Sell in May and Go Away?

An old Wall Street saying suggests investors reduce their exposure to stocks they own in May and return to the market in the fall. But what about small business owners who have been impacted by the COVID-19 virus? Many are still closed and not really sure how quickly customers will return. Higher operating costs, employee safety, and supply chain complexities await the brave new normal.

Yet some Baby Boomers remember the impact of the last financial crisis and how long it took the economy to recover and are fearful of waiting another two years to get back to even. For owners in the construction, manufacturing and healthcare businesses, recovery will be sooner than others. Some small restaurants, bars and independent gym owners in urban areas may never reopen and landlords will be hard pressed to find brave new entrepreneurs to replace them.  

During the past few weeks, I have talked with several owners and most all are either weighing the pros and cons of when and how to start again or considering closing their own business. Here is my advice.

If you are a business owner thinking about an asset sale, determine the value of your assets, review your lease carefully and be realistic about what your business is worth when considering a decision to sell. On the other hand, if you own a profitable cash flowing business and believe recovery will be swift, now may be a good time to find out what your business value is in today’s environment . There’s little doubt that the range of value has been impacted for main street businesses, but there are incentives available from the SBA for qualified buyers that can help minimize the downside impact on price.

In either scenario, talk with an experienced business broker to help you determine your best course of action. We are here to help you.