During a hurricane we all take cover and wait for the storm to pass. It’s only when the winds have settled that we venture outside to survey the damage.
It’s only when the storm has abated that we can truly make an assessment of how much damage has occurred.
We know what our house looked like before the storm, we know what it was worth before the raging winds ripped the roof off and the rain penetrated all three levels of our home. Value and value deterioration is measurable because it’s visual and tangible.
What are we comparing it to? We’re measuring our losses in terms of cashflow, debt repayments, redundancies and other temporary interruptions. But what about business value. How much value has truly been destroyed through this crisis? Does an established family business with a 40 year history and a market leading brand die overnight just because we all had to stay at home for 6 weeks?
Your creditors will be experiencing the same pain as your business. Your customers are feeling it too. But they’re all still going to want to sell you raw materials and services or buy your products. They have to so THEY can survive. We are all interdependent.
Yes, there will be some businesses that fail, some that give up, and others that will no longer have a market to serve. But for those that hang in there and commit to the future, despite its challenges, there will be rewards. But you will not get there on your own. You will need your suppliers, you will need your competitors and you will need your market more than ever.
What are we comparing the damage to our business against? What value has actually been destroyed? What was the value of our business before the storm of Corona Virus? How much of that value has vanished, and how much of that value can you save or salvage? What resources will you need and where will you find them? How will you justify your case for survival to your lenders? How will you raise more capital from your equity holders? What’s the next chapter in your business’s story?
The government is offering business support lending through the banks to businesses with annual revenue between $250,000 and $80 million. Businesses can apply to their banks for loans up to $500,000, for up to three years. The scheme will offer a total of $6.25 billion in loans to New Zealand businesses.
The government will be underwriting 80% of the lending to minimise the risk for the banks but, rest assured, there will be criteria to secure the finance. Banks will want a clear understanding of your business’s position pre Covid 19. They’ll want an idea of what your business was worth then, and what impacts have affected its value now.
In order to help you establish the market value of your business before we went in to lockdown, LINK Business Broking are able to provide you with a Market Appraisal* based on the following information that we will need you to provide:
Once we have a clear understanding of the pre Covid 19 market value for your business, we will be able to assist you with our Business Recovery Questionnaire to help you prepare your application for the bank if you require additional funding to get your business up and running again.
For further details on how we can assist, please email us at firstname.lastname@example.org
We’re part of your business survival kit. Please don’t hesitate to reach out for assistance.
Act on this now. Once we return to level 2, you’ll need to hit the ground running!
*A Market Appraisal is based on historical sales in a given industry for businesses with similar revenue, GP, profit, lease terms, number of working owners, time the business took to sell and earnings multiple.
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