The COVID-19 pandemic has created a significant economic downturn. That’s a fact. But what’s also a fact is that economic downturns create significant opportunities for business owners who have the wherewithal to take advantage. And this downturn is no different.
If you’ve got cash—or the availability of cash—here are three investments to consider.
When people say it’s all about location, location, location, they’re absolutely right. The strength of the property market really does depend on where the market is, what industries are located nearby and the social and financial demographics of the local population. But, regardless of location, the downturn has and will continue to affect many commercial properties nationwide. Why?
More businesses have discovered that working from home actually works and, over the next few years, will also realize that they have too much office space. Retailers across the country have suffered. Many movie theaters and event venues, struggling to fill seats even before the outbreak, will consider this the last straw. Other companies are struggling to fill their facilities. The residential housing market will continue to grow, but commercial property markets are challenged.
Property values will decline in many areas, and that presents an opportunity if you’re looking for warehouse or production space. Consult a commercial real estate broker and plot your strategy.
Inventory and Equipment
Some surveys are predicting that hundreds of thousands of small businesses will go out of business as a result of the pandemic. Other predictions are even more dire. There’s no way to tell if this is true, but one thing’s for sure: bankruptcy attorneys are going to be busy. This isn’t good news for those small business owners or for the economy, but it does present opportunities for businesses looking to snap up equipment and inventory.
If you’re in the market for that special machine—a used printing press, a forklift with low miles—then you should start looking now. Just Google “used equipment for sale near me” or visit online sites like MachineryTrader.com to see what deals are available. Do this daily as more deals become available. Also, look for auctions in your area. They will be growing in number.
Mergers and Acquisitions
According to BizBuySell, a marketplace for businesses looking to buy and sell, there is now a “lifetime opportunity” for business acquisitions. Many baby boomers have already been looking to get out of the game and retire prior to the pandemic and now, after struggling through the ordeal, want out more than ever. Other businesses—struggling for any number of reasons—may have also been pushed over the edge by the economic downturn.
This presents a great opportunity for any other business owner looking to expand or for an aspiring entrepreneur with a little capital who is looking to start his or her own company. Talk to a business broker, go to BizBuySell or ask around in your local trade association.
One final piece of advice: There is a great financing deal available for small businesses. Included in the CARES Act is a provision that will forgive the first six months of principal and interest payments on any new Small Business Administration Section 7(a) loan closed before September 27, 2020. The loan proceeds can be used for real estate, business acquisitions, assets and even working capital.
These are hard times for many, but for those who have capital and gumption, these are also times to do deals.
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