Dealing With the Virus – Now & in the Future

Question – recent legislation – the CARES Act – will provide loans.  Is borrowing a good idea?

Many businesses will have or already have lost revenue, had to lay off employees, and will likely suffer additional losses.  Loans can provide funds to help businesses survive but that doesn’t necessarily identify what “survival” will look like in what will eventually be the “New Normal”.

Considering a loan?  Please give some thought to these questions and issues for your business.

• What will the funds be used for?
• Are they “restricted”, that is, to be used only for specific expenses?
• What are the repayment terms?
• What do your projected revenues and expenses look like when business conditions return to anything close to what they were before the coronavirus changed almost everything?
• How confident can you be that your business will rebound since we’ve not experienced anything like the current business conditions?

Before borrowing, we propose the following steps…

1. Evaluate where your business was BEFORE the coronavirus changed things (BEFORE-CV).
2. What was the value of your business BEFORE-CV?
3. What are the possible scenarios for the business in the “New Normal”?
   1. Create and evaluate 3 to 5 possibilities. 
   2. What resources are needed for each?
   3. Revenues – what can you count on from current customers?  Are there new opportunities?
   4. Expenses – can you manage costs going forward?
   5. What resources do you have?
   6. How likely is each scenario to happen?
   7. Do you now have, or can you acquire the resources to make these scenarios happen?
4. What happens if you borrow? 
   1. How much is needed? 
   2. Does it provide for what is anticipated?
   3. What about a “cushion”?  If you need more, is it likely to be available?
   4. How will loan payment obligations affect cash flow and the Business?

1. What happens if you DON’T borrow?
   1. Can you survive?
   2. Changes are likely to be needed.  What needs to happen to survive and will you change?
2. Choose a few scenarios and estimate the value of the business as far out as 2 years in the future.
   1. How do they compare?
   2. Is there a clear choice?

WHAT WE PROPOSE

Our EXPERTISE and EXERIENCE over the past 30 + years is advising business owners, often with regard to the sale or purchase of a business.  We also provide business valuations – for many different reasons.  Often an “outside expert”, someone other than the owner and employees of a business, is best equipped to provide the analysis and opportunities briefly identified above.  In these scenarios we propose the following option:

1. You share information about your business so that we will be able to provide an estimate of the value of your business “BEFORE-CV”.  THAT’S OUR EXPERTISE!
2. Planning & Forecasting – we work with you to develop and evaluate scenarios for the “New Normal”. 
3. We will analyze the impact of incurring debt to survive, from the perspective of financial and business operations and from the perspective of the personal obligations of the owner / guarantor of the debt.

What you choose to do – borrow funds or don’t borrow funds – is up to you.

It’s better to make an informed decision based on data analysis!

COST OF OUR SERVICES

                The total cost of these focused services listed above will be far “LESS" than the overall cost of a full business valuation.  We recognize that each situation is different and that is precisely why we put this list of options together. Consider our assistance during these difficult times and contact us today for an outline of the steps we propose and cost with a not-to-exceed amount so there are no surprises.

Contact us:   Zoellner, Garten & Company 513-852-2400

John W. Zoellner, President     jzoellner@zoellnergarten.com

Morgan Vaive, Vice Pres.    morgan.vaive@zoellnergarten.com