We were in Florida in early December and happened to see the Palm Beach Christmas displays. The tree in the photo is made of sand. It is gorgeous, you can see it’s about 30 feet high, and obviously took a lot of hard work and skill to create.
It’s a lot like a business in that it takes a lot of skill and hard work to create a good company. And when somebody does that it is quite an accomplishment.
As you look at the sand Christmas tree, imagine what would happen if a rainstorm hit. Or if a rain and windstorm attacked the area. This tree wouldn’t last very long, would it? Businesses aren’t as fragile as a sand tree, but they do have things that can cause them to have reduced performance or even collapse.
It’s one of the trickiest things a business buyer deals with, determining if those issues are serious enough to cause them to back away from the company. Of course, when a company is for sale, everything is rosy and portrayed the same as if the Christmas tree is resistant to everything.
Look no further than the headlines for what some of those things are in the small business world. They include:
- The employee retention and recruitment situation given there’s a shortage of good employees.
- The supply chain issues, which affects small businesses a lot more than huge companies like Amazon and Walmart who can control their own supply and delivery chains.
- Escalating real estate prices, which may make future rent more expensive than it has been historically.
- A customer base that is not only fickle, but it is much more educated due to the plethora of (online) information available on everything.
And then, for companies who have thrived during Covid, the question is, is it a spike or a trend? It causes a great deal of consternation for buyers as they surely don’t want to pay for something that won’t be there in another year or two. Quite a dilemma trying to figure out the staying power of recent growth.
This issue is not going to go away for a while. Just another thing we have to deal with.
“Living at risk is jumping off the Cliff and building your wings on the way down.” Ray Bradbury