Is it a good time to buy a business?

Forecast:

The Euromonitor research department, which produces a comprehensive global macroeconomic study that is available to purchase for $1,325 US, has downgraded the baseline global real GDP growth forecast for 2020 to a range of -4.0% to -1.5%, compared to a 2.6%-3.4% growth forecast in the last, pre-covid-19 pandemic, forecast.

Advanced economies will be the hardest hit due to the spread of the virus and their governments’ willingness to institute social distancing policies. Please do not misunderstand me, the social distancing measures are extremely important, and no amount of money can be substituted for any life, but they do take an economic toll. With each month of economic lockdown, it is predicted that we will see a 25-45% decline in economic activity relative to normal. The unknown, of course, is the effectiveness of these measures and how governments will navigate pulling back the monetary spending and reduced personal disposable income, combined with increased household debt. The downside risks are dominated by more pessimistic covid-19 scenarios, reflecting uncertainty about epidemiological assumptions and financial conditions during the covid-19 recession.

Before I move on to the facts, it is important to note that the recession has increased the risks of a US-China trade war scenario.  Lastly, the Eurozone is the worst hit major region in the pandemic and probably will take longer to recover than North American markets.

Facts:

Covid-19 has pushed the global economy into a deep recession.

What does this mean for small businesses?  How will covid19 impact small businesses? Let’s zoom in and analyze some facts and leave the forecasts for the weatherman and the analysts locked in their home offices with creative zoom backgrounds. The reality is this: Whether we find a vaccine or or not, society at large wants to rebuild some semblance of the old way of doing things. Humans are social creatures, otherwise companies like Facebook and Instagram would not exist.  It is also widely agreed upon that interest rates are going to stay low and governments are spending billions of dollars to stabilize the economy.  This money is available to small businesses owners. The Small Business Association (SBA.gov) in the US offers to pay the first six months of payments for any new loan acquired before September 2020. Entrepreneurs, by nature, take risks that others typically wouldn’t consider. A true entrepreneur seeks opportunity where others are fearful. As the great Warren Buffet once quipped, “Be greedy when others are fearful, and be fearful when others are greedy.”

In my humble opinion, this is a great time to be an entrepreneur.

Sources: Euromonitor.com, sba.gov, bdc.ca

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