These conversations remind us of a story of two shoes salesmen who are sent to an African village to explore business opportunities for shoes. One salesman goes to the village and finds that nobody is wearing any shoes. She sends a message to the headquarters – “stop this project. No one here wears any shoes”. The other salesman goes to the village and finds the same situation. However, she sends an urgent message to the headquarters saying – “crank up the production in full force. No one here wears any shoes”. As you can see the opportunity is in eye of a beholder!!!

Many of the well-known businesses of today were started in bad times.

Hewlett-Packard (HP) was founded in 1939 when the Great Depression was ending. Several well-recognized names of today such as Apple, Microsoft and Genentech established their roots during recession of 1970.

Our view is that opportunity always arises from crisis. The best time to start or buy a business is when things are not looking up. The stock market principle of “Buy Low and Sell High” applies here too. In addition, there are several advantages of starting a business in bad times.

• You can find many good businesses at bargain price. Not everyone will survive in the bad economic times. There will be number of owners who simply cannot make it through the recession for one reason or another.
• You can find good talent at a reasonable salary. When unemployment is high you will come across number of highly talented individuals who will be willing to work for reasonable salary.
• Everything is cheap in the downturn. You can find good office space at a discounted rent. The material is selling at lower price and so on.
• There is less competition. The bad times will weed out number of weak competitors from the market. Only the strongest will survive and prosper when good times return. And they eventually do return.

Even though getting financing can be somewhat difficult in tough economic times; companies like Biz2Credit can find creative ways to find money for your start-up.

you should also make sure you perform proper research and seek outside help before jumping in. We at Angel Business Business Advisors can provide such advice through our blog and consulting.

What do you think? What are your reason to start business in tough economic time? Let us know in the comments.

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About Harry & Sally Vaishnav

Harry and Sally Vaishnav are founders of Angel Business Advisors – a consulting firm focusing on small business and franchises. Angel Business Advisors was founded to help small business and franchise owners and aspirants succeed.
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The reality is that people are still doing business, just differently. In the hotel industry the sleeping window of opportunity in the first time buyers market is to build or locate hotels in rural areas or small towns. These pockets of growth are a gold mine of the future. For example, right now the typical profile of a seller in these select markets is offering an average 20% reduction in their selling price. If you have a solid credit score and the financial backing to put a 20%-30% down payment, you have the buying power to purchase a hotel at a discount. If your intent is to flip the hotel, I recommend you hold onto it for approximately six months to one year. With the economy at rock bottom now there is only one way, but up. Therefore, I believe that within the next year, banks will start lending, the real estate market will improve, and with the promises of our new president, regardless of your political opinion, my projection is buyers will gain a 20% increase above the original discounted purchase.

Surprisingly, in spite of the shaky economical climate, the new construction hotel market has remained relatively untouched. For a first time buyer with financial backing and a strong resume, building a new hotel is an excellent option. Interest rates and commercial land prices are low and as the economy recovers, your ROI is realized in a shorter period of time.

Franchise hotels and motels generally go from X2 ½ – 3 ½ on the room revenue in rural areas and small towns. In large cities the room revenue can be X5 or higher. Purchasing an operational franchise hotel with renovation in mind is an option for a 1st time buyer. However, be sure to ask and review an inspection report during the due diligence stage. The biggest mistake as a buyer is making a purchase without being aware of the hotel PIP. Another point to consider is what flag is on the high-rise sign. The reputation of the franchise flag will dictate your walk-in market.

SBA is still an answer compared to a conventional loan for new construction. Although SBA has tightened their loan approval process, they are more lenient in approving a loan to a qualified buyer with a solid business plan. 1st time buyers must have hotel management experience or hire a management company to oversee operations.

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About Vishant Desai

Mr. Desai received a Bachelors Degree in Real Estate Development from Baxton University, after receiving his Bachelors Degree in Business Management from Leicester University.

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