As many financial experts warn business owners to prepare for the possibility of a recession, loan brokers are looking for ways to help their clients grow and thrive. While not every business owner can launch or acquire a new business, these industries can spark ideas on services you might provide to support your clientele.
One category that thrives during a recession, paradoxically, is the financial sector. When earnings are tight, business owners and individuals alike need to make sure they are getting every benefit they can from tax deductions and financial services. But it’s not just businesses that are financial first that can benefit. Consider extending credit to customers to empower purchase, or reopen older models of pre-payment like layaway. Anything that helps customers get what they need at a time of greater financial anxiety.
More traditional financial industries that grow during a down economy include accounting and financial advisement, two areas that require federal or state certification.
Learn more about becoming a tax preparer. While adding an accounting service to your current business may not be the right expansion plan, it’s not the only option for businesses to add financial services.
Industries like loan brokering become more important because of their role in helping businesses find the right financing to maintain liquidity, purchase or lease equipment, and generally maintain the capacity to bring on employees. Businesses, likewise, can work with loan brokers to extend credit on purchases through exclusive member cards or for per-product or per-purchase financing.
Repair and Maintenance
Historically, buyers postpone getting a new car or purchasing a new home. Selling fails to get the most out of one’s asset and buying can be a problem because sellers don’t want to add repairs or provide discounts to sell their property. Homeowners often choose to DIY or reinvest in their property, waiting for economic times to turn around. Autos are in a similar scenario. If economic times are uncertain, drivers hold off on buying to retain cash and will instead maintain their current vehicle.
The lesson for business owners is to find ways to help customers do more with what they already have. Customization, do-it-yourself, and opportunities for customers to finish projects to achieve higher quality at lower cost are the kind of win-win solutions businesses must consider when consumer confidence becomes shaky.
Rentals and Property Ownership
When people are concerned about the future of the economy they hold off on major investments like homes. The rental market heats up, and owners see higher rental rates and faster turnovers when tenants leave. That means consistent revenue and the possibility for future property appreciation.
Financing property deals during a recession can be challenging for the reasons described in the residential market, but also because lenders more carefully scrutinize risk. That’s why property investors benefit from working with a loan broker that has developed an expansive network. There are numerous ways of financing deals, including short-term, low-cost financing that can help ride out the high-interest rates seen during economic downturns.
It’s not surprising that stores like Walmart and Dollar General see an upside during recessions. With basics priced by the piece, buyers can spend less in the short term while sellers can see higher margins per item.
While purchasing and managing a dollar store is probably not on every businessperson’s shortlist, commercial real estate investors can think about the anchor stores and retailer mix they attract in a shopping center. Businesses themselves can think about ways to provide smaller offers that can be purchased more often to help customers manage tighter monthly budgets but still access the things they want and need. Of course, products or offers can be presented in multiple mixes, so you can retain your current products and offers, but introduce entry or trial-sized offers that can still help businesses take the steps to strengthen their position.
Though we are entering 2023 after two years of facing COVID and its market fluctuations, we are confident that businesses will be able to successfully weather the challenges of the coming year. Our team is here to help you identify and source financial solutions no matter your current business circumstances.