Tuesday, November 18, 2008

A great time for new businesses?

I'd like to share the following article By Brian Groom Published by the Financial Times on November 18 2008.

"One curiosity of this downturn is how some illustrious businesses that succeeded against the odds in the Great Depression are now buffeted by today's cold winds. Walter Chrysler found a way out of the 1930s slump by devising the Plymouth, a low-cost but high-technology car that promised a "floating ride".

Within two years Chrysler's sales were back to pre-Depression levels, well ahead of its rivals. Today its survival is threatened unless it gets a bail-out by the US government.

The British branch of Woolworths - founded by Byron Miller, an American - was a roaring success back then. Its format of affordable variety meant that everyone could find something to take home. Now the company has been struggling for years and its wholesale arm has been forced to demand cash upfront from customers as Christmas approaches.

The 1930s saw the rapid growth of chain stores, led by Jack Cohen's Tesco, Marks and Spencer and J Sainsbury. Tesco in particular is still hugely successful but this autumn it has lost market share to discount supermarkets as cash-strapped consumers try to cut their bills.

While the UK authorities tried vainly to revive coal, cotton and shipbuilding in the Depression, newer industries such as cars, electrical goods, chemicals and man-made fibres expanded. Like Chrysler, Britain's William Morris defied the slump with his stubby but popular Morris Eight (Morris's modern heir, MG Rover, sadly went under in 2005).
A recession can be a smart time to launch a business or innovate, if you can find the money to invest. Competitors are struggling to cut costs and you can look forward to the upturn. Lord Bilimoria founded Cobra Beer, a less gassy lager for drinking with curry, in the 1990s recession.

What will the successes of this recession be? Gordon Brown, the prime minister, wants to encourage green technologies - possibly right, although governments have rarely been good at predicting business success.

If I knew the answer, I would not be writing this column"

Makes you think!