It’s a time of debt, liquidation and even bankruptcy for small businesses. Hopes that the credit crunch might prove more hype than hurt have long since faded. However, when the economy is leaning towards a recession, there are still opportunities for businesses to not only survive, but thrive.
Many of these involve risk of investment when funds are limited, but it’s risk you’re going to have to take on in order to expand your business, rather than straggling behind or, worse, filing for bankruptcy.
A deeper pool of desperate skilled workers to choose from
Financial and retail sectors tend to be hit hard in times of recession. Australia is no exception. Business managers have a window of opportunity – right now there exists a wide range of highly skilled people eager to get back in the workforce.
Be on the lookout, as it is not unheard of for teams of entire companies to be made redundant. If you’re in the same field of work as a redundant team, you can not only bring their extensive skill to your workplace, but also their brand recognition and status from their former company.
Eliminate unnecessary costs and expenditure
When business is booming or going strong, it’s easy to loosen up and lose track of what’s making you money and what isn’t. Since this kind of approach won’t keep you afloat with less customers, business and credit, it’s the best opportunity to fine tune your business and filter out anything holding you back during an economic downturn.
Consult with your biggest client(s) and ask what features of your business they like, and what you think you can do without. You’re bound to get a different and interesting perspective.
Purchase cheap capital from bankrupt companies
With bankrupt firms and businesses attempting to liquidate as much as possible, you’ll be able to take advantage of some dirt-cheap office supplies, furniture, computers and other business necessities. That’s the easy part – the challenge will be finding these liquid auctions and claiming the bargains before others do.
Think it’s time to cut back on advertising? Think again
Just because people are typically spending less, it doesn’t mean that there’s less demand for all products. Certain niches will thrive in a recession. If you can pin-point the perfect target market for your business – one that will appeal to consumers’ frugality – then you can unlock a new jackpot. Worried about the excessive cost of advertising and your lack of funds? So is every other business. That’s why in times when less companies advertise, there is less clutter and competition, and media outlets will provide cheaper rates.
Buy cheap, sell big
Looking to expand your shares assets and overall ownership? You should be. There’s no better time than now. Businesses struggling will be reluctant to sell cheap but many won’t have a choice. If you can survive past the crunch, you will have an expansive portfolio that will prosper in the next boom.
How can you fund all these purchases long enough to last past the economic downturn? Well, although it’s a credit crunch, credit is available. For instance, if you have a balance of $15,000 on one credit card, and perform a balance transfer to Citibank Personal Credit, you can effectively pay a 7.9% interest for the life of your balance. Two years later, you’ve repaid $17,370.
The $2,370 of interest repaid over two years may sound significant, but with your business’s new capital and assets thriving in an improved economic state, you’ll be patting yourself on the shoulder for your shrewd investment strategy.
Mike Jarocki is a financial writer and webmaster of http://www.finder.com.au, which compares the latest and current credit offers from leading Australian financial providers.
Photo: peasap (Flickr)