This is the year just about every business owner is wondering, how long can I last?
The coronavirus drags on with no sense of when a mask-free, mass-gathering-restored normal will resume.
Businesses have failed. More businesses will fail. But do businesses with a fuzzy horizon need to shut down forever?
Not at all, insists Michael Greene, owner of Sam Goldenberg & Associates, a Santa Fe business brokerage that matches sellers and buyers of businesses.
“There are buyers actively looking,” Greene said.
The first trick to selling a business is not waiting until the last few weeks, when all the value of the business may have evaporated.
“Whatever your reason is, come in sooner,” Greene said. “Most owners wait too long.”
COVID-19 has shattered many businesses, but there is a silver lining. The past still matters even if 2020 sales numbers are dodgy.
“If you have a business doing well the last three to five years [before the coronavirus], I can probably sell it,” Greene said. “If you have a business that barely made you a living for 10 years, I can’t sell that business.”
Greene said business owners shouldn’t wait until they are about to shut down to put a business on the market. He looks for businesses to have at least 90 days of life yet, better yet, six months.
At that point, a business might still be viable, but would a business owner want to sell it if all hope isn’t lost?
Like in sports, where athletes often talk more about the mental game than the physical game, deciding to sell a business could be about where the owner’s mental enthusiasm is.
Six months into the coronavirus is an interesting time to consider selling a business rather than take a chance at ultimate closure. What’s the ideal trigger to think about selling?
“If you’re tired of trying to figure it out on a day-to-day basis, it may be right to start considering selling it,” said Chip Storm, the co-owner with his wife Lynsey of Statements in Tile and Allbright & Lockwood and formerly the owner of Ski Tech Santa Fe. He also has a Bambini’s Steaks and Hoagies food truck now on hiatus. “Ski Tech, I did it for 15 years. I was just tired of doing it. That’s why we sold it.”
Greene has heard business owners say, “COVID has taken the glitz off it. It’s no fun.”
“If you’re not happy, you don’t want to do it anymore, you don’t want to borrow more money, come in sooner rather than later,” Greene said.
Sam Goldenberg & Associates has made countless high-profile business sales in Santa Fe, including The Teahouse, Kakawa Chocolate House, Garcia Street Books, Bouche Bistro, Alpine Sports and Le Bon Voyage.
Downtown Day Spa just came on the market two weeks ago as owner Christina Sisley Schatz is wrestling with health issues after owning the spa since 1994. Why not just shut down?
“I have a certain loyalty to my customers,” Schatz said. “I feel someone will love taking it over. I want someone to have the same passion I have for it. I have learned how much I love what I do. It’s been a real hard decision to sell.”
Schatz worked with senior account manager J. Erika Munde at Sam Goldenberg.
“Erika has given me a light to let it go,” Schatz said. “She got me into doing things I want to do that I wasn’t doing for the last 25 years. I’m going to pull my life together and do fun things instead of just work.”
Like selling a house, where home improvements can boost a sale price — or just make a home marketable — a business seller can also benefit from sprucing the place up.
“We did an entire makeover during coronavirus,” Schatz said. “We now have artwork incorporated in the spa. We got polycarbonate Art Deco furniture from Germany. We ordered fountains.”
In the end, though, business is about money.
“Bookkeeping is the golden language,” Greene said. “Lots of [small businesses] do their own books. That’s not the same as doing the books. They should talk to us, business advisers or accountants.”
Storm is a graduate of the Anderson School of Management at the University of New Mexico and sees business ownership as entrepreneurship, not just owning a business.
“I look at business as a driver for cash flow and supporting my family rather than the product or service we are selling,” Storm said. “I think the number one thing is having the best books you can have. You have to have solid books. The better your books are, the more sellable your business is. SCORE offers free classes on accounting.”
SCORE Santa Fe is a group of volunteer expert business mentors who work with small businesses.
Storm has bought and sold his business through Sam Goldenberg.
“It’s helpful to have a business broker,” he said. “It’s important to know what to put money into to improve a business.”
There is a caveat to selling or buying a business during the pandemic. The sale price will likely be lower than the pre-COVID-19 era, but it will also likely be higher than what a buyer looking for a bargain wants.
“What you have right now is an unknown,” Greene said.
The buyer is banking on a semblance of normal returning in the next year rather than two or three years down the road, he said.
“There has to be a compromise,” Greene said. “The seller has to take a little less. The buyer has to pay more than based on current performance. We can still sell right now any decent business.”