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Crisis creates once in a lifetime opportunity

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The current global financial crisis has been described as a “once in a lifetime recession”. However, savvy business owners, entrepreneurs and investors recognise it as a once in a lifetime opportunity to make money. Here’s why:

  • Prices of public and private companies are extremely undervalued. Most will return to their true valuations over the next few years creating significant upside for investors
  • There are many industries that are thriving in the current environment
  • Lower barriers to entry for new businesses because most competitors have shut up shop
  • The cost of labour has significantly dropped – meaning business owners can employ better quality people cheaper
  • If you can provide others with a business opportunity such as a franchise or distributorship, recruiting in the current market is easy (as many people are seeking cashflow opportunities or extra income)
  • In property, prices have dropped and rental yields remain high due to the housing shortage. This combined with 20 year low interest rates means it’s easy to positively cashflow an investment property

Even though everyone is saying that capital is hard to come by, all the investors I speak to are very optimistic about the current investment environment. They are actively looking for the ‘next big thing’ that might become an IPO in two to three years when the stock market recovers. So timing is ideal.

Sir Richard Branson says the time has never been better for entrepreneurs. In a recent interview with The Times (London), he said the economic downturn has provided entrepreneurs with their greatest opportunity in years.

“Fortunes are made out of recessions. A lot of entrepreneurs get going in the economic depths because the barriers to entry are lower. There are a lot of Richard Bransons that will come out of the next three or four years.”

Branson also offered entrepreneurs some advice on how to get through tough economic times.

“You have to come up with imaginative ways of saving cash, like signing every cheque yourself. You would be surprised how much you can save even in large companies if the boss questions every purchase order that goes out.”

Steve Torso is a founder of IMI Trust, which assists SMEs with strategic marketing, business development strategies, web development and capital raising. He is also the founder of Wholesale Investor Pty Ltd, a high-end subscription-based magazine and website providing wholesale, profession and institutional investors with access to leading private companies.

Photo: Brooks Elliot (flickr)

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