2020 September Update Small Business Marketplace

2020 September Update Small Business Marketplace

Wow! The world has sure changed!

Review my 2019 Year Summary in my last blog to see where we were.

Today: Many small businesses are now out of business. Most are trying to just hang on. A few are riding the wave with increased revenues, as they are essential and highly needed in this Covid-19 crisis. If you are one of the many small businesses out of business, I extend my condolences. I will note that despite your bad fortune, closing your business quickly, and not throwing good money after bad should turn out to be a wise decision, given these difficult circumstances.

This crisis seems fairly deep, and a quick return to economic health for small businesses doesn’t appear at all imminent. Little gov’t relief moneys actually reached most small businesses. And, the second much needed relief funding failed to pass through Congress. So, most small businesses are being left to fend for themselves. This Covid-19 crisis has become much politicized. The election is two months off, and solutions might be four months off. An economic turnaround might come in the spring of 2021 at the earliest. I’d plan on nine months before significant improvement.

If I were a small business owner losing money, I’d seriously consider shutting down. It’s risky to through good money after bad. Those small businesses that can meet expenses are in industries that Covid-19 needs. If I were breaking even, I consider making the effort to stay on course. A turnaround may come in six to nine months from now. Can you hang on till then without losing money? If you are considering selling your business, remember, as cash flows drop, valuations plummet. So, don’t expect a quick sale at normal multiples. It won’t happen. In fact, I doubt your small business will sell at all.

We saw in 2019 retail showed the highest financial growth, restaurants were strong, but manufacturing experienced significant drops. Well, now we are seeing retail getting clobbered, and the restaurant industry has been near shutdown, with over 3 million restaurant works laid off, and the industry taking a $225 billion sales hit through May.

The hard-hit manufacturing industry may be facing a long-term new normal. That new normal may include the revival of expanded automated manufacturing, the decoupling of traditional supply chains, the continued rise in data infrastructure as a strategic asset, the accelerated competitive advantage of digitization, and the explosion of remote work, remote collaboration, and the ‘virtual shift’.