This entry builds upon previous posts in this series on strategies for a tough economy. Previous posts went over finding a niche to dominate, increasing market share to increase revenue, economizing by reducing unnecessary expenses, becoming lean and mean, investing in automation and processes that reduce costs, and paying down debt due to rising interest rates.
This post is about setting your business up for significant growth in the future. If you have followed some of the steps mentioned in previous posts then you have worked at strengthening your business and increasing profitability. Save the excess cash because it will be used to buy assets when their prices have fallen. What you can do, while you continue to grow your business, is to start identifying assets that you would like to acquire in the future. This can include equipment, property, other businesses, competitors, investment assets, and people to hire. These assets can be leveraged for future growth when the economy starts improving. This is the overall strategy.
The reason this will be useful is that when the economy gets worse and more businesses are struggling to make enough money, they will either go out of business or they will cut prices in an attempt to survive. If their profit margins are slim now, it will be more painful for them later. Currently prices of many things are increasing, however prices can’t go up forever because at some point they become unaffordable. People start cutting back on what they buy. At some point, sales will drop so much that businesses will be forced to lower prices in an attempt to bring back customers. Many businesses will fail along the way.
If you have made your business more resilient, you can survive the tough times and even grow. The longer your business survives the less competition you will have as some of them will fail. As businesses fail, some will cut their losses and sell off their assets so that the owners come out of it with something instead of nothing. At that point, you have an opportunity to acquire those assets at a discount.
It’s not about being predatory or taking advantage of people. Be good to people where you can. Be compassionate. They will be going through a tough time. Those liquidating their businesses have decided that the cost of doing business isn’t worth it because they are losing money. They want out and you buying their assets gives them some money and helps mitigate some of their losses. You can hire people who lose their jobs and businesses which helps them and their families. You have the opportunity to help others survive in one way or another during the tough times while strengthening your business.
Your newly acquired assets will help your business grow and produce more while you have less competition. During this period, as the economy improves and more people can afford your products and services, your business can grow rapidly.