite like the Y2K Millennium Bug, and the 2007 – 2008 Recession. Our deep & talented team of professionals like in previous crisis situations is available as a resource and sounding board to the entrepreneurial community. We welcome your inquiries. We are professional intermediaries paid on performance upon successful completion of business sale transactions, so there is no cost for a conversation. We are not consultants. However, we have a network of the “best of the best” of consultants in the region and welcome the opportunity to make introductions to professionals who have the knowledge, experience, and ability to address virtually any need. A sample of our professional referral network is provided at the bottom of this article in the list of contributing guest authors to IBA’s blog.
The first thing to acknowledge is that like other financial storms to hit the Pacific Northwest that this one will pass. It is also important to note that like the 2007-2008 recession there is a probability that the economic downturn will be shallower in the region than in other parts of the country. The reason this prognosis can be made is twofold. First, the region is blessed with multiple robust economic engines (Microsoft, Amazon, Google, Boeing, Starbucks, Nike, Intel, etc.) that have strong balance sheets and a work force that will continue to be employed and spend money in the region during and after the COVID-19 situation. Second, the population in this four-state territory is less than 20 million people or under 6% of the United States. This strong economic tide should dislodge and set sail on a positive course most businesses that successfully weather the short-term storm of 2 – 5 months caused by COVID-19. It also should be noted that this global slowdown may offer the recuperative tonic Boeing needed as it will allow them to get their house in order without significant loss of orders and potentially reposition themselves to rebid airline orders placed with Airbus that are cancelled in 2020 due to diminished demand for aircraft by the airlines.
John Kennedy famously said, “When written in Chinese, the word “crisis” is composed of two characters. One represents danger and the other represents opportunity.” This quote speaks articulately to the COVID-19 situation. The situation presents danger for our elderly and small business community. It also presents opportunity. The opportunity is delivered in multiple forms.
The first opportunity presented is the opportunity for an entrepreneur to efficiently and effectively manage the situation. This opportunity requires an intelligent assessment of the market demand for the company’s products and/or services over the next couple of months. Once market demand is projected, strategic plans can be made for satisfying the demand in terms of employees and resources. Correct staffing and intelligent hours of operation are critical during this time period. It is also prudent during this time period to proactively reach out for collaborative support from employees and vendors. The situation is known to all. It is probable that employees & venders will be willing to help a small business successfully navigate the storm, if asked. An example of a party that may help a small business, if asked, is their landlord. The last thing most landlords want is a tenant vacancy. An established tenant experiencing a situation that was not their creation like COVID -19 is a known entity facing unforeseen hardship. The preservation of that tenant is likely preferred to a new tenant with an untested business model. Subsidized or deferred rent for several months can be a “win-win” solution for both the tenant and landlord in the long run.
The second opportunity presented to an entrepreneur during a market slowdown is “found time” for strategic planning, education, and administrative implementation. Business elements that can be assessed and modified during this window of opportunity include marketing & advertising strategies and programs, IT infrastructure, facility workflow, and internal documentation like employee handbooks. The available time can also be used to move forward employee reviews and evaluate professional relationships and bank support. Interest rates are at historic lows. Equipment purchases with favorable financing terms and/or refinancing real estate & equipment loans could result in enhanced business performance in the future.
Rahm Emanuel famously said, “You never let a serious crisis go to waste. And what I mean by that it’s an opportunity to do things you think you could not do before.” The final opportunity relates to identifying business opportunity in the present and future that has been produced by the COVID-19 crisis. Businesses will make money during and after this situation. The entrepreneurs that identify those opportunities and takes the risk will receive the financial benefits. Anticipated areas of opportunity identified by IBA include companies that sell office furniture (for under equipped home offices) and boats (for people interested in an activity with built in “Mandatory Social Distancing” and small group interaction especially combined with the fact international travel is likely eliminated as a summer vacation option and the abundance of salt & fresh water venues for exploration in the region). Post virus restaurants and bars should boom from activity by a socially starved population and janitorial companies should also thrive when heavy use home environments need a thorough professional cleaning.
If you do not already own a business, but have always wanted to be an entrepreneur, the opportunity exists presently to meet in a limited person controlled, clean environment in either our Seattle or Portland office with an IBA professional to learn about the businesses we currently have listed for sale or about how we work with buyers. Last week IBA developed a “Mandatory Social Distancing Contingency” to help facilitate a buyer making an offer to buy a business while mitigating known risk that is unknown in length. The following is the verbiage employed for that contingency:
Mandatory Social Distancing Contingency
The Buyer will have the ability to delay the closing date for the transaction until such a time when the Seattle Public School District has been open for two successive weeks with regular attendance policies and the Seattle Mariners have ended any mandatory social distancing policies impacting attendance.
Few business brokerage firms in the United States have the knowledge, experience, and professional skill set of our deep and talented team of professional intermediaries who have successfully completed over 4000 transactions. There are very few situations that we cannot problem solve through or successfully navigate related to the sale of a privately held company or family owned business. If you are the owner of a business who is considering a sale, we would welcome the opportunity to meet with you and provide an overview of our client services. 100% of IBA’s sell side representation services from providing a professional opinion of the market value of the company to marketing the business for sale to facilitating negotiations and closing are paid on performance when the deal is completed.
The COVID-19 storm is presently raging in the United States. The storm clouds are currently dark, but they will pass and sunny days of opportunity for entrepreneurs will return in the future. The question to ponder is what will you do with the available time and the opportunity on the horizon.
IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, mergers & acquisitions, and real estate communities on subjects relevant to the purchase & sale of privately held companies and family owned businesses. IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.