Recessions Create Opportunities

Periods of recession have a silver lining.  They set new economic baselines. Once economic activity hits the bottom, a new foundation is established.  This is the appropriate time to engage the market and ride the next uptrend.  Sounds pretty simple, but it is not.

Warren Buffett and other financial sages have been quoted as saying,” Buy when others are selling and sell when others are buying”. Some call this strategy contrarian, doing the opposite of what the crowd is doing. There is a certain logic to this strategy that you need to consider.

Start with the big picture. What size is the market that you are interested in? Just how much revenue is moving around in the space that you have access to? How many and how large are the competitors sharing that market space? Is the market space getting larger or smaller?  These are all basic questions that you must get your mind around before you do anything rash.

Recessions create an atmosphere of survival of the fittest.  Those entrepreneurs who are skillful will recognize the changing economic landscape and make the appropriate adjustments to their businesses. They will constantly be striving to increase their market share at the expense of the less skillful. The only concern they have is whether the market they operate in is large enough to support their profitability.

You have certainly heard the old saying that it is better to be the big fish in a small pond than a small fish in a large one.  Small fish get eaten.  Be very careful about understanding the size of the pond and your place in it. If you must play in a large pond, try to stay out of the deep end in the beginning.

OK, you’re determined to launch your venture. You have set pencil to paper and surveyed the concerns mentioned above.  You are satisfied that you can handle the risks. Now what?  How are you going to fund your venture? How much money is needed? Where is the money, the capital, to come from? You absolutely must put numbers and names to these questions.  You also must absolutely have a detailed written business plan that includes a financial projection of your conservative expectations. Preparing this written plan will help you think your venture through more realistically and will give you the needed confidence that your venture can succeed.

This website has additional detailed information on how to work through these critical issues.  Planning, funding sources, marketing strategies are all discussed. Explore the site map to get a better feel for the information available to you.

Recessions create great opportunities to buy an existing business, one that is not doing as well as it could if it were re-engineered.  Less skilled owners often become frustrated and disillusioned about the business that at one time was a little gold mine for them.  They built it to the point that it became larger than their skill sets to manage.  The result is that the business has deteriorated physically and financially.  The present owner is burned out and lacks the passion to see what is wrong and effectively fix it.  He is tired and simply wants out. The big question is, ”Do you feel that you have or can develop the needed skills to take advantage of such an opportunity?”

Perhaps you see that there is a need for a product or service that is not readily available in your market area. You are considering launching a start-up. If you are properly and sufficiently prepared to survive the first two years, you can indeed command a sufficient market share for profitability. Most start-ups fail in the first two years due to lack of preparation by the owner.  The key to succeeding is to have a written business plan with a provable business model that will convince your investors, venders and family of your viability.

Your money machine must be blueprinted, the business plan, assembled with little or no need for major re-engineering. Remember, you are working with your own and others’ money. These are limited capital resources.

Marketing skills are critical here. You have to introduce your business to your market effectively.  You have to get profitable orders and lots of them in a very short time to conserve your limited working capital. You also have to pay yourself, your employees and your venders. All this takes money which needs to come from sales of your product or service. Marketing drives your business.

Whether you launch a start-up or buy an existing business, the fundamentals of business are your tools of the trade. You must develop proficiency, understanding and using those tools skillfully.  Be teachable and open to learning new skills.  You can do this.

This website can be very constructive here. Sections address this opportunity in detail and can guide you along the way. Think of it as a buy it – fix it – profit strategy.  Caution! You must know or have access to the required technical skills to deliver your product or service.  This website cannot teach you to be a master electrician, plumber, candlestick maker or computer whiz.  Those skills are yours to provide or hire.

The bottom line is that recessions shake out the less fit owners to make room for the better equipped entrepreneur. Decide if you have the passion to be a business owner, to be your own boss and to set your own course.  If so, you need to commit to prepare yourself to meet the challenges that will surely come your way. You can succeed if you are willing to do the work and pay the price.

You are urged to take our FREE Personal Evaluation Questionnaire. Before you start any trip, it is always important and constructive to know where you are now and where and why you are going next.This is your first step.