5 Reasons Why Soaring Small-Business Bankruptcy Rates Are Good

By Carol Tice Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.

Every new story that comes out about climbing small-business bankruptcy rates seems to send small business owners I know into a new downward cycle of negativity. Which I always think is a little odd. More on why in a minute.

First, our latest news flash: Equifax reports U.S. small business bankruptcy rates soared 81 percent in June 2009 compared with June 2008. More than 10,000 small businesses bit the dust. Leading the pack in small business shrinkage: California, natch, with 10 metropolitan areas in the top 15 worst-affected areas. The top four losing markets were the Charlotte, NC area; Atlanta; Portland, Ore.; and Dallas.

My question is this: Why doesn't this news make surviving small business owners happy? If this news depressed you, consider my Five Reasons Why the Small Business Bankruptcy Spike is Good For You:

1. Every small business that busts reduces competition for the survivors. If you still have your doors open, you're probably seeing a less crowded market for what you sell.

2. Every retail small business that goes bust frees up valuable retail space, sometimes in prime locations. As stores empty out, landlords become more willing to lower rents for new tenants -- a great chance to snap up a new location at a good price.

3. Every small business that busts leaves an open niche in the market that a new entrepreneur could seize on to start a new business or add a new business line. Hello, opportunity knocks!

4. The current small-business shakeout is culling the weak players from the marketplace, leaving the stronger small businesses still standing. It's brutal and Darwinian, but the end result should be generally healthier small businesses to partner with, and sell to, in the coming years.

5. Watching businesses go bust all around you tends to concentrate the mind of a business owner. Likely the current business cycle has helped you examine your business and become more efficient -- 66% of business owners said they have in a recent study -- putting you in good position to benefit as the economy improves.

So what are you doing to capitalize on the current small-business shakeout? Have you compiled a list of every business in your city in your sector that's gone bust and estimated what their revenues were? Sized up their locations? Asked to buy their customer lists? Looked into taking over their Web sites? Gone to an asset auction to see if you can get equipment deals? Upped your marketing spend to reach dead businesses' former customers?

Remember, one business's failure is another's opportunity -- are you seizing yours?

Carol Tice

Owner of Make a Living Writing

Longtime Seattle business writer Carol Tice has written for Entrepreneur, Forbes, Delta Sky and many more. She writes the award-winning Make a Living Writing blog. Her new ebook for Oberlo is Crowdfunding for Entrepreneurs.

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