Virgin's advice on how to handle the coming pain
Sir Richard Branson has built the Virgin Group into one of the world's largest private companies but not even billionaire entrepreneurs are immune to the global economic slump.
A number of Virgin Group's companies are already struggling and others are unlikely to make money this year, although Sir Richard insists that none will be shut down.
But Sir Richard is also concerned about the prospects for other companies and particularly those set up by entrepreneurs like himself. Last week he offered some advice to budding billionaires on how to handle the downturn.
First, conserve cash. With credit so difficult to obtain, companies must be able to weather any storm and that requires a strong balance sheet.
"You have to come up with imaginative ways of saving cash like signing every cheque yourself," he said.
Second, businesses cannot retrench too far because they will miss opportunities to grow.
Sir Richard said some Virgin companies were unlikely to see any growth this year, while others would take advantage of, for example, cheap property leases to expand.
Finally, Sir Richard said the recession in the United Kingdom and United States would offer entrepreneurs an opportunity to get started in business.
Corporations that were dominant in their sectors just a few months ago are now looking weak and many have been humiliated by the speed of the downturn and their own decisions.
As a result, the barriers to entry in many markets are the lowest for years and customers left disillusioned by mediocre service from big conglomerates might be more willing to try smaller firms.
"There are a lot of Richard Bransons that will come out of the next three or four years," he said.
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