After the Recession: Taking Advantage of New Opportunity
There appears to be subtle signs of economic recovery. Local conversations with business owners, bankers and business consultants seem to be more upbeat and I have seen new opportunity in select industries begin to emerge. Although the National Bureau of Economic Research NBER has not officially announced the end of the recession, they also have acknowledged positive signs of recovery.
When opportunity finally starts knocking again, companies will need to increase manpower and finance inventory build-ups. With that said, many companies have been depleted by the recession, especially in the areas of human and financial capital. They lack the funding for upfront cost such as additional man hours and vendor deposits.
Historically the solution to this problem was to use trade financing (receive deposits from customers upfront and buy on credit to vendors) thereby having the cash arbitrage to run operations. Today this strategy is not as readily available, as cash strapped customers are not as willing to pay deposits and vendors are asking for partial payments upfront. In response, companies have to become creative.
With unemployment benefits running out many displaced workers are in dire need of extra cash. Companies that take advantage of this vast labor pool can gain access to a flexible and less expense workforce. If companies have remained in good standing with vendors they often can negotiate terms, proposing a delayed payment based on the timing of receipts from project proceeds.
In many ways it is the best time to begin a small company. A new company without debt can be more competitive in price. There is a large labor pool of contract workers available to supplement existing staff. Serious business discussions can be done at Starbucks-so who needs that expensive overhead.The New Economy is going to change the way we work with employers, suppliers and manage new business opportunities.
When opportunity finally starts knocking again, companies will need to increase manpower and finance inventory build-ups. With that said, many companies have been depleted by the recession, especially in the areas of human and financial capital. They lack the funding for upfront cost such as additional man hours and vendor deposits.
Historically the solution to this problem was to use trade financing (receive deposits from customers upfront and buy on credit to vendors) thereby having the cash arbitrage to run operations. Today this strategy is not as readily available, as cash strapped customers are not as willing to pay deposits and vendors are asking for partial payments upfront. In response, companies have to become creative.
With unemployment benefits running out many displaced workers are in dire need of extra cash. Companies that take advantage of this vast labor pool can gain access to a flexible and less expense workforce. If companies have remained in good standing with vendors they often can negotiate terms, proposing a delayed payment based on the timing of receipts from project proceeds.
In many ways it is the best time to begin a small company. A new company without debt can be more competitive in price. There is a large labor pool of contract workers available to supplement existing staff. Serious business discussions can be done at Starbucks-so who needs that expensive overhead.The New Economy is going to change the way we work with employers, suppliers and manage new business opportunities.
Posted by LW and Associates at 5/17/2010 10:20 AM 
Categories: uncategorized
Tags: funding unemployed recession working capital small business labor pool business opportunity
Categories: uncategorized
Tags: funding unemployed recession working capital small business labor pool business opportunity
I have had a few discussions recently about the changing face of business, and contract workers has come up more than once in the discussions. I and others have seen this change, and have taken notice of business models that aren't traditional...reducing overhead.
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