It appears that we are moving into a new phase in the economic cycle. That can seem scary and uncertain for those that haven’t been through one before. Surviving and thriving through times like these is all about preparation, and leaning on depth of experience to take full advantage of the new opportunities coming available.
These are some of the ways that businesses successfully prepare for times like these, and separate themselves as those who come through in even stronger positions, versus those that fold.
Lining Up Funding & Liquidity In Advance
Trying to raise money, borrow money, and gain liquidity in the middle of a crunch or crisis is always extra challenging.
Experienced operators see the change coming, and work to raise more than they need in advance to account for this.
At NNG, we also began increasing liquidity in our funds well in advance. Liquidating mature assets, and using some shorter term strategies to have the liquidity to take advantage of better value opportunities when they arise.
We've also baked that into our latest funds, for our investors, with 90 day call options, so that those who weren’t as financially prepared can be confident that they have access to their capital in a crisis.
Also, if you haven’t read it yet, you may enjoy my first book Turning Distress Into Success. It details working through, and overcoming the challenges of the 2008 crises.
Keep On Marketing
The most common fatal flaw that businesses make when things get tougher is to freeze or pull back on their marketing. This self-sabotaging move destins them to failure. Often a slow grueling one, as a few others increase their marketing and scoop up all of the market share.
You have to keep on marketing through it. As soon as you stop that, the money stops flowing.
We kept on marketing through COVID and it has paid great dividends.
Diversifying in assets and income will keep results, cash flow, and portfolio balances far more consistent. And that’s no matter what else is happening out there.
Crisis Proof Income Streams
Cash flow issues are one of the biggest risks. It doesn’t matter how big a company is, if the cash flow stalls it’s just a matter of time before money runs out.
At NNG we’ve diversified into a variety of income streams through our portfolios. One of the stand out ones at this time is Section 8 rentals. Meaning our investors can rely on the government to keep paying their rent and providing cash flow. In fact, in periods of high inflation, they begin paying more.
Help Others Too
It can be very tempting to jump on the bandwagon to hike prices and strip value, just because everyone else is getting away with it.
Costs and margins do change. You have to remember though that there are others who may feel the pinch more than you do.
Gouging people will destroy your business. Being an ally in the tough times is what earns loyalty, and adds immense tangible value in goodwill over the long run.
Instead of gambling everything on constantly rising rents, we’ve also invested in truly affordable housing for those that really need it.
Find out more about investing in secured debt and real estate, go to NNG Capital Fund.