Business Survival in Difficult Economic Times

The Effect of the Global Recession

The New Economic Era

Though we are certain that the global recession will affect medium and small business companies in a negative way, we are also of the opinion that SMBs have a better chance to survive the recession and succeed than the BIG corporates... (See our business cartoon: the new era).

Why? Because, until now, one of SMBs' biggest constraints has been limited means to obtain credit and venture capital. This constraint might not only turn out to be our protection, but also change into one of our biggest opportunities ever!

Public companies, however, are usually large companies that raise investment capital by selling shares on stock exchanges. Most small business companies, on the other hand, raise capital without selling shares to the public. In most cases SMBs start their businesses on shoe string budgets.

In other words, the current financial crisis' impact (i.e. a credit crunch) on small business companies might be less than on companies surviving on huge amounts of credit... just maybe.

Unfortunately, here is some more bad news. Some experts predict that the BIGGEST market crash is still coming!

In a few years time the Baby Boomers will start retiring, exchanging their pensions (invested in company stocks) for cash. According to experts like Robert Kiyosaki and Sharon Lechter, authors of the New York Times bestseller Rich Dad Poor Dad, the huge demand for and withdrawal of cash from the market will force share prices down, then spill over to other parts of the world and ultimately create the largest market crash in human history (Rich Dad’s Prophecy).

After I had read Rich Dad’s Prophecy, one of my first thoughts was, “SMBs should seize these opportunities and profit from it!” It was followed, almost immediately, by another thought that neutralized just about all my enthusiasm right there. It was this thought that caused me to write Survival Kit for Small and Medium Businesses - Profit from your Business Risks!:

“If most SMBs haven’t failed and closed their doors before that time.”

Unfortunately, the harsh reality is that small business companies do struggle to keep their heads above the failure statistics - and that was during normal economic times! It is a never-ending battle and a global phenomenon, although statistics may vary from country to country. In general, only 50% business start-ups have a chance to survive the first year, and only 4% the first ten years. No wonder rumor has it that a business is your worst investment ever! (See some of our business survival cartoons.)

For this reason entrepreneurs MUST pay attention to the HIDDEN causes of profit loss in their companies - seeing that forces were even in normal times against them. So more during difficult economic times. BUT during a recession and market crash a country's economy still has to go on... and small businesses, used to minimal credit, might have a better chance of survival (as credit won't be available)... that is IF they can put a stop to profit erosion in their enterprises!

Download our small business survival guide for normal and recession times today!

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