Business Cycles are real. JAB announced it is acquiring Panera Bread for $7.5 billion. JAB is the Private Equity Firm that purchased Krispy Kreme and has since turned it back into a viable business. I am not in love with what Private Equity firms do BUT when I see contractions in the business world I know it means we are in a "trough." A trough is, "a phase when it becomes difficult for debtors to pay off their debts." As a result, the rate of interest decreases, prices drop, and businesses (among other goods and services) become good, easy buys.
Panera was not in trouble so to speak, and JAB paid what we would believe is a premium for the company. But I can guarantee you that after 5 years this will be a lean company that goes well beyond the valuation it currently has. Let me be clear: Panera by most economic factors had a good balance sheet and income statement but it does have corporate debt.
A trough also means that a recovery is coming. Why is this important? If you are looking to begin a company, the best time to start is during a trough. Low prices and low economic spending make it difficult to gain customers but as a newer business, you can withstand the slow start. As the recovery begins, so should economic spending.
Why am I telling you this?
Just as businesses become "steals" so will homes and other investments. If you are properly positioned to buy (have cash and good credit) you can purchase homes and other assets that will be underpriced. Generational wealth can be increased tremendously to the person or business who is prepared to take advantage of the trough or contraction. And whether you buy a million dollar business for thousands or buy a $250,000 home for $150,000, you just created a tremendous amount of wealth.
1. Start an aggressive plan to remove debt today. The Snowball Method of debt removal is effective and efficient. Find a few families or friends who you can make this into a contest or game, that way it doesn't feel as bad.
2. Begin building the foundation of your business. You may not be ready to start that make up business but you can begin positioning yourself as the expert in that field. Social media sites like Pinterest and YouTube are perfect to build people's awareness of what you do. Plus they are free.
3. Start or join an investment group. Those same people who join you in your debt elimination program may be great to join an investment club with. Pooling money and resources will allow you to build quicker and potentially buy more.
If you are married or have a family, attempt to make this a family affair. Don't force it, but it's worth a discussion. As long as your goals, objectives and attitudes align things should go great!
Winfred Burns II is the CEO of the Global Drive Network. You can connect with him by clicking here:
Business Cyles
By Winfred Burns II
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