Buying or selling a business comes with its challenges but trying to do this during a global pandemic can be even harder! During the Victorian lockdowns across 2020 and 2021, our agency has been very successful in helping buyers find the right business for them and most importantly, helping sellers move onto the next chapter of their lives.
One of our most recent successful sales came with particular challenges, as it was both in the retail and events based industry.
Although many retailers flourished online, some businesses like those selling wedding dresses were very limited in their ability to pivot or move online for obvious reasons. As a result, the sale of such businesses posed a great challenge in light of wounded buyer confidence in such industries and niche services.
The sale required a lot of background work with the vendor and their accountants to ensure financials, sales and activity before, during and after the pandemic were clearly outlined. It was also very important that we had a clear breakdown of re-scheduled gown collections, deposits and payment histories as well as gift vouchers sold.
During lockdowns, many businesses were forced to promote the sale of Gift Vouchers in order to establish a steady cashflow for the business’s overheads and overall survival. It is important, however, vendors note that when it comes time to sell their business these gift vouchers that may have assisted in the turnover looking healthy will need to be adjusted and negotiated during the sale.
While buyers are aware that the events arising from the COVID pandemic amount to exceptional circumstances, they also need to factor the running of a business with the presence of a potential COVID outbreak, so it is crucial when selling your business that you provide the financial reports for 2020- even if you were closed due to the lockdowns. The best support to provide for your business sale is to also have up to date monthly or weekly income breakdowns in order to prove to the potential buyer that your business is on an upward trajectory to recovery or reinforcing its stability through the sale trend data. No matter how small your business is or how low the sale price, the pandemic has meant the seller needs to do a little more work in order to provide this insight for the potential buyer and essentially chart the “Goodwill” performance of the business.
With this particular sale, we also had to take a close look at the inventory (stock) to determine the value of the dresses and take into consideration passing seasons and trends that could impact their retail value. It is important as a seller that you have a good understanding of your stock and run a full stocktake before putting your business on the market for sale. Buyers are very sensitive to the idea of paying large amounts of money for stock, especially if the recent yearly turnover reports don’t support the quantity of stock holdings. Running promotional sales or campaigns to try and reduce your stock and sell off older items is crucial in achieving a smooth negotiation process and ultimate sale of your business.
Although the pandemic has introduced some challenges for the sale of some businesses, it is absolutely achievable to sell your business and move on to your next chapter, provided you work with experienced professionals who can ensure you have all the supporting documents and paperwork required to reinforce buyers’ confidence in the stability or potential of your goodwill.