Optimism Alert: The Opportunity in the Chaos

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Apparently, we’re supposed to write about the virus subsiding only to re-emerge worse in a few months and repeat that cycle indefinitely until we are all trading sugar and toilet paper in the alleys of our new barter economy. While not understating the seriousness or importance of our current precautions and challenges, the world is not going to end. And not all companies are in the fetal position in the corner of a dark room. Many of you are capitalized well enough to take a punch—or a dozen of them—which makes us ask:

Is today’s market a chance to seize a generational opportunity for transformative growth?

While certainly not a direct comparison, let’s go back to 2008/9. Traditional lenders were in the penalty box. Industrial finance companies (like GE and CIT of old) were seeking exit strategies or trying to become a bank. Tight bank lending and the retreat of commercial finance companies left a void ripe for innovation. Just think about the explosion of fintech lending. Small business lending hasn’t been the same since. And now they are being approved at scale to help distribute PPP without some of the hurdles larger banks face.

During the Great Recession, the Fintechers acted on a limited window of opportunity to change the game. And they did.

Is this another window?

Anyone with an SBA 7(a) lending ‘license’ is a little busy right now.  Underwriting of non-PPP capital is longer, harder and less lenient (already). Outside of PPP and whatever the Fed’s Main Street Loan Program will be, there is a general feeling that some lenders are just battening down the hatches so-to-speak. Months ago, you guys were complaining these same lenders were driving spread compression or outsized risk, but now they’re on a conference call with Treasury and the SBA about issues with eTran.  So, here’s the question:

Should you be building an attack plan instead of a survival plan?

Samsung’s brand value went from 21st in the world going into the financial crisis to 6th coming out. They convened a strategy team to put an aggressive growth plan in place in November of 2008—when the world was still sliding into chaos. And Samsung’s story reminds us that there is always opportunity in chaos. Who is there to help the company that doesn’t need PPP?

  • Private equity has record amounts of ‘dry powder’ as they felt the market was commanding purchase multiples far in excess of what they felt was reasonable. That’s a huge industry, full of capital, ready to pounce. And they’ll need low cost, flexible debt capital to get there.
  • Equipment sellers that have passively promoted their vendor program will need to reacquaint themselves with the power of payments to drive sales in a purchasing challenged environment. Major programs that haven’t taken your call in a while will be open to new ideas more than ever before.
  • Small Businesses have pockets of very near-term opportunity also. Ever wanted to build a book of healthcare practices? Telemedicine has exploded and almost none of them are well-prepared for it. High-priced attorneys working from home are squinting into their 15” laptop screens instead of well-equipped 27” Dual HD Monitors. And yes, even the PPP recipient you are scared to talk to right now will have credit needs to reinvent their company as they climb out of this ditch.

Embrace your instincts.

I know it feels a little funny to think like a killer right now. But this is business and we will survive. We will move forward. There is a ton of ‘pull back and we’ll see’ and there is little ‘let’s take advantage of opportunity’. Who do you think wins in the end? If you need help talking through Marketing’s role to propel the business development part of your plan, let’s talk.

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