The Benefits of Starting a Business During a Recession

I’ve been told that I’m a bit of a Pollyanna. When you ask me if the glass is half full or half empty, I’m likely to tell you it’s overflowing. So it was when I addressed the New Haven Professional chapter of Net Impact.

small business grand openingIt’ll be no surprise to my friends when I say every dark cloud has a silver lining. Even when it is a storm cloud of epic proportions like the recession we’re in now.

What makes it possible for new companies to launch in bad times?

  • Less to lose. If you’ve been laid off, are concerned about being laid off, or your business has diminished, you’re not giving up the safety of a regular paycheck and benefits. You’re surviving!
     
  • During downturns, the marketplace changes more quickly and dramatically. When change happens, opportunities present themselves to those who know where to look and can be flexible to exploit market conditions. Large companies tend to be slower to respond than small and midsized enterprises, due to cumbersome bureaucracy and layers of approval. Think elephants vs. gazelles.
    • Competitors weaken and some even go out of business, which creates an open space for smarter, more resourceful players.
       
    • Customers are more likely to re-evaluate their brand loyalties as they seek less expensive alternatives.
       
    • Quality talent becomes more affordable. Not just because people have been laid off but because, in light of large corporation vulnerability, they may be more willing to take a chance on joining a startup. Some small company vendors and freelancers may become more flexible on payment, although the reverse may also be true. Vendors can also become more rigid about payment or require more substantial monies upfront.
       
    • Some goods and services become more cost effective. Overall, many products and services become more affordable as the market price waivers and vendors find it necessary to slash profit margins. Prices for office space has dropped around the country. You may be able to buy used office products on the cheap such as office furniture. Vendors may become more willing to negotiate better terms. In fact, some vendors may be willing to barter services or take a percentage of the company in exchange for the providing the products and services you need to get started. This is a strategy I’ve employed starting my own businesses.
       
  • Recessions toughen you. Remember the` old adage: “what doesn’t kill you makes you stronger.” Adversity brings out the best in entrepreneurs – creative problem-solving, healthy deliberation about spending, strength and perseverance.
     
  • Downturns force entrepreneurs to scrutinize their ideas. During hard times, entrepreneurs need to look long and hard at their business ideas before moving forward. A recession forces a keener evaluation.
     
  • Get a leg up. The skills that you learn by starting in lean times makes your company stronger when economic health returns. Being creative and resourceful are skills that never fall out of favor. 

Starting a business is about strong well-thought-out ideation, thorough understanding of your markets, timing and seeing a great opportunity when it hits you in the face. What might seem out of reach for one person is reachable for another. Is this the right time for you? Only you can decide, but if you share your ideas, I’ll provide some feedback.

Geri