SBA debt relief efforts are incentivizing buyers to move ahead with business acquisitions, but those incentives have a deadline. The SBA is providing a financial reprieve to small businesses during the COVID-19 pandemic. While there are several proposals regarding delayed payments and fee abatements, it is recommended that you carefully review the SBA guidelines as they are “fluid.”
Is COVID-19 the Ultimate Cure for “One-More-Year-itis”?
I heard a story about a business owner who shared how her teenage kids remember the Great Recession and the impact it had on their household. Now they’re seeing economic upheaval again, at a time when they’re old enough to lose out on their own summer job opportunities. In both good times and lean, money issues had always weighed heavily on her mind, so she can’t help but wonder how this will impact her children’s financial mindset.
I have similar thoughts, but I’m not thinking about my kids. I’m thinking about our country’s business owners. How will the COVID-19 pandemic affect their psyche? I believe entrepreneurs tend to lean strongly toward optimism. After all, 19 times out of 20 when I talk to an owner about their projections, business is going to grow. It’s not a bad attitude to have, especially when you consider the strength you need to run a business.
But that optimism is also why so many business owners succumb to what we call “one-more-year-itis.” It’s the condition that leads owners to delay selling their business, even in an up M&A market, when the proceeds would more than fund their dream retirement.
Importance of Planning for Business Sale
Unfortunately, most small business owners don’t plan ahead. For the smallest businesses, valued at less than $500,000, roughly 72% of owners do no planning at all before putting their business on the market. Even for larger businesses over $5 million, only about 25% plan more than a year in advance.
But as we come off the longest bull run in history and find ourselves in wholly unprecedented conditions, I have to wonder how long our country’s entrepreneurs will remember this struggle. If there’s any benefit, perhaps more business owners will think strategically about their financial future. Instead of waiting to hit a certain milestone age or waiting for some trigger in their life, perhaps we’ll see more business owners planning to exit on their own terms.
Doing that means keeping tabs on how much your business is worth, creating a vision for your financial future, and selling when the numbers line up.
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