It’s no secret the Covid-19 lockdown has hit small- and micro-enterprises the hardest. As cash flow is the lifeblood of business, it’s easy to see how a month without receivables can be crippling.
In his 38 years at Park Village Auctions, Head Auctioneer, Clive Lazarus, has seen many businesses bounce back from the brink of closure through realising assets for much-needed liquidity.
Clive: “Most businesses that reach the point of filing for business rescue just need a capital injection to continue operations. However, they can’t secure a loan or investment because (by this stage) they are already over-extended. They’ve exhausted their credit options, which increases their risk profile with other non-bank funders.
“They think they have no more options, but they could self-fund. Business owners underestimate how much capital is tied up in their assets.”
Examples of such assets include:
- Older, slow-moving stock items
- Selling off discounted excess stock
- Unused or redundant equipment and machinery
Most auctioneers are qualified evaluators and can, therefore, accurately appraise the assets’ worth. PVA, in particular, are professional valuers registered with the South African Council for the Property Valuers Profession (SACPVP) and are recognised appraisers to the High Court.
Asset disposal is not the only way to financially resuscitate a business. “We’ve seen how businesses can successfully manage with a remote workforce. Rather than forfeit property, owners can now look at leasing all or a portion of their property to create an additional revenue stream,” says Clive who explains that one of PVA’s specialised competencies is consultation regarding asset stripping, downsizing and asset restructuring.
“Every business is unique and, though we are affected by lockdown, the right remedy for each will be too,” adds Clive. He encourages business owners, financial and operational managers to arrange a consultation with a reputable auction house to discuss their specific situation.
During this period, Park Village Auctions has been busy working on their post-lockdown strategy, which includes refining and expanding on their various online asset disposal methodologies, namely:
- Simulcast auctions, where a live and internet auction run concurrently.
- Online only auctions, where online bids are only accepted during a finite period after the auction commences.
- Live virtual auctions, where the auction takes place in real-time with online attendees only. Like their physical counterparts, items are sold in lot order.
“It is our firm belief that online auction disposal is going to play an important role in assisting business in generating revenue from assets in the wake of the lockdown,” concludes Clive.