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Business opportunities from a weak dollar

The rapidly falling dollar (and overall currency fluctuations) are causing a lot of pain to businesses (and to consumers to a smaller extent). I dealt with this issue yesterday and provided tips on how to protect your business from currency fluctuations. But a falling dollar also creates interesting business opportunities for businesses of all sizes. In fact, that is one reason the US Government is letting the dollar fall in the first place.



New business opportunities from a weak dollar

  1. If you have seen your business mature in the United States with a 1.0-2.0X GDP growth, then this may be the perfect time to explore entry/expansion into high-growth markets, particularly in BRIC (Brazil, Russia, India, and China) countries. A weak dollar means that you will be at a disadvantage when buying products/services overseas, and at a even greater disadvantage if your customers are in the United States.
  2. A weak dollar makes your products and services cheaper in the global market. Thus, businesses and consumers that could not afford your products in the past may be able to do so now. Conduct an analysis of disposable incomes of the rising middle class in emerging economies and assess if your products are more affordable now and then jump on the opportunity. While we may not be excited by "Made in China" labels, the Chinese love products "Made in USA". So is the case with countries that have had closed markets to imports, for instance, Russia and India, or countries that adore American products but have not been able to afford them, for example, Latin American countries. While the masses in these countries are still mired in poverty, a rising middle class is hungry to elevate their status in the society by consuming "foreign" products.
  3. A weak dollar gives a boost to tourism in the United States for two reasons. One, a weak dollar makes it unattractive for Americans to travel overseas and so they spend their vacations in the United States. Secondly, a weak dollar makes it more attractive for foreigners to come to the United States, particularly from rich countries in Europe. While security concerns have reduced overseas travel significantly by tourists, as a management consultant I know that even businesses have been cutting back on overseas travel due to security concerns. However, when travel is inexpensive, some of these concerns are ignored. So according to the iProceed forecast, we should expect a boom in tourism in the United States in 2005. And that creates some very attractive business opportunities particularly in organizing group tours to popular tourist destinations in the country.
  4. Interest rates have been inching up in recent months and a falling dollar may motivate the Fed to keep raising them further in coming months. Higher interest rates typically curb consumption and motivate consumers to pay off debt or save or invest. If you are in a financial sector, find ways how to tap into this trend.
  5. Finally, Americans will increasingly look to geographically diversify their portfolios. They will try to find investment opportunities in other countries so that they are somewhat protected from a weak dollar and currency fluctuations. A whole bunch of business opportunities are emerging in form of helping Americans invest overseas.