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Cash Management and Company Valuation Go Hand in Hand

COVID-19 reminds every business owner that CASH is still king!

Even the most junior business person knows that cash flow is everything to a business. But now that the Corona Virus is sending chills through the economy, it's critical that every business owner and CEO do an immediate indepth review of their cash position and projections.

With most businesses looking at supply and labor challenges, it's critical that leaders sit with their teams and discuss cash flow. The following are just a few steps to take:

1.) Develop a cash projection tool for your business if one doesn't already exist. Contact me and I'll send you a template if you need one. But this tool should enable you to project out for the next 4, 8 or even 12 weeks what the incoming and outgoing cash needs of your business will be under various scenarios.

2.) Immediately identify high risk customers that you might already have in your Accounts Receivable or soon might have given product/service you plan to deliver in the days ahead. Think about which customers might be hit by this virus extra hard and realize they will most likely slow down their payables to you. Consider those you might have to reach out to and open immediate dialog.

3.) Look at possible scenarios that are looking more likely for your business as it relates to employees working from home and/or not being able to produce anything for your business and what this will do to your near term revenues. Your revenues and costs may get out of whack in these next few weeks so you'll want to get out in front of this now.

4.) Look at your available line(s) of credit and determine if you may need to tap in to one now. If credit markets tighten, your lender may reduce the amount you think you have available so you may want to grab some cash now in the event the worst case scenarios hit your business.

5.) Look at your upcoming projected costs and determine which non-essential ones you can eliminate or at a minimum defer. 

Bottom line (literally) is to immediately huddle with your team and discuss your cash requirements. Get in control of this otherwise it will take control of you and your business and do damage to the value or worth of your overall company. Future acquirers will want to see that you managed through this storm effectively because it will show them your team has the muscle needed and it could help boost the exit valuation they place on your business.

Use Greenpoint Testing to Achieve Your Desired Exit Valuation

It only takes 106 questions, scanning 10 essential business functions, to stress test your readiness for a successful exit.

However, these questions require thoughtful commitment to achieve your desired exit valuation.

During this up to hour-long online testing, you'll see questions such as the following.

Sample Question 02

After internalizing each question, select among three answer options – Agree, Unsure and Don’t Agree – choosing the answer which best describes you and your business.

Then, complete the Greenpoint questionnaire to unlock your personalized report, which will reveal any gaps in your planning, pointing to the action steps needed to maximize your desired exit valuation.

Format: Digital

Delivery method: Email

Report included: Your Greenpoint results