Recession creates billionaires

Recession creates billionaires, by David Robertson - 9th March 2009

Sir Richard Branson believes that the next generation of self-made billionaires will emerge from the corporate wreckage of this recession.

In an exclusive interview with The Times, Sir Richard said: “There are a lot of Richard Bransons that will come out of the next three or four years.”

The Virgin founder believes that the depth of this recession and its impact on once-impregnable industries has presented entrepreneurs with their greatest opportunity in generations.

“Fortunes are made out of recessions. A lot of entrepreneurs get going in the economic depths because the barriers to entry are lower,” he said.

Sir Richard highlighted the banking sector as particularly ripe for a shake-up as the established giants of the industry have been humbled, giving new ventures a chance to grab market share as disillusioned consumers look for alternatives.

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He wants Virgin to be part of the shake-up in banking, but he also expects as yet unknown companies to seize the opportunities presented by the complete or partial nationalisation of Northern Rock, Bradford & Bingley, RBS and Lloyds Banking Group.

Sir Richard was sharing his thoughts on the state of the economy while flying around the world last week to promote the launch of his newest airline, V Australia. Although he believes that the recession will be prolonged, he is also optimistic about the prospects for the UK's 4.7million small and medium-sized companies.

“If you are best in your field, then don't cut back on quality because good companies always survive ... I got into business aged 15 and since then I've seen four recessions, so I'm quite used to weathering these storms. We are not going to be out of this one any time soon, so people are going to have to dig in and work longer hours to pull us out.”

Sir Richard is concerned that the ambitions of the next generation of entrepreneurs could be scuppered by a lack of financing. Sir Richard is one of Gordon Brown's business advisers and he has been urging the Prime Minister to make the liquidity crisis the Government's top priority.

“The PM realises that the most dangerous thing is the liquidity issue,” Sir Richard said. “We cannot allow perfectly decent companies to go to the wall just because they cannot get liquidity. And if your bank is behaving badly, then shout about it because no business can afford to lose that lifeline.”

Sir Richard also urged business leaders not to panic and cut jobs unnecessarily. British companies have been forced to cut costs as sales have slowed and, as a result, unemployment rose to 1.97 million last month, its highest level for 12 years.

Sir Richard has instructed the managers running his various businesses, which include trains, gyms and mobile phones, to find alternatives to job losses wherever possible. He said: “Where companies indicate they may have to cut back and tighten their belts, we have given strict instructions to management to look at job-sharing, part-time work or shorter working weeks to prevent job losses. We want to look at everything first because there is nothing more demoralising than being out of work. That has to be an absolute last resort for any company.”

Sir Richard offered the owners of small and medium-sized companies a piece of advice to help to limit the impact of the recession: “You have to come up with imaginative ways of saving cash, like signing every cheque yourself. You would be surprised how much you can save even in large companies if the boss questions every purchase order that goes out.”


Richard Branson

Virgin Enterprises Limited


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