Annapolis business owners, are we learning the right lessons from COVID?
Dear Annapolis Business Owners – a quick question for you.
I know we have had a few difficult years. From moving from on-site to virtual working, struggling hiring, ever-changing recommendations from the CDC, and demanding government loans to stay afloat, it’s been a challenge. But my question to you is: as we start to look back on this experience, are we learning the right lessons?
As a business broker, my job is to help business owners maximize the value of their business. So I can see how owners and CEOs are dealing with the pandemic and the “lessons learned”. But, I’m not sure we’re always learning the right lessons.
Granted, it can be hard to see the “big picture” when you’re so focused on keeping your head above water. Before making a decision, you should first consider whether the challenges you face are “cyclical” or “structural”.
If they are structural, then you have a problem. New York taxis suddenly had a structural problem once Uber burst onto the scene. Blockbuster had a structural problem when Netflix started streaming Michael Scott and The Office in our homes.
However, if they are cyclical, your situation is less serious. While you may need to seek short-term help or embrace changes to get you through the short term, your business is still dynamic. You are not the after-iceberg of the Titanic. You are charter fishing in 15-foot swells. Sure, it’s more choppy than you’d like, you’re not catching as much as you’d like and some of your friends may have a hard time keeping their lunch – but you’re still on top of the water and the sea will eventually calm down. .
So what are the lessons that I see business owners ‘learning’ that ARE wrong? Let’s take a look at a few.
Restaurants are bouncing back, but with a renewed emphasis on the outdoors
I recently put up for sale a new restaurant in Prince Georges County. This is a nice, quick and relaxed little restaurant and since the post went live I have had several callers asking for more information about this space. What’s interesting is that they all seem to be looking for seats outside.
And while I love what Annapolis does with Dining Under the Stars, not everyone needs outdoor seating. Remember, COVID is a once-in-a-century pandemic. And while yes, it does persist, you shouldn’t expect to see another COVID-like virus for another hundred years.
Yes, outdoor seating has been incredibly beneficial to restaurateurs during COVID, but do you really want to commit to the extra costs, maintenance, personnel, and all the hassle that comes with outdoor seating – to cope with to a pandemic that none of us are likely to see again in our lifetime?
Switch to a professional life entirely remotely
Hello to all of our Big Tech friends! Using tools provided by Microsoft, Slack, Google, Amazon, and others, businesses have been able to move from in-person to virtual work while staying productive. The tasks were still done. Supported clients. Employment, although it has fallen, has not bottomed out.
Remote working has allowed companies to continue to support their customers (and staff) throughout the pandemic. However, the question now is whether everyone should stay aloof?
The answer to this question is probably not all or nothing. Many Fortune 500 CEOs talk about bringing people back to the office because they see the impact on the culture of working from home. But now that we know that people can also be productive by working remotely, why take away that flexibility?
What we should be doing is reconsidering your office space needs. Companies with 50 employees may now only need enough space for 35. And if so, then why not downsize and take advantage of those savings?
I urge everyone to look to flexible office spaces, such as the Regus locations we have at the Annapolis Towne Center or the 1997 Annapolis Exchange Parkway. If Regus is right for your business, there is also a lot of good commercial real estate available. I also invite you to check out some of the great retail spaces available in the city through Murphy Commercial Real Estate or Douglas Commercial, among others.
Delay the sale
Again, I am a business broker. My typical interaction with a business owner is someone looking to sell or grow their business. Many people I talk to about selling their business tell me that they would like to sell now – after all, it’s been a hectic few years – but they want to put the sale on hold for now.
When I ask “why? They say they want to bring their income back to pre-pandemic levels. What I understand. I also wouldn’t want to spend decades building a business just to sell it at a discount. However, this is not what we are seeing in the market. There are a few factors that are working in favor of business owners selling at this time.
- One, the inventory of businesses for sale is 40% [or more] below pre-pandemic levels. Simply put, more businesses closed in the last year than we usually see, and now there is a lull in supply.
- Second, buyers always want to invest in profitable businesses. The stock market is still high. People still have their savings. And now that they are faced with the realization that they will have to return to the office, and that the shuttle and these colleagues, buyers are ready to buy companies at pre-pandemic levels if we are able to see the trends. financial year to these levels.
So here we have a supply and a demand that works in opposite directions, which favors the owners. Therefore, we are seeing buyers willing to accept valuations at 2019 levels assuming that there is at least some evidence showing that revenues are moving closer to this time frame.
The times are changing
In conclusion, we are clearly not operating in the same environment. But homeowners must be careful to learn the right lessons from the pandemic.
If anyone has any questions on any of the above or would like to discuss other trends I see in the local market, please contact us. The easiest way to contact me is by email, at[email protected].
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