The Recession and Buying Businesses

If you have ever been turned down for a loan or overdraft application by your bank don’t you think that there is a little poetic justice in banks refusing to lend to each other.

“Sorry HBOS you are too much of a credit risk” says Mr Lloyds Bank but I will buy your business for a knock down price!

Economic growth and wealth only happens when you give away money, and the fear that it will not get repaid will mean that the world economy will be affected.

Imagine the economy as a river and money as the flow of water. If the money does not flow then all that is in that river will die.

What’s in the economy river are businesses some have been eaten up by larger fish/businesses like Lloyds and others the weak that no one wants will die, Lehman Brothers.

Larger organisations like Lloyds know that it is still the right time to buy a business if you are healthy yourself, and if you have cash to spend you can get bargains which would make your empire stronger. That merger would never have been allowed during a time of boom.

The ones that make money from a recession are those that do not panic, whilst all those who are scared of buying a business stagnate in the river you are the one getting stronger because you are investing in buying all your competitors for a cheap price.

The same concept happens in the micro economy, the single hairdressing business in a town who is making profits because they know how to look after customers can end up with being the major hairdresser in the area if they invest in buying their competitors. The same businesses that everyone else is scared of buying now.

And when the river starts flowing again, which it will, they will be the one swimming the fastest and strongest and have the platform to really push ahead.

This entry was posted on 09/10/2008 at 10:09 am and is filed under Buyers, The Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.