7 Ways 'Vulture Capitalism' Can Benefit Your Business

You may have heard the name "vulture capitalists" for the funds that take advantage of companies that are about to default on their debt. While the image of a vulture circling a dead carcass may not be an obvious point of inspiration, do think about how you can get your "vulture on" and take advantage of competitors that may be struggling in your industry.

If you know that a competitor that is closing -- or rumored to be struggling -- here are some ways that you can turn their misfortune into an opportunity for your business.

1. Take over their customer accounts: If a company is going out of business, it may have long-term customer relationships, including unfulfilled orders or ongoing-service accounts. Approach the competitor to see if they will facilitate a transfer of orders or account to your business. Offer to pay them a royalty fee on any accounts that you take over with their help.

If they are going out of business, they will want to recoup any money they can, so they're likely to buy into your plan if you present it as a win-win situation for them.

2. Buy their customer lists: If your competitor can't assist with the account transfer directly, or if they are in a different type of business, see if you can buy their customer list. Then you can email those customers directly and attempt to build relationships with them.

3. Buy their website domain: Offer to buy their website domain and have it redirected to your website. When their customers go to the old website, it will automatically redirect them to yours. If you do this, consider setting up a special landing page to welcome the customers and make them a special offer.

4. Take over their phone numbers: See if you can get the competitor's phone number transferred to yours once they give it up. This way, anyone calling the business will be redirected to you (much in the same way the website redirection works). You can work on a script to let callers know that you are in the same industry and excited to serve their needs.

5. Buy their inventory on the cheap: If you are in a product-based business, competitors who are in financial trouble will often sell inventory for pennies on the dollar. See if you can make an early offer on key inventory to get a great deal.

6. Buy their FF&E (furniture, fixtures and equipment) assets: In addition to selling off inventory, your competitor may be selling everything from computers and office furniture to specialized manufacturing equipment. Again, as they look to recoup dollars, see what you may be able to purchase these at deep discounts.

7. Hire their key employees: While the employees at the competitor may not always be strong performers (especially if they are going out of business!), some may be truly talented -- and those folks will be looking for a new job. They can bring insights on what worked and what didn't and can be a strong asset for your company, either as consultants or on a full-time basis.

Let the tough economy work in your favor when a competitor goes out of business. While not every competitor will be amenable or have assets that are valuable to you, there is probably some meat on every business carcass that you can feast on.