How does COVID-19 impact business valuations moving forward?

COVID-19 has affected everything. Before March 2020, we used to wake up, get dressed and drop the kids off at school on the way to work without much thought about anything else. We would open up our stores, turn on the lights, and greet customers with a smile and a wave. Now that all looks very different., our businesses may have been shut down for some time And our revenues may have dropped considerably during that period.

It goes without saying that COVID-19 Crisis affectedmost businesses. To stay afloat, business owners in every industry had to get creative fast. With an inability to leave homes or reducing their exposure to other people, customers prefered  items delivered or hadthe option for curbside pick-up. For many businesses, those options were foreign concepts a mere 10 months ago before coronavirus. The same goes for business valuations – there is no doubt how one values their business has completely shifted after 2020.

So, how does COVID-19 impact business valuations moving into the future? To put it simply, determining the value of a business now has much less to do with the past, and much more to do with the future. Investors and prospective buyers understand profit margins are going to be lower in 2020 than in previous years. The interest now is in how the business survived COVID-19.  What did it look like before the crisis in 2019? What did you change to help the business stay afloat? How has this helped your profits in the last 4-6 months? And, most of all, what is your plan to continue to grow in the next 4-6 months? The answers to these questions will help potential buyers see the value in your business.

If you have questions about determining your business’s value as a result of COVID-19, do not hesitate to contact your local business experts at Transworld Business Advisors.