That's Some Upside

Monday, October 13, 2008 at 05:42 PM

Wonderful headline from the Fresno Bee: Entrepreneurs see upside in downturn. And what would that upside be?

Here's how the Bee puts it (emphasis added):
The faltering economy, tanking retail sales and a real-estate market rife with foreclosures didn't keep Ritsuko Miyazaki from launching a ceramic art store.

"I know some people would think now is not a good time. But you never know. Tomorrow may get even worse, and this is something I've wanted to do for a long time," said Miyazaki, owner of Clay Mix in Fresno. "So why not now?"

Experts generally agree. Despite a tough economic climate, starting a business now has advantages for entrepreneurs with solid business plans, adequate financing and marketable products and services.

"These tough times really force people to practice good business behaviors," said Melissa Chang, founder of the Massachusetts-based Pure Incubation, a business consulting firm. "It helps you persevere and understand that difficult times happen."

Chang acknowledged that there are still huge obstacles to starting under difficult economic conditions, namely tighter lending from banks, venture capitalists and angel investors.

But credit hasn't dried up completely, she said.

Good business ideas still get looked at. They are just scrutinized more closely.

Got that? If I can follow that winding road--there seem to be any number of things being put forth as the upside--it seems that trying to start a business when the economy as a whole is in the tank is a good thing because it forces you to be more careful. Much the same as being on crutches forces you to be more careful when crossing patches of ice, I'd imagine. Thank God there's a weakness forcing me to be more careful, because if I didn't have the weakness, I wouldn't need to be more careful.

To my surprise, the piece actually does contain a hint of something like an upside: lenders are going to scrutinize you more closely, so presumably, if a lender decides to let you borrow money, it means you're idea is good. Now you could treat that a free review of your idea: no need to make an independent evaluation of my idea, I'll just put it in front of the bankers and they'll let me know if it's good.

Then I remembered. That's right, you can trust the judgment of the very people who caused the downturn, because in the downturn, they're going to be exercising better judgment.

As a character says in the movie version of Norman Mailer's Tough Guys Don't Dance: "Only a country as mad as ours could be such a roaring suc-cess."


Feregi Rule of Acquisition #162: "Even in the worst of times someone turns a profit."

Trust me, this is true. Ask those who made out like bandits during the Great Depression.