Who does a recession help?
I can't seem to pick up a newspaper at the moment that isn't predicting that businesses like mine (i.e. small consultancies) are either going to thrive in this financial environment or else that we'll go to the wall quicker than anyone else.
The arguments seem to run as follows...
Thriving: -
- Clients are downsizing but still need to function so hiring an external for a few days rather than keeping on an employee makes financial sense
- Companies that can grow in a recession (i.e. working from a small but expanding base) can pick up talented staff as their larger competitors are going through the trauma of shedding the very same people
Failing: -
- As a rule we have neither the cash reserves or the credit lines to survive the inevitable cashflow crises triggered by late-paying clients, in turn triggered by the overall cost of funds
- A larger / older competitor with a pre-existing brand who is able to (forced to) discount is possibly a better value proposition than a newer entrant to a market