Thinking about moving from protecting to building your future company exit valuation
No one's crystal ball can tell us with any degree of confidence when business will get back to "normal". As business owners and CEO's, despite having our days right now filled with tactical matters related to COVID-19 such as personnel items, customer requests for extended terms, supplier challenges, monitoring cash, etc., etc., we also have to find time to think about how our business will respond when our industry begins to recover.
Being prepared for how your particular industry will come out of this event could be the difference between losing or building your longer term company value or company worth. And as I recommend to business owners and CEO's frequently, always look for opportunities to put on the glasses of your future investors/acquirers and look at your business through their lens. Months or even a few years from now, your future investors and acquirers will ask you how you performed through this event but even more so how you bounced back. How your company bounced back could be an opportunity to build your business valuation in their eyes.
Start thinking now about how your industry, how your specific business is going to recover. Is it going to come back very slowly so that it could take months or even a year or more to get back to pre-2020 levels? Or is your industry or business one that will roar back like a lion and will do so relatively quickly? Thinking this through and doing your own projections will help you determine what level of inventory you may want and when, your labor requirements, etc.. What you want to avoid is your industry rebounding more quickly than you are prepared for and therefore not able to meet demand. Many companies aren't losing their customers through the COVID-19 event potentially as their purchases may have decreased. But it's when they are ready to buy again, will you be a partner they can turn to or will they have to turn to others and therefore you will lose business that could have been yours?
In prior Reflections on this site, I've referenced the need to do modeling of various scenarios for your business. Now is a great time to do that becausse you want to be ready to be the kitten or the lion in terms of being ready to participate effectively as a leader in your industry when things start to recover. Talk with your team and think about whether your business needs to be ready for a kitten or lion event. Getting this right can be a great company valuation builder not just in the near term but long term as well.
