Will your business survive the next boom bust cycle?


We are approaching the end of another 7 year business cycle. So what, you say? Surprisingly, many still do not fully understand that the economy goes through a repeating 7 year economic cycle and at the end of the 7 years, there has always been some form of correction. In 2008, we saw the Lehman moment and subsequent market collapse. In 2001, it was 9/11 and the dotcom correction. In 1994, it was the bond yield crash. In 1987, was the Black Monday market crash and the list goes on. Remarkably, these 7 year cycles can be traced back to the great depression and beyond. The other bit of twisted irony is that most of these events occur in the September, October timeframe. The four cycle events I have noted are no exception. Lastly, there are the super cycles of 49 years and it just so happens that 2015 is set to fall on a super cycle.

So what does a 7 year cycle mean for you? In 2008, it meant loss of revenue for most and bankruptcy for some. Many who were looking to sell their business were faced with a market of less buyers with less availability to capital which resulted in lower business valuations.

Regardless of what your ambitions are for your business, it is always prudent to be aware of the markets and how they impact your business. Keep expenses trimmed and reduce credit exposure. Build up some cash liquidity for that rainy day, as well as maintain solid relationships with customers and suppliers to support you through any downturn. If you’re looking to sell your business within the next three years, now may be a great time to prepare a strategy to exit your business in the most efficient and profitable way. Remember that the key is to sell your business when you want to, not when you need to.

For an overview on the 7 year cycle and its origin check out this YouTube video: https://www.youtube.com/watch?v=8TsYBuw6rko