For some entrepreneurs, an upside to the Great Recession
Flickr user Aturkus
Looks like the economic carnage has actually been a boon for some small business owners.
Just consider some of the conclusions of a semi-annual survey done by American Express OPEN Small Business Monitor, which found that more small business owners are upbeat about their near-term growth opportunities. That is, more than half reported they have an optimistic outlook compared to 45% in March, and 26% predicted expanding opportunities for their businesses, up from 15% a year ago.
But, when you look under the hood, what’s really fueling this attitude? Apparently, it’s opportunities created by the downturn. That is, companies that have managed to grow during this time have done so partly by taking savvy advantage of weaknesses in their competition and among suppliers. For example, among businesses reporting growth opportunities, 44% said these opportunities are the result of decreased competition. Also, these companies cited the ability to renegotiate equipment leases and supply contracts (13%) and lower real estate costs (12%) as other factors contributing to their growth.
Obviously, companies that have been able to prosper, or at least tread water, have done other things besides making the most of their competitors’ problems or pressuring suppliers for better terms. But, it’s clearly helped.
Oddly enough, even those businesses expecting good results over the next six months aren’t upbeat about the overall economy, however. For example, 63% of respondents said they don’t think the economy has hit bottom. I fear they’re right about that.
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On another note, there was an eye-opening statistic about just how small businesses are addressing cash flow–32% said they use personal or private funds, up 9 percentage points from March. That’s a lot. And 35% reported that they’ve had to tap personal assets. Scary. Time to step it up, SBA.
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Since banks don’t seem to be in the business of lending anymore, small businesses have to turn elsewhere to find someone who operates more like banks used to. You’re extremely lucky if you can get a bank to even make you a home equity loan, unless you package it with 2,400 other properties and let them in on the deal.
But as to your main point, I think there’s potentially tons of opportunity for start-ups now – not because of the recession, certainly, but because of the turmoil within various industry segments – media, music, energy, agriculture, heavy manufacturing, financial services to name a few.
Some of these are in flux thanks to the digitization of everything, others for reasons related to natural resource depletion. But I really believe in chaos lies opportunity. And you have to admit, it’s getting pretty chaotic out there…
There definitely is opportunity in the chaos for smart people able to make sense of it all. (Also for smart people comfortable with risk). But, it certainly is unpleasant for the many others who don’t share that ability.