I am the founder and owner of a technical startup in New York City. Despite the grim news, I firmly believe that small business will lead us out of the hard times.
While small businesses may not have the same resources that a larger organization has, we have have one key asset that will prove move valuable than anything else: the ability to be be nimble. I believe this makes us well positioned to weather the downturn and in fact emerge stronger.
Another advantage we have under the circumstances is that technical startups typically rely on sales of equity as opposed to operating with significant debt. As the credit markets also tighten, this levels the playing field somewhat. Larger organizations can be hard to compete with when they are spending freely, but as they cut back on that spending and have less debt financing available to them, it really enables us to compete with “the big boys” easier.
As a technical company, our largest cost by far is talent. Here in New York City, we’re seeing many larger business - particularly those hard hit in the financial services industry - significantly cutting their staff. All of a sudden, elite talent is available and often for well below what they once made. We’ve gotten an amazing number of highly qualified resumes, with many willing to work for more equity and lower salaries. We’ve even had a few applicants willing to work for only equity and health insurance.
Finally, the economic downturn is making both individuals and other business more price sensitive. This opens up a great opportunity to compete with a cheaper, lighter-weight product. When times are good, potential customers may be looking for the “best”, regardless of price - but we have found them more receptive to our sales pitch for a product that does 80% of what the market leader does for a fraction of the cost.
Ultimately, small businesses should see the grim economy as a unique opportunity to seize marketshare - one that may not exist when larger organizations are freely spending and putting their more significant resources to work. There is, in my mind, no better time to start (or grow) a small business.