How Business Owners Can Capitalize on a Strong Market
The warning signs are everywhere that a recession may be only a year or two away. For now, though, it’s sunny skies for most business owners. Valuations rose ~11% between 2017-2018, and those figures may remain stable or even increase in 2019. The market offers significant opportunities to both sides, with businesses selling for record figures and buyers having access to plenty of capital.
So what can you - a savvy business owner - do to take advantage of today’s strong market? Here are three tried-and-true strategies:
Sell Your Company
Those approaching retirement or seeking an opportunity to sell their business should strike now. Valuations have reached all-time highs, with an abundance of qualified buyers seeking an opportunity. Nearly 60% of Baby Boomers hope to exit businesses in the next three-five years. So act now, before the market dips and erodes buyers’ willingness to take a risk on your company. In many cases, buyers are willing to allow owners to remain part of the company, in a more passive role that offers more income generation opportunities. Working with an experienced investment banking firm will help to ensure that the terms of the deal are fair.
Add More Value
Young and startup businesses should capitalize on a favorable market by investing in continued growth. That growth can help their businesses down the road, when they must weather the storm of a less favorable market, or worse, a recession. If your financials look great this year, invest that money back into the business to support organic growth. Look closely at which factors add value in both the short and long-term. Bolster relationships with clients and vendors. Upgrade your products or improve efficiency. And don’t forget to add curb appeal by refreshing the business’s physical infrastructure.
Expand and Grow
If you do everything right, sooner or later you will outgrow what you're doing now—whether it’s your client base, your physical location, or your budget. Use strong financials and increased revenues to invest in your own growth. Lease or purchase a new office. Open a second location. Widen your company’s geographic net. Consider even investing in another company by acquiring a competitor. Folding an existing business into your infrastructure offers significant revenue-boosting opportunities, and can help you outshine the competition.
Buying isn’t your only opportunity for growth, though. Strong markets support owners of every variety. So consider whether other opportunities might help you expand and become more profitable. Critical self-evaluation, market research, and the expert insight of an unbiased outsider can prove invaluable.
Capitalizing on a strong market now can secure your business’s long-term financial future. Don’t be fooled by today’s upward trends. Every economy eventually contracts. Every business eventually must struggle through a recession. Focus on strength and growth now, to boost profits and prepare for the future.
About Madison Street Capital
Madison Street Capital is an international investment banking firm committed to integrity, excellence, leadership and service in delivering corporate financial advisory services to publicly and privately held businesses.
Over the years we have helped clients in hundreds of industry verticals reach their goal in a timely manner. Our experience and understanding in areas of corporate finance and corporate governance is the reason we are a leading provider of financial advisory services, M&A, and valuations. With offices in North America, Asia and Africa, we have adopted a global view that gives equal emphasis to local business relationships and networks.