Can businesses got off the ground in the midst crisis withstand the storm?
If we refer to online-only businesses, we see a major negative impact induced by the financial crisis as consumers shift focus to entry-level products or value-for-money, said Marius Ghenea (photo), CEO of FiT Distribution, operator of Pcfun.ro, Electrofun.ro, ShopIT.ro and 24PC.ro.
Dragos Stanca, managing director of F5 – the web division of Realitatea Catavencu media group, says the online field, which includes also web-based products apart from publishing services, has moved into a standstill. In the best case scenario, online business can generate up to 25% decline at the most.
“We are affected by the financial crisis, as we have problems in collecting the money, and not necessarily in terms of acquiring objectives. Our partners and clients have the same problem, which inevitably feeds a sharp slowdown. You can feel the liquidity drought taking its toll”, said Stanca.
Therefore, given the current drawbacks and challenges that Romanian online industry is facing, he recommends well-consolidated businesses that could find the specific niche and know how to see financial crisis as a good earning driver.
Assuming that “online is cheaper” , Ghenea says that “starting right from the growth engines of e-commerce when things get stormy, we can apply the same idea to other sectors and marketplaces where the growth is fueled by the fact that those options are in fact the cheapest variants, such as: low-cost flights, discount retail (both food and non-food), outsourcing (as a reliable tool for companies to better handle costs)”.
Opportunities in crisis exist; you only have to scan the environment and dig for them, said the CEO of FiT Distribution. In times when the majority of the markets shrink, you cannot expect eye-popping gains. They can only grow in the detriment of other sectors sinking to bottom lows.
Recruitment/executive search companies feel the brunt of the crisis, as the recruitment drives were scaled back to roughly zero and even companies seeking personnel, usually use cheaper tools over expensive recruitment services, said the local head hunter, George Butunoiu.
“Our activity shrank by around 50%, and I expect it to shrink further in the coming months”, he said.
Businesses likely to fare better when things get sour are usually those that involve necessary products that consumers cannot live without, the head hunter said, even cheap food or chocolate, as Octavian Radu mentioned.
A business idea that could take you back on profit, as Ghenea says, is crisis management consultancy.
“You can successfully invest in services that could help companies and consumers ride out the crisis, from crisis consultancy to products and services that could relax over-stressed consumers”.
Niche business or mainstream?
According to RTC founder, if you have enough cash, you have a variety of opportunities to choose from. The problem is however, that you can’t invest in any business and expect it to generate major profit, regardless to its type: niche or mainstream. The reason is that even the existent ones can barely find enough resources to stay afloat.
In case of a start-up, it would be recommended a niche business that targets a sector less affected by crisis, says Ghenea.
“If we try to get a business up and running in a mainstream segment, it is very likely to tap a market underway to a sharp contraction, where there are already strong players urging to withstand the tough conditions, to survive, and even to grow stronger, so the entry barriers could be so higher that the costs of moving into the market could be unreasonably high”, he explained.
The niche businesses providing well-customized services geared toward a specific group of consumers, and delivering less expensive projects are likely to be successful in times of crisis, said Dragos Stanca.
However, as Marius Ghenea continued, this is not the best time for a start-up “financing is now more difficult and comes at high costs; moving into a market is much more expensive due to the contraction crippling it and where the competition tightens. So the odds of a start-up to actually return profits are close to null in times of crisis”
The point is that you may not want to start with a mainstream segment. There are various marginal opportunities resulted from major bankruptcies, which leaves a portion of demand uncovered, CEO of Pcfun.ro said. Nevertheless, this demand is easily absorbed by the rest of the players who lick their lips over new profit drivers, so the window of opportunity is eventually turning into a small porthole.
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