For the owners that bought post ZIRP, are you seeing revenue declines?

searcher profile

September 10, 2024

by a searcher from Xavier University of Louisiana in Houston, TX, USA

For the owners that bought post ZIRP, are you seeing revenue declines? If so, what percent declines are you experiencing from the average diligence revenue? Are you getting squeezed between revenue decline and high floating interest rate SBA debt? If so, what's your release valve?

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commentor profile
Reply by a lender
in Stuart, FL, USA
One way to offset the possibility of revenue declines or expenses getting out of hand are to increase revenue on day one. There are lots of ways to increase revenue without incurring any additional cost to the expenses that a lot of people may not think about when they first purchase a business. This is not an exhaustive list but a teaser on some of these items.

• Find out when the last time the seller increased the sales price of the product or service and nudge it up by 10-15%

• Do a review of what each employee is doing and make sure you're not overstaffed in certain areas and if so, relocate duties to maximize your return on investment per employee.

• If you provide a service for someone, make sure your logistics are not increasing your expenses by having multiple visits to the location that generates the revenue when one visit could do etc.

• Go through your vendors and see which ones will offer you discounts for early payments. A lot of vendors will give a 2 to 5% discount if you pay the bill early. This is when having a line of credit or backup working capital account is beneficial to take advantage of these discounts.

• Do a review on the critical expenses your business is paying. I.e. Are you paying too much for insurance because you haven't done a review on the policies lately or are there elements of the policies that are no longer needed that you can drop. Have you renegotiated office services such as Internet or phones?

• Are you overpaying on company vehicles or equipment on maintenance plans or repairs? • Are you tracking your marketing efforts, so you don’t hit a point of diminishing returns? Are any of the vendors willing to co-op on the marketing for a larger percentage of your market share?

These are just a few things that a buyer can do when first taking over the business to help pick up efficiencies and increase top line numbers without adding any expenses to the bottom line. As mentioned, there are plenty more of these, but this is a good list to start with. Hope this is helpful to someone.
commentor profile
Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
Unfortunately I have seen financial statements for a large percentage of businesses in 2024 where revenues and / or EBITDA is down over the same time period last year. There are always exceptions, but overall I think 2024 is a bit of a setback in the small business world. But 2022 and 2023 were very strong years for most companies, and business is always cyclical, so I expect many of these businesses will bounce back next year. Often when fresh blood is injected into a business if you focus on sales & marketing you can often pick up low hanging fruit the seller was not focused on. But that is not always the case. Be sure you understand your industry and market conditions before going into it, and try to leave room to allow for a decline in revenues and still remain profitable.
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