6 Reasons To Start Your Business In An Economic Downturn
Regardless of what anyone may say to you, this is the best time to start a business.
Recessions, like the one we are now facing due to the coronavirus pandemic, are no doubt difficult times to overcome. People lose their jobs, businesses get directly hit on their cash flows, companies get wound up and there is a huge amount of uncertainty everywhere.
In this COVID-19 situation, nearly everyone now believes that a worldwide economic reset is upon us. But it can’t be all bad.
In fact, startups can take advantage of this economic downturn and come out on top. If you look at the recessions that happened in the past, you will see that some of the world’s greatest businesses have started in a recession or downturn.
Many of the current businesses have already started to revisit their budgets, pivot their business models and develop new forecasts with the goal to maximize their available cash runway and minimize their burn rate — and they are not just surviving, but they’re finding ways to thrive.
So, if you already have a plan to start your own business, now may be the best time to do that. Let me give you 6 reasons to start your company right now in this recession.
#1 You will get more talents
Are you thinking of getting your tech startup off the ground? — You’re going to find plenty of engineers who are waiting to be hired.
Want to hire better qualified people at an affordable rate? You know there are many qualified professionals looking for their next opportunity. New hires in a depressed economy are usually more willing to accept below market salaries in exchange for equity based compensation and solid benefits.
#2 People are willing to change suppliers
If you have a good value to offer, then you can have a greater chance at winning new businesses. In this time of economic crisis, there are many companies in the market that are searching for new partnerships and so, if you have something innovative or different to offer, you have a better chance of winning compared to a normal economy.
#3 People want to save money
During the downturn, most of the clients are looking for cheaper alternatives. They are all watching their wallets and so, this is a perfect time for you to pitch in your products or services in such a way so that you can win them over. If you can offer a promising quality, you will find those clients stick with you even after the economy recovers.
#4 You get better credit options
During a downturn, the banks usually start to drop their interest rates in order to keep the consumer spending high. As a result, credit cards and loans will make more sense to you if your startup is in its initial days.
#5 There is less competition in the market
In a strong economy, you may find any kid on the block wanting his own startup. But on the contrary, in a weak economy, nobody wants to try for a startup because there is less funding opportunity. This can be beneficial for you — because it makes it easier if you are willing to control the ownership of your company without the need to measure it out with bank rollers.
#6 You get greater negotiation power
As you may already know, in a weaker economy, the traditional vendors will face a good amount of trouble to move their products. So if your business is dependent on products from suppliers, then you will find that this downturn gives you a better chance to negotiate and renegotiate deals. This way you can ensure that the deal benefits you even when the recession is over.
In a nutshell, recessions sure create an abundance of problems. But those problems can also prove to be good opportunities for you if you are a new startup. You can come into play with your innovate ideas and solve those problems.
Yes lay-offs are more frequent during in time, but on the bright side, there are many talented and highly skilled people available for hire.
And most importantly, a startup that is formed during a downturn, is designed to be lean and efficient with good habits and low-cost from the ground up.
So when the things get better, a promising future will unveil in front of you with a subsequent increase in the profit margins.