Seize the COVID-19 business opportunity
Published 10:00 am 3 May 2020
The coronavirus pandemic is rapidly reshaping the Australian business landscape. While many will only see hardship, there’s plenty of opportunity for far-sighted entrepreneurs willing to invest in struggling businesses, writes DG Institute Founder and CEO Dominique Grubisa.
Experts have described it as ‘a tidal wave’, ‘an avalanche’ and an ‘economic death spiral’ waiting to happen. With businesses around the country being forced to shutter their operations due to the COVID 19 crisis, it’s only a matter of time before we see a massive spike in the number of companies being wound up – and individuals going bankrupt.
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Remarkable early figures
The early signs of the coming business massacre are mind blowing. The Australian Bureau of Statistics (ABS) reported earlier this month that two thirds of Australian businesses had suffered a fall in revenue due to the , while one in ten had paused trading. In hard-hit sectors, such as hospitality, almost 50 percent of businesses had laid off workers or put them on unpaid leave. A total of least 1.6 million Australians have already lost their source of income due to , and the likely unemployment rate is conservatively estimated to hit 10 by mid year.
Countless businesses in distress
While it will take some months for the full extent of business closures to become clear, financial experts are in no doubt about the scale of what is to come. Justin Walsh, an insolvency partner with professional services company Ernst & Young, warned earlier this month of an “avalanche of insolvencies” set to hit the country as the full effects of the pandemic ripple through the business . Meanwhile, in an article for The Australian Financial Review, Mark Korda from consultancy KordaMentha spoke of a “tidal wave” and potential “death spiral” of company .
Opportunity amid the chaos
For many, the very thought of entering the business world any time soon would be ludicrous. They would see it as far better to sit out the storm and wait for conditions to return to normal. But as the great investment guru Warren Buffett once said, wise investors are fearful when others are greedy – and greedy when others are fearful. The current reshaping of the business landscape offers endless opportunities for entrepreneurs willing to step on-board ailing businesses and return them to the point of profitability. Economic circumstances mean that many business operators will be willing to trade equity – and ownership – for a solution to rescue their businesses.
While the slowing of trade caused by the pandemic is slamming turnover, there is also some reason for entrepreneurs acquiring businesses to be optimistic. The government has introduced a wide range of measures aimed at stimulating the economy – and allowing businesses to trade their way out of trouble. Initiatives including cash flow support and the Job Keeper allowance can be used to keep the doors of a business . Temporary changes have also been made to insolvency laws in a bid to keep businesses afloat. For example, the threshold for the minimum amount of debt required for a creditor to initiate bankruptcy proceedings will increase from $5000 to .
Power through knowledge
Even before the coronavirus pandemic, the government had moved to introduce ‘safe harbour’ amendments to the Corporations Act to reduce the liability of directors working to save ailing businesses.
DG Institute’s Business Turnaround Package provides would-be entrepreneurs with the knowledge they need to make the most of the current turmoil and emerge from the crisis in a far stronger financial situation. It provides a step-by-step approach to identifying distressed businesses, acquiring them, and then trading them out of trouble to profitability. The system is based on the premise that both the owner of a distressed business and the entrepreneur who acquires it can walk away winners by arriving at a mutually beneficial deal.
So, don’t panic and join the throngs abandoning small and medium-sized businesses as the economic fall-out of the pandemic sets in. Keep calm and capitalise on the situation and you stand your best chance of building considerable wealth.
Lawyer, Asset Protection Specialist and Property Educator
Dominique Grubisa is a practising legal practitioner with over 22 years of legal and commercial experience. She is a property investor and developer, an entrepreneur with businesses in Australia and Southeast Asia, a speaker, educator, writer and published author. You may contact Dominique at firstname.lastname@example.org
This column has been written for general information purposes only. It is not intended as legal, financial or investment advice and should not be construed or relied on as such.