Photo: Markus Spiske, Unsplash.
Are we in a recession? Who knows? The definitions can be arcane. But we are in a massive government-initiated reaction to a public health crisis — that we do know. The talking-head economists will argue the meaning of the “R” word and when one actually begins (or ends). Blah, blah, blah — who cares? Some are calling what we’re in now just a “hibernation.”
The point I want to make is that, regardless of what we call a downturn in the economy, it can actually be the very best of times to start a business. I know something about this topic. I started my business during a recession — a year in which U.S. unemployment jumped faster than at any other time (well, until 2008-09). Did that scare me? Hell no! Because I knew I had something — customers weren’t getting what they needed from the established incumbents. And I survived three other recessions because I adjusted and simplified — reinvented myself and my business to meet the new realities.
So, buck up, people! Think of a recession as a challenge. The opening of a new door.
Why can starting a business during a recession be the right time? I’m hardly the only one who knows these truths. I loved how Australian startup founder Alec Lynch framed it when he wrote in Forbes after the last major recession (the 2008 financial meltdown), “10 Reasons The Best Time To Start A Business Is During A Downturn.” Here’s his list:
• People want innovation
• People want to save money
• Incumbents are vulnerable
• Good people are looking for work
• Things are cheaper
• Lower interest rates means cheaper credit
• You will have fewer competitors
• Smart investors want to invest
• Downturns give startups negotiating power
• You’ll build a lean startup with good habits
Some further perspectives on reasons why now is the best time to launch a business come from a guy named Brad Sugars, who penned a great piece in Entrepreneur magazine post-2008 recession, “Top 10 Reasons to Start a Business in a Recession.” One excerpt: “Just go back and look at the economic slowdowns throughout history. Most recessions in the post-World War II era last an average of 10 months, followed by growth cycles that last an average of 50 months. What this means for the startup is there’s no better time than right now to get going and start pursuing your business dreams — in anticipation of the next period of growth.”
You won’t find his list much different than Alec’s, but he does offer up one other key point: “You can get good PR by showing you are going against the trend. The media loves aberrations, and if you are optimistic by expanding or getting into business now, you would be in that category. That means you can generate some great PR by demonstrating your ‘alternative’ view of the market.”
And you have to love how he wraps up his piece: “There’s no better time to start than the present, especially if people around you are more comfortable with their own list of reasons why they shouldn’t start pursuing their own business dreams right now. It only means you’ll be facing a lot less competition.” Bingo!
Edward D. Hess, a business professor at the University of Virginia, coauthored a book called, “So, You Want to Start a Business? 8 Steps to Take Before Making the Leap.” Among his key points is having a clear understanding of your value proposition. “You need to decide why someone is going to buy what you have to sell. You must have a message (my emphasis) to customers about why you’ll be better, faster, or cheaper than the competition.” And to develop that, you need to talk to them directly and get to intimately know their needs.
Yes, it all comes down to this: will people pay you money for what you’re offering, and why? And remember, there’s a big difference between a business idea and a profitable business idea. The good news is there are tons of resources out there to help you start and run a new business. Read, think, plan, talk (a lot)… and build confidence.
Then dive in!
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UPDATE 6/9/20: I told you to start your business 🙂 … It’s not too late!
“U.S. had shortest recession in history: Economist Mark Zandi” | Fox Business Video
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