Recession - What Recession?

I don’t claim to be an expert in economics, but I always marvel how the average person gets lulled into believing the doom and gloom, and likewise the euphoria, that is spewed by all of the so called economic experts.

Having been in my own business for nearly eighteen years, I’ve been through a number of these economic cycles. I’ve learned a couple of things:

• There are very few “recession-proof” businesses
• The doom is never as bad as predicted
• The euphoria during the good times never lasts
• There will always be cycles, good and bad
• True entrepreneurs weather any storm
• Whenever a recession is predicated, my attitude is: “I’m not participating”

I must admit that I have seen a significant change in business buyer habits in the past twelve months. While the overall activity has been strong, and our business is up by twenty percent, people seem to be a lot more cautious. I believe a lot of this is tied to the real estate market. In the recent boom years, many people felt asset-rich and though they may have been “cash-poor”, the feeling was they could leverage their real estate holdings with confidence that it would continue to appreciate. Obviously, that mindset has changed.

Additionally, past volatility in the stock market reminded people that investing in equities is not for amateurs and so in seeking an environment where the individual was more in control brought the conclusion that buying a business, where at least you know what is going on everyday, was a safer alternative. However, with today’s roller-coaster market, people seem to have translated this to overall fear and so they are thinking differently.

While any trepidation is understandable, I see this from a different standpoint.

To me, there are three great reasons why right now is an ideal time to buy a business:

1. Many buyers will remain on the sidelines and therefore your competition is reduced.
2. Many businesses have experienced decreases in 2007 and the bottom line numbers on which valuations are done will be a lower basis. Multiples will generally take a step back as well.
3. Business owners tend to become a bit more motivated to sell if they believe that they are about to embark upon another difficult year.

Although few businesses are truly immune to a market slowdown, as a business buyer you need to embrace the unpredictability and realize that there will be swings in the economy. Further, you need to evaluate the uniqueness of any entity within its sector, and not be influenced by what is going on elsewhere if it truly does not impact the business.

Of equal or greater importance, you must realize that there’s never a “perfect” time to make any major decision, just as there is no such thing as a perfect business.

Any true entrepreneur recognizes that along with risk usually comes a disproportionate potential reward, and in order to be successful, you must be willing to take risks. The difference of course is to take calculated ones. You must make well-informed decisions, and now, more than ever, becoming a knowledgeable buyer will make all the difference.

I see tremendous opportunities every day in the business for sale marketplace and I anticipate there will be an abundance of them in the New Year. All you need to do is arm yourself with the right attitude and aptitude and 2008 will prove to be a banner year for you.

So here’s the advice: let all the pundits make their predictions but you need to make your own decisions. If you truly want to be in your own business, the future looks great, regardless of what the pessimists have to say.