I was talking to a business owner who shared how her teenage kids remember the Great Recession and the impact that 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 good times and lean, money issues have 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 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 is 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 I like to call “one-more-year-itis.” That’s the condition that leads owners to delay selling their business, even in an up M&A market, even when the proceeds would more than fund their dream retirement.
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 to 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.
About Centurion 7 Business Advisors
Centurion 7 Business Advisors is a team of experts, including two accounting PhD’s, who provide professional guidance to business owners in exit planning, sales strategies, and wealth management. The company receives annual accolades from IBBA as a Top Producer and is widely regarded as a respected authority on subjects regarding strategic sales advisory, exit planning, and wealth management, and is a regular contributor to Forbes.