COVID-19 and the Economy: How Some Businesses Are Staying Stable During the Pandemic
Amid recent national and world events, particularly the impact of the COVID-19 pandemic, achieving financial success in all types of businesses is more challenging than ever. Many business owners are asking themselves whether they can afford to keep their business, while employees worry whether new direction and leadership can adapt to a crisis.
The current economic climate has demonstrated that businesses need to keep in mind the reliability of their value, and companies need to take a long-term view to weather surprises across business cycles. Success isn’t just about growing the company; it’s about building a flexible business model that will sustain value for you when facing a crisis and a transition, or even a return to a more predictable time.
For that reason, successful companies are turning to business succession strategists, a field devoted to planning for this challenging transition opportunity. PNC has developed a specialized team of professionals dedicated to working with businesses in Philly to address these exact issues.
“We help owners identify the gaps in both business and personal financial plans; we then work with them to develop a roadmap to close those gaps,” says Joe Fahey, CFA, CEPA, national director of business succession planning at PNC. According to Fahey, a business’s planning process always should be designed to succeed regardless of the business owner’s plans to keep or sell, especially since most business owners (80%1) are uncertain as to when or how they plan to transition.
Sharing the Wealth
The process benefits not only the individual, but the company as well. Preparing the company and shareholders for transition leads to increased probability of success for both; it allows for the financial adaptability the company requires to thrive. Business strategists will identify the company’s reliable value drivers, and document activities that enhance shareholder value. Key indicators that need to be documented include a stable cash flow, growth potential, a reliable customer base and human capital. But simply having the necessary patents, copyrights and effective company procedures can have a major impact.
It is essential that the business owner develop and maintain a personal financial snapshot and forecast to enable them to be clear as they plan to step away when preparing for the future. “A business owner should position their business as if they plan to keep it forever, but with the flexibility to sell tomorrow,” says Jennifer Messa, JD, LLM, a wealth strategy market leader for PNC. “We guide business owners through the pros, cons and financial implications of each of their options.”
1 State of Owner Readiness Report (2013). For additional information on the cited report visit www.exit-planning-institute.org
The PNC Financial Services Group, Inc. (“PNC”) provides investment consulting and wealth management, fiduciary services, FDIC-insured banking products and services, and lending of funds to individual clients through PNC Bank, National Association (“PNC Bank”), which is a Member FDIC, and provides specific fiduciary and agency services to individual clients through PNC Delaware Trust Company or PNC Ohio Trust Company. PNC provides various discretionary and non-discretionary investment, trustee, custody, consulting, and related services to institutional clients through PNC Bank. PNC does not provide legal, tax, or accounting advice, unless, with respect to tax advice, PNC Bank has entered into a written tax services agreement. PNC Bank is not registered as a municipal advisor under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
“PNC” and “PNC Bank” are registered marks of The PNC Financial Services Group, Inc.
Investments: Not FDIC Insured. No Bank Guarantee. May Lose Value.This is a paid partnership between PNC Bank and Philadelphia Magazine's City/Studio