capital intensive projects
During the boom times the risk appetite of financiers increase, money and credit becomes plentiful, and a lot of capital-intensive, green-field projects get approved. Invariably a substantial portion of these investments fail before starting to generate positive cash flows.
Engage in simple, non-capital-intensive projects. Maintain a low debt level. Accumulate cash and wait for a financial crisis to take place. (The chances are that you will not have to wait for too long, especially in countries like Turkey.) Buy into a economically viable, capital intensive business that has run into serious financial difficulties due to the indiscriminate credit rationing. Wait until the economy improves and investors become optimistic about the future growth potential. Sell the recently bought stake and put the profits into safe, liquid assets. Go back to your old, simple business.
Let others finance and construct capital intensive projects, whose development period often last longer than the half life of an average boom/bust cycle. When money and credit flow around in vast quantities, there are always some people who are overly confident of their ability to value complicated projects. After the end of the boom period, investors will start to shun such extremely illiquid businesses which you can then buy into at bargain prices.
Do not forget that many businessmen made a lot of money in simple businesses and lost everything in complicated ones.
Engage in simple, non-capital-intensive projects. Maintain a low debt level. Accumulate cash and wait for a financial crisis to take place. (The chances are that you will not have to wait for too long, especially in countries like Turkey.) Buy into a economically viable, capital intensive business that has run into serious financial difficulties due to the indiscriminate credit rationing. Wait until the economy improves and investors become optimistic about the future growth potential. Sell the recently bought stake and put the profits into safe, liquid assets. Go back to your old, simple business.
Let others finance and construct capital intensive projects, whose development period often last longer than the half life of an average boom/bust cycle. When money and credit flow around in vast quantities, there are always some people who are overly confident of their ability to value complicated projects. After the end of the boom period, investors will start to shun such extremely illiquid businesses which you can then buy into at bargain prices.
Do not forget that many businessmen made a lot of money in simple businesses and lost everything in complicated ones.
