Starting a Business During a Recession
Starting a business during a recession is the last thing anyone is thinking. If you are able to make it work though, whether part-time or full-time, starting a business during these periods of uncertainty will give you an edge. There is less competition, society is ready for culture and economic shifts, and you can gain credibility by proving you are not being a “tourist” entrepreneur.
Competition for many things cools off when the economy slows down. There are more people looking for jobs due to layoffs, and fewer companies hiring due to hiring freezes. This lets you get access to talent that might have been out of your budget and reach. In addition, the common idea is to not start things during down markets due to fear and uncertainty or to reduce spending in all areas including marketing, this means fewer people you need to compete with for customers, funding, and marketing. In other words, your budget can go a lot further thanks to less competition.
Never Waste a Crisis
Down markets like other crises always cause society to shift cultural and economic priorities. Think how Covid made remote work and virtual meetings a new cultural norm. During an economic crisis, there is always a focus on how to spend less and get more. This provides a great angle when selling and marketing your business that might not have been a high priority when budgets weren’t being cut. Your product or service may have also gotten lucky culturally, meaning part of the crisis has pushed society to need or want your product or service. Always look for the silver lining in a crisis that you can take advantage of by finding new trends and norms.
Not a Tourist
Building a company is hard, but when money is easily accessible, people who are not serious about building a company or just want to “get rich quick” will take advantage of up markets. These are the first people to get out or quit when markets turn bad. The fact that you are building during a down market means you are passionate about what you are doing and have the grit to push through the hard and uncertain times. This is a great signal that many investors and potential partners will pick up on. In addition, this is a great way for you to see if you can handle running a business, as it will never be easy and there will always be problems and obstacles outside of your control.
Overall, building during a recession is a great way to stand out, get a foothold in your market, and build credibility. The best time to start is always now, whether part-time or full-time.
“Profits are created in the down market, and harvested in the up markets” - Jason Calacanis