Something is worth whatever someone is willing to pay for it. A painting that just sold for one hundred million dollars in a heated bidding war may only be worth fifty million the next day. The last person in line to flip a house for profit gets stuck with a gigantic mortgage on a house, which can only be sold for a fraction of its previous list price. The stock that just sky rocketed to an all time high may crash and burn to penny stock levels leaving the last investors with huge losses. No matter how much something has devalued, it’s still possible to sell in a down market, or worse, no market.
It’s important to understand a market before entering it. For example, let’s say you are considering planting a crop of watermelons. Is there a wholesale produce distributor in your area who will buy your entire crop? If there is that’s great, but you’d better have a conversation with one of the company’s managers confirming they will buy from you. Getting something in writing is better than just a handshake and verbal commitment.
Always have a backup marketing plan just in case something goes wrong with your first plan. Congratulations, you grew a bumper crop of watermelons. Unfortunately, so did everybody else. The wholesaler is flooded with watermelons and backs out of your deal. It is possible you could win in a lawsuit against the produce wholesaler, but there is no guarantee of victory. Meanwhile, your watermelons are beginning to get too ripe. Good thing you had a plan ‘B’, which is another wholesale produce distributor in a nearby county.
When it rains it pours. Your backup distributor says the whole state is flooded in watermelons. Now you have to get creative in finding a market. Watermelons are fruit, and other animals besides humans can eat them. Check out pig farmers to see if they’ll buy your crop at a steep discount for pig food. Some grocery store, produce department managers might take several loads off your hands if you undercut the going market price. Why not try to get convenience stores to buy a truckload or two? If there is absolutely no market to sell in then you will have to sell watermelons beside the road out of the back of a pickup truck.
Nobody said selling in a down market or no market would be easy. After you’ve rung the last cent out of your business endeavor, it’s time to reassess your understanding of the market place. Will a market glut one-year force others out of the business so the next year will see higher prices? Can you afford to have a wait and see attitude? Maybe the market is telling you to seek profits elsewhere. In any down market there is always someone somewhere willing to pay something for your product be it houses, widgets, or watermelons. It’s up to you to get the most out of a down market, or worse, no market.