Buying a Business in a Crisis

As a result of the economic downturn, we are seeing many businesses going out of business. Is now the right time to be buying a business?

Forbes recently reported that “the Covid-19 crisis has led some investors and entrepreneurs to believe this is an opportune time for potential buyers to save jobs by buying companies at bargain prices or even as start-up ventures due to their financial difficulties”.

Let’s explore what kind of opportunities might arise if you were able purchase these distressed businesses; for instance, they may not be priced competitively but could represent value in a number of different ways.

While there have been significant setbacks from such events like the Great Recession in 2008, the dot com bubble bursting in 2000 and others before it, crises can provide excellent investment opportunities.

When financial panic sets in, the Government is proactive with timely measures to keep people attached to jobs and money in their pockets.

The latest announcement of these measures will be a huge buffer for the Australian economy as we watch it grow stronger from within.

In this current environment where we are still waiting for the return to work and a new reality, cash is king. We should all be conserving it because in times like these you can never have enough!

In order to thrive in the new economy, it is important for businesses to evolve and focus on what customers need.

The 2008 recession taught us that those who thrived as they emerged from the crisis were able to do so because they had used this time period wisely by evolving and focusing on their customer’s needs rather than trying to get back where they were before the crisis hit them.

Out of Crisis – Becomes Opportunity

John F Kennedy famously noted, “when written in Chinese, the word “crisis” is composed of two characters. One represents danger and the other represents opportunity”.

Businesses that streamlined and engaged with new ways of doing things, as well as embracing emerging technologies thrive.

After the total change in working practices the C-19 shutdown forced on us, it is unrealistic to think everything will snap back exactly how they were before.

The budding shoots of new business processes and efficiencies have been laid down. They are here to stay in some form or another whether we like them or not.

Business meetings don’t need to be held face-to-face anymore; this has become apparently clear now thanks largely due to video conferencing capabilities having become better over time.

You can now dial into a meeting instead going through the gruelling process of travelling for hours just so you could attend one meeting at a different location.

The move to even more online shopping behaviours and deliveries have really dealt a permanent blow to the high street, one from which it is unlikely to fully recover.

Buying a Business

Cash is King

A big investment of cash in acquiring a business can do two different things: bolster your current production if you’re in an industry that’s growing or invest instead into something new with opportunities such as pharmaceuticals, groceries, gaming and technology through AI.

It’s not just the businesses that are directly impacted by a lockdown who need to be on high alert. There is an opportunity for innovative or creative companies in other sectors, such as consulting or marketing, to take advantage of new market opportunities when the lockdowns lift.

Some may say that the Great Recession is a problem for big business, but in reality, it’s also an opportunity for budding and seasoned entrepreneurs alike.

While some companies are hurting due to lower consumer spending, others stand to gain from investments in new technologies or expansion into emerging markets as their competitors retreat temporally.

In order to not be left behind during this time of change and uncertainty, those who will succeed are those who plan ahead by taking advantage of cheap loans if they qualify; stop staring at your shrinking bank account balance and do something about it!

In Conclusion

Buying a business in a downturn may seem like an unattractive proposition. However, there are many benefits that come with buying during this time of uncertainty and turmoil.

With the market flooded by distressed inventory from failed businesses, you have plenty of opportunities to innovate or bolster production as well as purchase discounted equipment at reduced prices.

The key is knowing how to cut through all the noise and find quality companies for sale while everyone else is missing these generational opportunities.

If you are in the Darling Downs area, Brisbane, Gold Coast or anywhere in South East Queensland and are looking at buying a business during the current crisis, contact Marc Phillips today.

Why Buying a Business During a Crisis is a Good Idea

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