“Resourceful people have the habit of making opportunities suit their needs” – Napoleon Hill
Most businesses in early stages are resource challenged. Money is in short supply, equipment and supplies are difficult to procure and most important of all the customers are hard to get.
Business developers and entrepreneurs in the early stages of the venture spend most of their time chasing money and customers. The situation is even more compounded for bootstrappers – people who create business through their own money and resources rather than OPM (Other People’s Money).
They need to get done more with less and capital seems to be the most important thing at that time.
But is it so? No, says Paul Hawken, entrepreneur and best-selling author, who in his book ‘Growing a Business’ notes that it is a common misperception that the major problem afflicting the businesses is the lack of capital. He says that the major problem for any business is not lack of capital but lack of imagination.
And he is quite right. It is the power of imagination and innovation that makes companies more competitive. It makes them more resourceful, stretch their resources and achieve more for little. The benefit of being resourceful is that one needs less money, time and other resources than the competition to accomplish the same results – something that early stage businesses must do. There are many ways through which
businesses could raise resources for cheap and one such avenue is through bankruptcy courts.
A business’ bankruptcy proceeding is normally handled by a bankruptcy court, whose first attempt is to figure out if the business could be revived and the next attempt is to salvage as much value as possible and pay out the debtors. This is where the ingenuity of the resourceful people comes in picture in exploiting the opportunities.
Jumpstart Your Business: Get Customers
Few years back Inc magazine reported about a resourceful guy, Ghanshyam Patel, in Ohio who in 80’s wanted to start a telecommunication company. With only $4,000 of his own money and $25,000 of borrowed money Patel was able to build a business of $35 millions in eight years. His trick – jumpstarting his business through bankruptcy courts. Around the time when Patel was bootstrapping his company ConQuest Telecommunications, a long-distance carrier in Ohio and Indiana had gone bankrupt. Patel was able to persuade the judge to let him acquire 400 customers of that long-distance carrier, which he did for $5,000. This enabled Patel to get a running start for his business by having customers so early on in its life.
Equip You Business To Get In Style
This one should be a no-brainer as this is the first thought that comes into everyone’s minds when opportunities through bankruptcies are mentioned. Since the main objective of bankruptcy proceedings is to salvage as much as possible as early as possible, a lot of their tangible assets are disposed of for a song. If you are cash strapped and are successful in getting to the front of the line of bidders then you may be able to get most of your office furniture and equipment for cheap through these auctions.
Intangibles Are Fair Games Too
Usefulness of tangible assets of a bankrupt business is quite obvious but creative people find ways to exploit the advantages of intangible assets too. One European adult entertainment firm wants to get the domain name of Napster. After acquiring the domain name it would redirect the traffic to its adult entertainment sites. This way it plans to exploit the brand equity of Napster and trap unsuspecting web-surfers.
Other examples are customer lists and mailing lists. They too present good opportunities. CNN acquired PointCast Business Network for precisely the same reason.
Suppliers Of Bankrupt Companies Also Present Opportunities
When companies go bankrupt then many of their suppliers get stuck with specialized or outdated equipment for which there may not be a fair open market. They too present good opportunities. After getting the 400 customers through the bankruptcy courts, Patel needed to get equipment to serve those customers. Here too he utilized the bankruptcy. GTE held the title to $500,000 worth of such equipment from the bankrupt company.
However, there was no open market for this specialized equipment and it was costing GTE $40,000 per year in excise taxes. Patel was able to buy it from GTE for only $4,001 – the one dollar for the customized software.
Bankruptcies occupy unique situation in business world and exemplify the saying ‘one man’s problem is another man’s opportunity’. Businesses go bankrupt because they cannot meet their obligations, which is their problem. But as a going concern they also have certain assets and resources, which present opportunities to others. If you are resource challenged but not creatively challenged then you could utilize these opportunities and benefit from them.
