Should I Stay or Should I Go?

I was on a call to one of my clients last week and we were discussing an online seminar that they had recently attended.  Apparently, ¾ of the attendees said that they were planning on selling their businesses within the next 12 months.  This got me thinking about the financial industry. With the pandemic looking like it’s taking up firm residency certainly for the next 6 months plus, and increased regulatory reporting and concerns, is it sensible to sell and if so, what steps should businesses be taking to get ready to sell (and if selling isn’t on the agenda…what’s next)?

Without doubt, I don’t need to repeat that the current climate is unsettled.  Things don’t just change on a monthly basis; they change on a weekly, sometimes daily basis. Firms are certainly concerned about all aspects of business, especially paying employees if they’ve experienced a drop in business income.  This makes life uncertain for the financial industry – as it does almost every industry.  Lockdown (and the continuation of lockdown in many areas of the UK) made us all think differently, with greater need for flexibility in how employees should work.  That flexibility was implemented by most people, on an adhoc basis but it’s possible that firm structures weren’t put into place to support long-term flexibility.  Many company owners are now looking long and hard at their businesses, making the choice on whether they stay in the financial industry, continue to invest in their business and employees or do they plan their exit? There is temptation to sell, certainly when you feel you might be out of options, but if you’re thinking about selling up, before you do, are you really out of options?

Staying!

One of the things I’ve noted in the financial firms I work with at the moment is short term planning (which is understandable in a pandemic situation). However, it is always wise for  business owners to make time to do some strategic thinking for at least 3 to 12 months ahead along with a 3-5 year plan.  I would suggest writing down what “good” could look like and what “bad” could look like.  When doing this strategic exercise, take into account the following:

  • Your business income
  • Your staff retention
  • Your staff coverage
  • Your client retention

Unfortunately, businesses should also take into account the growing COVID-19 cases (I’m sure you are).  I’m certainly noticing more cases close to home and of course, the news is constantly reporting that the Midlands and North East are particularly “high” (and growing in the South too).  What will this mean for your business?  You need to be clear on adapting accordingly and ask yourself how can you run your business and get the level of income you originally budgeted for (particularly in relation to new business).

If You’re Struggling

Firstly, you aren’t alone.  It might be your business costs are too great or you feel particularly isolated.  Remember, your suppliers and partners are all happy to talk to you, work with you and even help you.  We are all sounding boards for others and we’re all experiencing the effect of the pandemic. In the words of the (very) old British Telecom ad, it’s good to talk! It’s cathartic and good to hear other people’s experiences. Certainly, in my line of business, I find that the relationships with suppliers and clients are all about talking and coming up with longer term strategies to help people cope with difficult periods.

There are other things that you can do to cost-cut, for example, if you want to cut out journeys to your office in the city centre, have you thought of a virtual office?  By outsourcing your admin you can divert your post, your calls and more for a low monthly cost.  Just one idea!

It is now also an ideal time to got through your bills and actually have a look at all of your outgoing expenses. A common thing we have seen in many businesses is the payment for software for example they no longer use but never got around to cancelling. Being as organised as possible can help you maintain a feeling of control. Define your goals on a daily basis and know what you want to achieve (and what is achievable) on a daily, weekly or monthly basis.  Keep track too, as much as possible. Never underestimate the motivating feeling of ticking things off a list!

Adapt your Business Plan

As we’re in a period of quick-change, adapting your business plan is another key.  If you can, stick to your plan but don’t feel you can’t push your goals a little further back.  Contingency planning is key in this environment. Being able to adapt at a moment’s notice has never been more critical.

Going!

On the other side of the coin is exiting your business.   If you’re thinking of selling, I’d always suggest using a friend or unbiased third party as a sounding board first, to chat it through.  Perhaps there’s a way you can still run your business so you enjoy it and have your needs met?

Of course, if you’ve made the decision and you’re selling (and that’s that), obviously, you want the best price for your business, after all, you’ve worked hard at growing it and you’ve certainly spent a lot of time, energy and investment getting it to where it is.  There are lots of factors that affect the selling price of your business.  The elements that make your business look more attractive can include:

  • Strong customer base
  • Consistent ongoing income
  • Increase in profit

Be aware that at the moment there is an influx of businesses looking to sell, so having your business stand out is key to getting the best price.

When talking to prospective buyers it’s vitally important that you can evidence any information you provide to them. Common information requests concerning due diligence can include:

  • Data around customer profiles
  • Investment profiles
  • Levels and types of income over different propositions or settlements
  • Types of financial advice being given

Additionally (and moving away from data slightly), the processes your business follows will also be a factor, that can include regulatory adherence GDPR, RMAR reporting and PI.

So, do your homework in advance, tick off your list of must-do’s and must have’s.  Take time to get all the aspects in order. Make sure you understand how your business operates in detail and that you can evidence and interrogate all of your data, particularly your business’ costs and income (do you know the split between one-off and recurring income and cost, for example?).

On a final note, above all, don’t rush the process, you could run the risk of devaluing your business.  As I mentioned earlier, be sure you want to sell because if you’ve had a business for a number of years and you’ve built it up, with solid client, partner and supplier relationships, perhaps it’s worth weathering the storm?  Remember myself and many more of your connections, suppliers, partners will be there to be a sounding board and pillar of support