Subscribe to Blog ContentThink the gloomy economy is the worst time to start a business or to add new products and services? Think again. Microsoft, Apple, Adobe, Southwest Airlines, JetBlue and Method (environment-friendly soaps and household cleaners) all came to be during an economic downturn.
How in the world do such companies manage to thrive when starting up during bad times? A blasted economy offers several advantages for new companies:
Less competition: Many think the downturn is not a good time to start up a business. This could be true for some industries such as travel. But then again, some brilliant mind might come up with a way to offer travel for prices that people can afford.
Lower costs: With buildings struggling to fill vacancies and businesses unable to move equipment, they tend to be more willing to negotiate better rates. It's a buyer's market.
More available pool of applicants: We've seen unemployment go up to one of the higher levels in years. Thus, new companies have plenty of talent for the choosing and they're more likely to accept a lower salary. Better than no salary. Employees also struggle to find new jobs for the same reason. But this doesn't mean you should take advantage of employees. It's cheaper to keep them to hire new people -- so do what you can to keep them loyal as bad times won't last forever.
Furthermore, laid off employees find the free time to explore the things they love and look for problems to solve. These ideas turn into businesses. Besides, smart unemployed people know they need to network. Networking for both a job and starting a business go well together.
Even if you still have a day job, keep it. It's better to start the new business while employed. Yes, it'll be hard work to manage both sides, but it pays off. There are no guarantees your business will take off or make it, so at least you'll have the peace of mind with your day job. For those already unemployed, it would be worth getting a part-time job.
This situation forces people to be mindful of spending or taking the bootstrapping approach. Marketing doesn't have to be an expensive task with all social networking tools available.
Don't use the economy as an excuse to put off your business dreams. On the contrary, it could be the best time. When the economy starts seeing the light, you'll already have your business in place ready to capture those who can start spending.
These businesses use their own money and loans from family and friends for starting capital. When things start to come together, then they move on to private financial organizations and other loan options. Also, stay on top of cash flow and planning.
HBS Working Knowledge interviews Bhaskar Chakravorti who teaches entrepreneurship management, new venture formation and innovation. The interview contains important insights for those ready to start something new.
Post new comment