The global pandemic has resulted in some of the most unprecedented economic downtimes throughout the world. Recent statistics showing the UK having the highest economic slump as compared to other countries like Germany, France, Spain, and Italy may have left you as a business owner confused. Compounded by the confusion and uncertainty on how to re-open safely and effectively makes the picture grim. So, is it time to sell the business?
Selling a Business Now
Now that a majority of the businesses in the UK are service-based, a lot of business owners have been hard hit. In normal cases, you would expect a rise in the number of people selling businesses as an exit strategy. However, the buying and selling of businesses have reportedly slowed down since the onset of the pandemic.
It is highly likely that the uncertainty surrounding the pandemic makes the market hugely unpredictable. You never really know whether it will get worse, or there will be a huge bounce back.
The figure for the economic recession for the UK is predicted to reach 11.4%. However, it might hit 14% in the case of a second wave of the pandemic. That means times might even get worse economically than the current situation.
And then there is the matter of trade agreements with the EU, which seem to likely worsen the situation if positive steps are not taken. The overall picture for you as a business owner is therefore discouraging.
It makes it quite the right decision to sell the business.
The V vs. U Curve
Some analysts are predicting a V curve in the economy within the coming months. If that’s the case, the recovery of the economy will be sharp. Therefore, it will be more profitable to hold on to your business for a little longer in the wait of the brighter days.
Predictions put the growth in 2021 at over 9%, which is quite a strong recovery in case it actualizes. The possibility of a V-curve makes selling a business now unfavourable.
On the other hand, there are predictions of the U curve in the economy by other analysts. Although the economy will recover in the end, the length of time at the bottom of the U is not known.
It could take quite a while. As the bottom approaches, the price of your business will keep going down. It means you may be better off selling your business now when the price might still be up.
Is Now a Good Time to Sell a Business?
The big question is whether it is an excellent time to sell a business now. Based on the statistics, right now is the best time to sell as an exit strategy. It may not be as lucrative as you initially thought, but the possibility of worse times ahead means you stand to make more losses if you hold on to it.
It’s also unknown how long it will take for the economy to recover, which could be quite a challenge for you as a business owner. It might take many more months and spill into 2021, which might mean one of the hardest times for small and medium businesses.
Additionally, the possibility of a second wave might make the situation even worse. A second wave could mean many businesses having to close down.
You most likely would rather make some money back from your business than see it get swept away by the uncertainties of this pandemic. However, time will tell given the unpredictability of the COVID19.
Your Staff
In case you have employees in your business, you probably have noticed how tough it already is for them. You may have had to get some of your staff working from home or even downsized. Your decision at this point will impact not only you but also the staff and their families.
In case you choose to keep your business and re-open, there are chances that the economy might recover in time for the normal operations to resume. That’s on the optimistic side.
On the other side, things could worsen, leading to the closing down of the business, which means loss of employment for your staff.
Selling your business can be a great way to ensure your staff keeps their jobs in most cases. A buyer will have enough finances to fund the business and keep it afloat in these tough times. Your employees will enjoy some stability until, hopefully, the economy picks up.
The Pros and Cons of Selling a Business Now
You may want to consider the following pros and cons before deciding to sell your business during the current pandemic.
Pros
- You get the best possible price as the prices are going down
- It could help you deal with debts
- Pursue an alternative business that’s more favorable
- Cost of running a business now is not favorable
- Buyers eyeing the economic recovery could pay higher prices now
Cons
- The demand is not as high as in normal times
- Uncertainty for your staff
- You may be giving up a lucrative revenue source
Re-Opening Safely and Effectively
In case you find it prudent to hold onto your business during these unprecedented times after a careful analysis of the economic situation and predictions, you may embark on safe and effective re-opening.
You may need to focus on adjusting your business to the current situation. Some of the ways to adjust include online sales rather than physical sales and other adjustments. You can adapt and thrive in the current situation if your strategy is well crafted.
Ensuring you put all the safety measures in place as per the regulations can help keep your staff and customers safe. The measures are the new normal and might be around for some time, so why not make the necessary adjustments.
A good strategy could boost your effectiveness and result in remaining profitable.
Conclusion
The recent figures indicating the UK’s economic downturn is heading the country into a recession are a wake-up call for you as a business owner. It might be time to sell the business before the economy hits the lowest point.
