When customers buy, usually they are interested in convenience, value, and service. However, an increasing number of customers are also buying based on a cause.

Many advertisements market a cause. For example, a sock manufacturer touts that they gave away 60 million pairs of socks to homeless shelters, one pair for each pair sold. Their tagline boasts of “the greatest sock never sold.”

When I was shopping for socks a while ago, I went to their website.  Unfortunately, I was unable to find what I needed.  However, their advertisement was successful in getting me to visit their site.

With the COVID-19 virus devastating our nation, many businesses are forced to close. Businesses scramble to sell off assets for the best possible price. Unfortunately, it is difficult to make much on a quick sale. However, the business probably has a customer list that may be of value to others. 

Recently, I talked to a couple of business owners who needed to close their businesses.  The first was a landscaping business in a state that required businesses to close for several months. The owner did not have enough cash reserves to continue operations. The business had grossed approximately $200,000 in 2019. I helped them present the value of the mailing list, and he was able to sell the list for $12,000. While it was less than what the business made in 2019, it was better than nothing. The business that bought the mailing list also purchased some of the equipment.  In addition, the same business offered the owner a position as a crew supervisor which provided an opportunity for his employment. 

A crisis like COVID-19 creates devastating pain across the nation while at the same time opens opportunities. We see dramatic change in life patterns and are experiencing business changes occurring at a rapid pace. One critical skill for any businessperson is to recognize the changes that are already occurring and adjust to them.

One devastating statistic is that 25% of small businesses have closed this year and bankruptcies have increased 26%. This reality demonstrates how existing business models no longer work for many. In some situations, the change has affected entire industries, like the airline and the restaurant business. At the same time, the US Census Bureau reports new business applications have increased 5% between the first and second quarter. This represents 40,000 new business startups.

At times I watch Shark Tank. I enjoy the interaction and business lessons we can learn from the program. One common mistake many entrepreneurs make when entering the Shark Tank is asking for a ridiculous valuation. I’ve seen several shows where the sharks were interested in the idea; but the valuation was so high compared to earnings, no one was willing to pull the trigger and make an offer.

As a consultant I have encountered many business owners who, at times, have an unrealistic valuation of their business. Here is an example.

A client who was on the verge of closing an auto repair business came to me for options about restructuring the business. “Sam” operated a small facility employing two other mechanics plus a part-time office administrator. Sam worked most days from 7 am to 9 pm to keep the business afloat.