(by dott. Riccardo Pastore) The crisis generated by COVID-19 seems to have a unique strength, even greater than that of 2008. The reason for this uniqueness lies in the fact that the almost general block of activities wears down the resources of businesses and families "from within" and decreases flows to banks. In detail, it happens that companies burn liquidity to cover fixed current expenses and jeopardize the ability to restart. Families living closed at home, lower the demand for goods, spend the minimum necessary with the well-founded fear that next month the salary will not arrive. Banks that are already experiencing non-repayments of loans are updating their economic forecasts for the future (infamous outlook) downwards and are preparing for both a contraction in loans and an increase in non-performing loans.

The economic shock acts simultaneously on several fronts. The vicious circle that we will see will be more or less the one depicted in the following image.

Decline in household demand, loss of jobs, obviously this applies to everyone. Blocking of loans to businesses and families. Lack of resources. Decline in production. Fall in turnover. Loan repayment risk. Failures. In reality, however, like all crisis situations, there will also be many positive ideas that every entrepreneur should try to make the most of. In fact, the crisis will do a bit of "cleaning", "selection" as usual. All the improvised or those who have not had a solid strategy and financial structure will find it difficult to restart. Market shares will be freed in favor of more virtuous companies. The loan crunch will favor the action of investment funds which will have a much wider choice of target companies to acquire or finance. The market will be more open than ever to new mergers and build-up strategies which will allow the consolidation of industrial groups operating in fragmented sectors. Furthermore, every crisis always brings profound changes in demand, new market niches and new business opportunities arise.

Just think of the explosion in recent days of all the apps that favor contact less.

The virtuous circle fueled by the events of these days will be the one depicted in the following graphic.

New needs. Possibility of acquisitions. Birth of new market niches. Investors and companies towards investment funds. Greater availability of qualified personnel. Higher free market shares. The life of the company will accelerate towards the development of its cycle.

Companies that get stuck in the vicious circle of the crisis will suffer losses and will start relentlessly in the decline phase.

It should be noted that there are companies that were already in the decline phase before the outbreak of the pandemic, and they were not few. These companies are unfortunately at risk of not reopening at all after the emergency ends. Furthermore, despite the fact that, in all likelihood, they will be the subject of aid from the Authorities, they will use those resources to cover past losses without ever starting again.

In fact, these "aids" will certainly not be enough to restart and there will be no funds, banks or investors who will want to support companies with past losses. For virtuous companies undergoing development or expansion that have interesting margins and a solid target audience even if reduced by the crisis, they will have a better chance of surviving.

Obviously this will only happen if they manage to overcome this phase of uncertainty by using all the weapons available as state funds or through partnerships and collaborations with investment funds.
These companies will accelerate growth and increase their turnover. For them, the crisis will prove to be a great business opportunity.