It is stunning what can happen in one month.
At the end of February, the vacation rental industry was thriving. Ski markets were collecting their final bookings for the end of their peak season. Beach markets were preparing for their Spring Break rush and collecting bookings for their Summer peak season. Urban markets were booming with corporate and leisure travelers alike.
Today is the end of March. Mountains and beaches are closed. Half of the population has been issued "stay-at-home" orders. Only essential travel is permitted. Some states have banned vacation rentals. Urban cities are ghost towns.
Is this a black swan event, recession, depression, or even worse? In our 30 plus years in the business, we have experienced SARS, 9/11, hurricanes, oil spills, earthquakes, and many other catastrophes. Unfortunately, we have never seen somethings quite like this in our lifetimes.
It pains me to write this, but below are actionable steps you can take to prepare your business to sell, if the times comes.
- MODEL YOUR CASHFLOW RUNWAY
- Create 3, 6, and 12 month models
- Do not assume when this will end
- What expenses need to be cut if it lasts < 3 months, 3 > 6 months, 6 > 12 months, or > 12 months
- At what point on that timeline does the cash run out?
- Adjust and iterate the models weekly
- Now is NOT a good time to sell
- Buyers will not pay anywhere near "market" price
- Do everything in your power to weather the storm
- MAINTAIN YOUR HOMEOWNERS
- Every company's P&L looks bleak moving forward
- Focus on retaining or even growing your homeowner count
- Buyers know that revenues are down, but they can project future revenues by homeowner count
- Open line of communication with all homeowners. Do NOT go dark!
- Communicate, communicate, communicate with your homeowners
Your homeowner count is the most important factor for selling your company at this time. If you have any further questions, feel free to contact us at C2G Advisors. We are currently providing free consulting regarding financials & cash flows, valuations, and structuring your company to sell. All conversations are confidential.
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