Trust Your “Funny Feeling”

Recently, I was contacted by a business owner interested in selling his company. In the process of a market valuation he was “surprised” that his company was not worth more than the range of values we cited, based on recent sales and his recent financial results. One of the main factors that impacted the market valuation was three years of significantly declining revenues. When asked about this he said “I had a funny feeling in 2009 that we were going to go through some changes.”

The “funny feeling” that business owners sometimes experience is actually market intuition and you should consider that it has some basis in fact. When I asked him about the basis for the “funny feeling” he replied, “One of the local managed healthcare representatives told me there were to be a lot of changes in the way services were authorized.” And during the next three years his service authorization declined despite excellent quality ratings.

If you find yourself in a similar situation you have some options:

  • Purchase some market intelligence through a consultant who knows your marketplace. In this example the owner “lost” $2.5 million in revenue over a three year period. The consultant would have cost a fraction of that lost revenue.
  • Look to your trade association or similar group. They are often the best source of thoughts on market trends.
  • Talk to your competition. They may be your competition, but this is a topic that interests them, as well.

The problem with the “funny feeling” is that it may not correspond with your life plans. For example, the moment at which it occurs may not fit with your intention to slowly grow your business the next few years before retirement. If you are willing to consider that you might have to act differently to achieve your goal (e.g. sell you business and move on to other professional pursuits) you’re more likely to be successful. If not, you can be imprisoned by a limited strategy in the pursuit of your dream.