Forget 2020? Steps to Consider When Presenting a Bad Year to Buyers

Forget 2020? Steps to Consider When Presenting a Bad Year to Buyers

Can you believe 2020 is finally behind us? The year that simultaneously flew by but would somehow never end? With 2021 here, there is a greater sense of hope and excitement. Even though COVID-19 cases fluctuate up and down all over the country, there is a vaccine, some new plans, and some positive projections in San Diego and around the country.

That said, the effects of 2020 are still looming. As one of the most detrimental economic crises this generation will likely ever face, we will likely be feeling its effects for months to come in San Diego. Thankfully, however, we now understand how to survive during a pandemic as business owners which can translate to just about any situation we may face in the future. As a result, we now know how to evolve as business owners as the world (and consumers) demand it.

How do I now present my business to buyers?
Are you hoping to sell your San Diego business in 2021? Does it feel like a terrible idea after one of the most difficult years to date? Do not fret, investors and prospective buyers also lived through 2020 and they are not expecting any business to have made it through 2020 without being impacted.

In 2021, when interested buyers are looking to purchase your business in San Diego, they will likely ask you questions similar to those below. We recommend you prepare for this in advance by proactively asking yourself these questions now – this will help you learn how to present a bad year to buyers, whether that’s 2020 or a different year at another time. Just remember that looking at the business holistically, not in the context of one bad year, is more important.

  • How did COVID (or other crisis) specifically affect my business? (i.e., sales and profits)
  • Are these impacts going to be temporary or permanent?
  • How long did it take to recover? or How long will it take to recover?
  • Is there a “new normal”?
  • Will my business reach pre-pandemic (or pre-crisis) profit margins?
  • How has my customer base changed?
  • Did my competition change?
  • What did I do (creatively) to stay afloat?
  • How do I plan to continue to evolve?
  • How did customers respond to the changes that were made to stay afloat?

How do I present my financials?

Of course, before you can sell – you need to perform a business valuation to have a better understanding of what your San Diego business is worth. In the world before COVID, there was a more straightforward method for doing this. Now, it does look a little different and if you ever face a crisis or bad year for another reason, you will not be able to skip the financials for that year but you will be better prepared for presenting your financials in an informed way. The presentation of financials may no longer be quarterly as is commonly done; prospective buyers are often willing to see month-to-month progressions, presented alongside the state of the economy or information about the crisis you dealt with. The ability to show how much your San Diego business can grow from one month to the next will be very attractive to a buyer. At the end of the day, they are interested to see how their investment will grow once you have stepped away. That, and the ability for the business to survive another potential crisis.

If you still have questions about how to present a bad year to buyers interested in your business, do not hesitate to call our local team of experienced business brokers at Transworld Business Advisors San Diego North.