Starting A Business in A Challenging Economic Climate, Part One (Why Now?)
April 10 by Susan Baroncini-Moe | Work
Starting a business during a recession seems counterintuitive, doesn’t it? If the economy isn’t doing well and people aren’t spending money, doesn’t that mean a new business is likely to fail? Actually, the answer may surprise you.
Fears about starting a business in this economy are common and understandable. But in this two-part series, I’m going to show you why this economic climate is a fantastic time to start a business, how you can limit your risk, and where you can get help.
Part One: Why Now Is A Great Time To Start A Business
History shows us that the economy may not have as much of an impact on startups as you might think. Many of the companies you know and trust were started in economic conditions much like the ones we’re experiencing today. Disney, Johnson & Johnson, and Microsoft were all started during recessions, and I think we can all agree that the economic conditions in which they were started didn’t doom them to failure. You can operate out of a sense of scarcity and fear, perpetuated by the media, or you can rely on history to show you the way.
Your corporate job may not be as safe as you think. So many businesses are making cutbacks these days that one thing is clear: nobody is completely safe from layoffs. You may not be privy to what’s going on behind the scenes at your corporate job or what’s happening in their books. So you may not know if your job is safe, if it’s safe “for now,” or if you’re next on the chopping block. Even if your company is trying to protect its employees, in the long run, many companies may not be able to keep everyone on. Now is the perfect time to build your “failsafe” or “backup plan” so you’re prepared if your employer can’t carry you through. Better to start now and have something in place, already growing, and if you don’t need it, you’ll have some nice extra income on the side.
Experts don’t know what’s going to happen. Some financial experts are saying they’re already seeing signs that the economy is improving, but others caution that we could be heading into a depression and that it may be a long time before we see true prosperity in our economy again. It’s hard to imagine that this economic climate is permanent, but without a clear idea of how long this is going to go on, and without knowing for sure that your corporate job is safe, having your business up and running and gaining momentum now, even in your spare time, just makes good sense.
Labor and outsourcing are cheaper than ever. Because everybody’s looking for clients, products and services that you need for your business are more affordable than ever. Thus, your startup costs for virtually any business will be less expensive and you’ll find fantastic values out there. That means you’ll be much more likely to be able to outsource mundane tasks to focus on the aspects of your business that really need you. Plus, instead of making the mistake that many new and inexperienced entrepreneurs make and trying to design your own logo and web site (almost always a mistake, in my opinion), you’ll be able to hire talented professionals at reasonable rates.
You’ll be more invested in your own success. In an economy where everyone is flourishing, many business owners think they don’t have to work as hard. Clients are easier to come by, and if your business doesn’t succeed as quickly as you anticipate, it’s not a big deal to get a temporary job until things pick up. In contrast, in an economy like this, many business owners exhibit a much stronger work ethic, where, even if there are jobs out there, they work like crazy to make their businesses succeed as soon as possible.
It’s so easy to give into the fear in challenging economic times like this. It’s easy to believe that now is the time to stash your cash in an emergency account and hang in there for the long haul. But the wisest course of action just might be the opposite action, to invest in small business ownership. In the second part of this series, I’ll share what you need to know to start a business and limit your risk so you still have that emergency fund intact.
I started my computer games company in 1991, right in the depths of a big recession. Not only that but I bought my first apartment a year or so later. These were the two smartest things I ever did: I got a bargain with my home and, for the same reason (many sellers, few buyers) I was able to hire excellent programmers and graphic designers at well below the previous market rate. It helped me have that ‘we’re a start-up so we can’t afford blue chip salaries’ conversation. Of course, if starting your own business doesn’t appeal, you might find my article: How to get the job you really want
Great article.
A recession is maybe the best time to launch a new business or to expand an existing one.
Dan B
http://www.Gtdagenda.com
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Excellent article! I started my own blog about start-ups after thinking through many of the reasons you mentioned. Never being a big idea guy, I finally realized I do have a level of expertise and knowledge in a niche that would be interesting to others. http://www.upandstarting.com was born.
First off – that was a great post.
I liked the “History shows us that the economy may not have as much of an impact on startups as you might think.” callout.
I believe that it doesn’t matter what the rest of the economy is doing – people, businesses can thrive in any environment because there are always needs and desires. Because the world is at a virtual standstill doesn’t mean people have stopped wanting things. The advertising, marketing industries have built up the “want” over entire lifetimes. We don’t know how not to want.
I think if you have a viable idea and the motivation to make it happen then that’s all it takes to have a winner, recession, depression, whatever comes.
Starting a business during a recession would be a much better idea than waiting until it was over. Then when the recession is receding and things are looking bright – they’re going to be looking really bright for those that weren’t sitting on their thumbs.
My 2 cents. :)
[...] check out for inspiration on the entrepreneurial path: – Susan Baroncini-Moe writes about Starting A Business in A Challenging Economic Climate, Part One (Why Now?) – The Arizona Small Business Development Center has a post called Starting a Business in a [...]
[...] Part 1 of this series, I talked about why now is a good time to start a business. But without Part 2, [...]
Great article. It was exactly what I needed to read right now. Thanks for posting!
[...] Part 1 of this series, I talked about why now is a good time to start a business. But without Part 2, [...]