It is very sad to see how so many businesses are collapsing or going through a very difficult patch because of the present pandemic. We are not talking about a normal downturn in the economy here. Not even a recession. We are talking about a very serious global crisis in which only the bravest are going to be able to survive. A little while ago I spoke to an old friend and client from the UK. He has a very successful horse saddle manufacturing business with a turnover of over several million pounds per year and has done remarkably well for the past few decades. He has savings and can probably stay put, and with a bit of luck recover his losses in the future. I said to him, “We must be able to navigate in all kinds of water because the sea is rarely ever calm”. To which he answered, “The problem, my dear fellow, is that at present there aren’t any waters at all to navigate in…” This is true but certainly not applicable to all cases.
There are sectors in business that are doing extremely well. And you do not need to be a genius to spot them; just look around. Which business is flourishing at this very difficult time? Are hotels and restaurants doing well? Or any retailers selling anything? What about the hospitality business? Or the entertainment business? Clothing and fashion perhaps? Car sales? Not at all. Not during the pandemic certainly. Maybe after the pandemic but far from it at present.
So, who is doing well right now and probably making a killing rather than a living in the business world?
Let us just name a few to set up a departure point. Chemists and pharmaceutical business and anything related to them. Just try and get some Vitamin C from a chemist. Unless you go in the early morning their stocks are gone by noon. My friend, the chemist manager of my local pharmacy, told me Roche has temporarily run out of stocks. And the surgery glove manufactures are facing similar situations. And the face mask suppliers. And the hand sanitiser manufacturers. And the lavatory and tissue paper companies. I could spend the total word limit of this article mentioning all these business suppliers and companies that are doing better than ever much to everybody’s regret and sadness in these extremely difficult times.
Then look at the food business. We are certainly not talking about restaurants and hospitality. We are talking about the food grocers large or small. Their suppliers. The agriculture sector. Cattle farms and all related to farming. Fruit and vegetable farmers around the globe. And the list connected to this is again huge. Mercadona for example, being the most successful grocer in Spain and arguably one of the top European supermarket chains has increased their salaries by a minimum of 20%. And they are looking for staff as though we were living through an economic boom. Naturally there is an element of risk of catching the virus whilst working with plenty of people around you, but because they all wear masks and gloves and all supermarket outlets get treated several times a day with disinfectant the risk is not huge. And the age of the workers rarely ever exceeds the 30-year-old mark. So it is not as serious as with the elderly to whom the virus can be lethal within days.
Only the bravest are going to survive.
It is quite clear that in these times you want to try and be in any business connected to the above-mentioned sectors. Again, other interesting sectors include the digital media, entertainment channels like Netflix or any pay-per-movie digital company, internet services suppliers, data supply companies, smartphone lines of any sort. These are booming. And that is being conservative.
And then there is the stock market. If you are in a position of liquidity this is the best and sweetest moment to start buying stocks and shares. You should rely on a good financial consultant that can advise you on how to play your cards properly. Currency and arbitrage can produce handsome results as well. Even property can go down considerably. Not overnight, but it will come particularly in badly hit jurisdictions like Italy, France, Spain and the UK.
Development land is probably going to go down a lot. Unsold apartments and flats will be offered at reduced prices. So, if you are thinking of building a rental property portfolio this is the ideal moment to make a move. I refer to contrary investment in property on which a wrote an article some while ago. Rentals may come down but not necessarily in the long term. At present a lot of property portfolio managers are either reducing the rental amounts for the next couple of months or giving tenants a break with rental payments. If you are a business tenant you surely can get a decent discount from your landlord, but like always, each case is different.
This is the ideal moment to make a move.
A friend who owns a small chain of health shops in Spain and Portugal negotiated a good deal with his landlords where he will not pay any rent for two months and the total amount due from these closedown weeks shall be split up and paid back in monthly payments during the next twelve months at zero interest. That is more than fair. Others have obtained reductions in lieu of payment breaks. Which is a fair agreement as well.
The virus will go and things will somehow go back to normal gradually but certainly not overnight and not in every business sector. Sadly, a lot of business ventures, large and small, will go under and will not make it back. It is, I am afraid to point out, a little like war and after-war economics.
Some will not be around and others will thrive.
Let us all look back at the difficult days of the border being closed down. A lot of business enterprises suffered whilst others made a success of the locked-up border. Of course, nobody wanted that, but it is just what happened and we must admit a lot of people underestimated the brave character of the Gibraltarians who survived not only the evacuation days of the last great war but also the border closedown which lasted over a decade. Some very solid businesses were created in those days and happily they are still around.
Some very solid businesses were created in those days.
The fact remains that we are going through very complex times in this pandemic and that means that we can only move forward by helping each other. The world will most likely be a different one, but there is masses of room for improvement and hope.