The reality couldn’t be further from the truth. The best time to start a business is during a downturn. In other words, if you’re thinking of starting a business, there couldn’t be a better time than now. So, let me explain.
Technology makes it easy
Years ago starting a business was a difficult process as you often needed to take significant risks to get started. Nowadays its much easier and more and more people are starting their business from home with little or no monetary risks. The Internet has been a key driver in this as there are so many opportunities online. Technology has also made it much easier to research ideas for businesses and what’s involved in running a business, so knowledge has improved and most people feel much more confident about taking those first steps.
People are looking for a good deal
A startup has very few expenses and overheads, so if you check out your competition the chances are that you can undercut them. Their clients or customers will be looking for deals and cheaper alternatives that are just as good. So, it’s the perfect time to win them over. If you do a good job, as promised, there is no doubt that you’ll retain those clients when the economy recovers.
Now is the time to negotiate
If your startup depends on products from suppliers this is the best time to negotiate a really good deal as vendors struggle to sell products. When the economy is strong, vendors in the main set the rules for their price model and it’s very hard to broker a deal.
Competitors are vulnerable
Whether they’re large corporates looking to scale back throughout the downturn, or smaller companies that perhaps aren’t resilient enough to see it through, your competitors are in a vulnerable state. Startups are nimble, agile and flexible, and when you spot an opportunity you can pounce on it.
Access to finance
Previously to get started in a business you either needed to self-fund or go to a bank for a traditional business loan. However, there are now so many different schemes and incentives as well as crowdsourcing and independent investors that if you have a great idea – its possible to get funding quite easily and on reasonable terms.
When the economy falters, angel investors in particular, look to move their money out of the stock market and may be willing to fund you if your prospects are promising. Additionally, its worth noting that interest rates on credit cards are low which gives you another option to get you started.
Good people are looking for jobs
If you’re able to secure funding and looking to grow your business quickly, you’ll probably be looking to increase your staff. In a downturn, when redundancies are rife, highly qualified, talented and effective people are much easier to come by.
You’ll create a good startup in tough times
A startup created during tough times is designed to be lean and ultra efficient. You’ll develop business habits that will help you get ahead of the game when the market recovers, with the scope to increase profit margins once consumers and clients are spending at full throttle again. If you can make it work in the bad times then it should fly once the economic good times return. Also for many people whose job is perhaps uncertain or if they have been made redundant it becomes a chance to put control in to their own hands.
We have definitely seen a rise in the number of people starting up businesses from home, and although we still get people of all ages there seems to be a growing number of young people (18-25) starting up a company alone. So, if you’ve been considering starting your own business this is the time to take the plunge.
By Paul Bryant, managing director of Setup A Company www.setupacompany.co.uk