No one can deny that COVID-19 has changed the business world, and climate drastically. From main street to Wall Street, there is a new standard for normal. How, when, or if things can return to any semblance of our old standards is yet to be seen.
It’s said that it is an ill wind that blows now good though. This will prove true here as well. Whatever level of business you find yourself in, there will be opportunities for expansion, acquisition, and development that can and should be explored. Doing so in a manner that is equitable, ethical, and profitable will bring new challenges to address.
Many are talking about a “new normal” for all aspects of society, and nowhere is this more evident than in the business world. Some of that has to do with how businesses operate on a daily basis. Some refers to assumptions in business plans and business funding. Not much will be taken for granted in this new reality.
Successfully navigating that reality will take a fresh perspective, and offer opportunities that mostly didn’t exist until now. It will also require entrepreneurs to ask a lot more questions in what we call the “What if he gets hit by a bus” category. Extreme situations used to be assumed to be rare occurrences. Every business in the U.S., if not globally is experiencing extreme situations at this point.
Gauging Business Value – Twice
There are as many formulas for gauging business value as there are entrepreneurs. Few situations are identical either. That being said, there are some questions that need to be considered now that few would have even imagined a few short months ago.
The first, and most obvious one is if the business can survive in the current lock-down situation much of the nation endures now. Most people assume that at some point this will end. That doesn’t mean that things will completely return to our old reality, or that another pandemic will not make these conditions return along with their challenges.
These can drastically alter the valuation applied to most businesses. Drawing up a valuation based on each eventuality is the best course. In the end a decision will need to be made as to which carries the most weight, as only one number can be used for a purchase.
Drawing up two business plans isn’t a bad idea either. The exercise will allow you to combine them making one a Plan A, and the other a Plan B. The process will dictate which is which, and aid in evaluating how they come together in one valuation.
New Opportunities –
Partnerships and Replacements
In spite of, and in some cases because of the various stimulus and bailouts that will roll out of Washington D.C. in the coming weeks and months the landscape of players will change and evolve.
Those that survive may just barely do so. Some will need to do something they’d never have considered in the past: Taking on partners. Opportunities!
Others will leave their respective markets either through lack of ability to evolve to the new realities, or through lack of capital to weather the storms of the recent past, and imminent future. These will create vacuums in their respective markets, and therefore: Opportunities!
The valuation concerns from the previous section should be applied equally when considering these scenarios. In some cases it may be necessary to consider that a market segment may no longer be viable.
Each of these is a conclusion that entrepreneurs must draw for themselves. More than ever before, this is going to make these judgement subjective to what is and is not seen individually. What we can convince banks of in the near future will be both interesting, and likely not a very wide perspective at all.
Vision. More than ever, vision will dictate what opportunities we are able to identify.
Many of the businesses that will be casualties will have been longtime favorites of the community, or marketplace. Those coming after will need to step lightly in some respects. Buying up businesses, equipment, and locations as fire sale prices makes good financial sense, but may leave new operations with an angry client pool.
We’ve already seen repeats of dust bowl farm auctions where neighbors refuse to allow anyone but the original owners to buy back their property. Ignoring public sentiment is shortsighted at best, fatal to ongoing operations at worst, and contrary to what is more and more viewed by the public as just wrong.
You may need to pay extra for certain opportunities not to be seen as heartless opportunists. A good question to ask oneself as you proceed is “Am I being a heartless opportunist?”
To be sure, entrepreneurial pursuits aren’t for the faint of heart. The marketplace can be cruel. That doesn’t mean we have to be, and to be sure we shouldn’t.
Have you ever heard someone say “He’s a heartless bastard but makes a hell of a pizza!”
This argument carries over from main street to Wall Street too. The public stage this odd pandemic melodrama is playing out on is revealing institutions, and those at the head of them to be either admirable, or something else. More than ever, this could well be the legacy of the new normal.
Of Course This Could All Be An Overreaction
All of this could be overreaction, or as some will no doubt say all generalizations with no specifics. Both have merit.
As many will state, this could all blow over in coming months with all returning to some version of what we’ve all come to think of as normal. The likelihood is that we won’t be seeing that again, or perhaps we will see a portion of that normal before either a second wave of COVID-19 hits, or some other pandemic we cannot predict makes an appearance.
Let’s assume for arguments sake that each possibility has equal probability of coming about. Which carries the greater danger? Adopting new, and admittedly extensive criterion for considering business opportunities? Or assuming we are headed back to business as Pre-COVID-19 normal?
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