How Does The Wall Street Mess Impact Ecopreneurs?
Like many of you, I’m sure, I have been glued to the news…online, on screen and in casual conversation. If you’ve actually figured out what when wrong with the debts and swaps and mortgages and hedges…you’re way ahead of the Wall Street mavins and most of the rest of the world.
To most Americans, the real impact so far has been watching 401Ks and various other stock accounts plummet in value. To others, the inability to acquire a mortgage has been the only real sign of trouble.
But, like most businesses, small and medium-sized ones have a different take on the situation. As they are closer to the credit markets, the real impact of a tight market for money impacts entrepreneurs first.
Businesses need money to grow, to meet short term obligations like payroll and to pay suppliers. The immediate impact of the credit crisis has been increased borrowing costs for short-term loans. For manufacturing based businesses that rely on working capital to fund purchases this creeping interest rate increase means either a profit squeeze or potentially increasing prices which, as we know, should be undertaken with caution in a recessionary climate. For any business with employees, tight credit can mean the ability to meet payroll each month is compromised.
Add to that, how Entrepreneur.com puts it:
…. most small businesses are constantly struggling to get the capital they need to launch and grow their businesses. This is especially true when the founders have poor personal credit, as so many displaced corporate workers and other potential entrepreneurs do now.
So you may be concerned and probably should be. Most entrepreneurs are.
But there is a brighter side. While traditional businesses that are heavily leveraged and entrenched in competitive industries may flounder, those in the green sphere may be uniquely positioned in this latest downturn.
I was reading an article, on Venture Beat that asked: Is the Sky Falling For Venture Capital and Start-ups? I don’t think so and neither do the venture capitalists that contributed to that article.
Ecopreneurs are in a unique place – a tipping point, where green is going mainstream. That means that while investors are surely risk averse, the demographics of the green market work in the ecopreneurs favor.
But, as I’ve mentioned before, times have changed…radically now and green business owners need to ensure that they have a solid business model, well researched marketing plans and a strong and realistic forward P&L.
A well thought out business already in the black can move forward through these tough times, but perhaps not under the old rules. Businesses not yet in the black can make a good pitch for venture capital or investment with a solid business plan and experienced management.
As any business grows the types of skills needed change. In rough waters, this need becomes even more critical. Now is the time to refocus on your business plan. Revise as necessary. Bring on experienced folks to help out. Corporate downsizing works in the entrepreneurs favor. Ensure that your business model works in this new economic environment.
And don’t panic. Think long term.
How are you seeing the credit crunch and economic downturn impact your eco business? What advice do you have for other ecopreneurs?
Photo Credit: Thunderchild5 at Flickr Under Creative Commons License
Related Posts:
Raising Venture Capital A Primer For Ecopreneurs
Financial Crisis: What Will The Collapse of Investment Banking Mean For CSR?
Nothing Sustainable about a $700 Billion Bailout Plan: Why not MADE IN AMERICA?
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