While starting a business during a recession might seem scary, it may actually be smart timing to develop an idea into a revenue-generating venture. In fact, many successful corporations had their start during tough times thanks to entrepreneurs who recognized a need, innovated a solution, and found a new niche.
If you have a strong startup idea in mind, follow these tips for starting your own business during an economic recession – or any time.
Why the Economic Downturn is a Good Time to Start?
Starting a business during a recession is all about looking past the immediate chaos and recognizing the surprising benefits and advantages. These include:
Low pricing on supplies, materials, and online business solutions
During economic downturns, some companies and suppliers may begin to sell off products or reduce inventories at lower costs, so the timing couldn’t be better for a new business that’s ramping up and needs equipment. Likewise, software companies that support small businesses might provide longer free trial periods or sign-up discounts to entice new customers.
Less competition entering the market
Existing companies in your sector are likely trying to pivot and deal with new challenges that are transforming their business model and cutting into their revenue, while also holding back on new innovations to see how the market shakes out. What's more, many entrepreneurs may also be waiting out the recession to open new businesses. With that kind of void, it could be an ideal time to swoop in and save the day. Your new company will be starting off lean, nimble and focused, so it may reach a customer base that might not be getting what they need from their usual providers.
Access to a bigger talent pool
Forming the perfect core team that may help your business grow is so important, especially in the early stages of a new company. An economic downturn means that more talented people are either out of work or actively seeking new opportunities. In other words, it may be easier and less expensive to recruit and hire. Plus, less competition for talent means you get to be more selective and may not have to bid as high as you might when professionals have their pick of jobs.
Starting a Business During Recession
Now that you know some reasons why recession and business launches may go hand-in-hand, you have to make sure your business idea is well-developed and ready to launch. These tried-and-true tips for starting a business may serve you well during any climate, but especially during an economic recession.
Identify a need
With so much change happening at once in the marketplace, there are plenty of shortfalls and consumers being left behind. What do your prospective customers need right now, and will that demand continue? Can your business fill a gap that was left from other companies not stepping up? Will your solutions help customers not only right now, but for the long term? Identify people and industries that are going through significant disruption right now, and think about what they need.
Be a less-expensive alternative
When times are tight, consumers have less discretionary spending and start looking for cost-cutting alternatives. That could be a great opportunity for a new business model that allows them access to great service and products but at a reduced price.
Offer a solution
What new challenges have emerged in the last few months? For instance, people having to work remotely and children learning from home has resulted in a higher demand for technology, home-based office equipment and entertainment, and innovative childcare options. Entrepreneurs and businesses that have come up with solutions during this time have not only generated income to survive but perhaps have created new revenue streams going forward.
Forging strong customer relationships is always good business practice, but even more so during tough times. Customers want to know that their businesses are there for them, understand their needs, and are accessible. If you can earn their trust when they need you most, you may win their loyalty for the long haul.
Starting a business in recession – especially one where more people are plugged in at home than ever before – means digital marketing is crucial. Reaching audiences on their devices through email marketing, connecting on social media, and advertising on various channels may help get the word out about your business. Depending on the nature of your business, setting up an eCommerce platform or creating an app is also a smart up-front investment that may help set your business apart.
Don’t Let the Recession Stop You
Though it feel risky, starting a business during a recession may bring with it some distinct benefits. By taking advantage of every opportunity, recognizing how your business may help meet new consumer demands, and forging those all-important customer connections early on, you may build a foundation for a long-lasting business.
This article is intended for general informational purposes only and does not constitute legal advice or an opinion on any issue. It should not be regarded as comprehensive or a substitute for professional advice.