Article Contributed by Stan Spector
This may absolutely, positively be the best time to start a well-funded business if you can take advantage of these 10 factors.
1. Equipment
In many business sectors, large numbers of business are going out of business, declaring bankruptcy or downsizing. Much of the equipment from these businesses is available for pennies on the dollar if you look to purchase used equipment.
2. Customers
Many businesses are going out of business and their customer will need a new supplier. These customers are up for grabs if you can find them quickly. Hiring a sales representative from one of those companies that are closing can help you find their clients and get them to your business.
3. No Financing
Most of the companies in financial distress may rely on short-term borrowing to stock their business for the peak season, such as Christmas sales. Many will not get the credit they did in past years. So a well-funded, new business with a business model that doesn’t require borrowing every year will get a boost in these tough times.
4. Rent
Many commercial landlords are having problems keeping their property filled. You can negotiate better rents now than you have been able in many years and you can lock up long-term leases that are less expensive than your competitions. This will reduce your fixed expenses. Negotiate, negotiate, negotiate.
5. Staffing
Existing competitors have too many employees for the reduced business they have now. It is hard for them to cut loyal staff and they keep the staff on long after they can financially justify their pay. You are starting your company so are probably understaffed for the work you have. Keep it understaffed until the business grows.
6. Employees
It is hard for an existing company to reduce pay to workers that they have employ for many years. You can hire new employees that have been laid off from your competition for many months that are now desperate for a job at less than they were making before.
7. Credit
Clients now expect to be scrutinized and expect to provide a lot of private information, and possibly personal guarantees, to get new credit from suppliers. Every businessperson knows the “no doc(ument)” credit is done. Your existing competitors can’t recheck their customers credit or tighten their terms without upsetting the client. You can do this as a new supplier and possibly charge a higher price (or offer less of a discount) for clients who are desperate for credit.
8. Sector
Focus Most business have sectors of customers that are still doing fine while other customer sectors are failing. You can focus on the good sector with your products or services and avoid the deadbeat sectors that will stick you with bad debt.
9. Low
Overhead Low pricing will dominate the customer’s decisions when they consider buying from you. If you can cut the overhead by the preceding ideas, you can offer lower pricing under similar terms as your competitors and get the sales.
10. Attitude
Negative employee attitudes go hand-in-hand with struggling companies. The customers sense this and look for suppliers that have good attitudes and more pleasant customer service representatives. Even if you hire ex-employees of these failing companies, their attitude can change overnight if they are now working for a well-funded company.
Stan Spector is the author of “Baby Boomers’ Official Guide to Retirement Income – Over 100 Part-time or Seasonal Businesses for the New Retiree”. The book’s website can be found at StanSpector.com.