Why now is the best time to start a business

We’re living in uncertain times. And as the world continues to reel from the far-reaching effects of the COVID-19 pandemic, many businesses around the world have seen their fortunes change overnight. Even as restrictions slowly start to ease up and we all gradually begin to get used to a new normal, the road ahead is uncertain. 

Many experts are predicting that there may be a recession ahead, as the economy struggles to recover from the impact of the virus on jobs, behaviours and spending habits. Should that happen, there’s no doubt it will be tough. Plenty of companies fall by the wayside in times of doubt, while there’s simply less spending, both from consumers and other businesses. 

So you’d have to be mad to start a business of your own with all this looming, right? Actually, it turns out that perspective could well be wrong. Launching your company right now could actually be a very good thing indeed. And here’s why… 

A World Of Innovation 

What’s the one thing that all fledgling businesses have in common? Innovation! Doing things differently is something that’s woven into the DNA of start-ups. It has to be for them to challenge the established marketplace and win over customers. In fact, your point of difference is one of the most valuable assets that your business has.

With that in mind, you begin to realize that recessions can be full of opportunities to innovate. A state of recession inherently creates problems for people and other businesses. Problems that are ripe to be solved by agile start-ups who can respond to market demand and shifting external factors much quicker than an established corporation with many layers of management. If you choose to do something different one day, you can!

Recession conditions also mean that the big boys generally halt their spending on development. It’s an easy area to slash the budget on when you’re battening down the hatches, after all. This leaves an even bigger gap for your small business to take advantage of. Move quickly and you can beat large organizations to the punch and look great in the process. Customers – be they in the B2B or B2C worlds – quickly get hungry for new solutions. If you can work that to your advantage, then your new business could really take off. 

Offering Better Value

Whether the condition of your finances are affected by the recession or not, just the mention of the word is enough to put the brakes on spending for a lot of individuals and companies. No matter whether they’re facing a job loss, anticipating reduced spending from their own audience, or just being cautious, many begin by tightening their belt. This is not just for businesses slashing whatever areas of budget they can, but also consumers cutting back on discretionary spending.

The perception of value becomes hugely important; your audience will be seeking new ways to save. That presents another golden opportunity for clever companies. If you can position yourself as a low-cost alternative, you have a real chance to win people over while they’re feeling extra sensitive to price.

And as a start-up with significantly lower overheads than the corporate titans, there is usually a way to do that. Think creatively about what you can offer and how you can demonstrate value. Craft a killer sales pitch and some targeted marketing material that shows off your value proposition.

Once you have people on board, go above and beyond to provide great service. That way, you are shifting the perception – from initially being the choice based solely on price to something more. If price is the only front you compete on, eventually there will always be someone out there who undercuts you.

By making a shift to compete on other factors, such as great service or ethical brand values, you are more likely to convert casual customers into brand advocates who want to stick with you for the long run, even after the economy recovers. It’s not quite bait and switch, but it is a two-layered customer acquisition and retention strategy that could keep your business running well into the future.

Taking On The Competition

As a small business, unknown to the marketplace, one of the hardest aspects is trying to take on the big boys. They’re well established, well known to customers and have deep pockets to fund expensive marketing campaigns and well-resourced sales operations. How can you ever compete?

You do have one secret weapon they don’t: agility. As a micro-business, you’ll quickly get used to doing things on a shoestring. And, as unlikely as it may seem, that can actually be a major strength.

While the corporates are hamstrung by slow decision making, multiple stakeholders, and high fixed costs, you have the freedom that can let you accelerate past them. If you can manage to keep overheads down, then you are far less vulnerable to economic shocks than your larger competitors. You don’t yet have costly office or warehousing space, a large staff wage bill and all the other pillars of big business.

This means you can keep operating for less for much longer. As long as you’re bringing in enough to support yourself and you keep your overheads small, you should be able to keep the business running while you build a client base.

Growing Your Business

If things do suddenly take off, then you’re also in a great position to benefit. Let’s say you’ve put a lot of hard work in, managed to pick up some good business, build a name for yourself and perhaps even take advantage of your bigger competitors.

If you do need to expand in a rush, then you have the opportunity to increase staffing with some genuine talent. With more people actively in the jobs market during a recession, it’s a lot easier to recruit from the best. You’re likely to be able to access skilled people in need of a job.

As any business owner knows, finding the best talent is a constant struggle. In fact, it’s one of the main factors that can really be hard to solve – and especially so for start-ups, who don’t have the name recognition, higher salaries and suite of benefits that the larger companies do. This playing field gets a lot more level during a recession, as the jobs market is busier and there are more and more candidates competing for roles.

You may have the chance to access a much more populous talent pool, and that could prove to be an amazing opportunity to grow your headcount. Similarly to winning business, once you have acquired great staff, you will need to make sure that you retain them – creating employee loyalty is definitely the next challenge. But a recession could just bring you to the attention of a few great jobseekers you might not normally have attracted.

Access Cheaper Credit

Most start-ups have to resort to using credit for their initial set-up; something has to cover the gap between getting into business and turning your first profit. There are a lot of business decisions that need to be made quickly in the early days; most of them need a little capital behind them. During a recession, what you tend to find are lower interest rates in an effort to keep the economy afloat, and this means two things.

Firstly, if you have some savings that you are able to use to launch the business, you won’t be missing out on much interest by putting them into your venture. Secondly, if you do need to borrow with loan financing, it’s a lot cheaper. You’ll be paying less interest and there may even be grants and other schemes run by government to encourage small businesses that you can access.

Pair this with small overheads and you could be on to a winner, even if you can’t access some of the measures above. For internet-based businesses, who are able to run without an office and with low costs, then you may even be able to use a credit card to get started. It’s generally a good time to borrow, as long as you can make the business pay in the longer term, so starting up may be more affordable and within reach than ever.

Get More Negotiating Power

How good are your negotiation skills? Well, starting a business during the recession means they might just get a boost. Your supply network is likely to be feeling the pinch and keen to offer discounts to secure your custom.

Whether that’s parts you need or third-party services like web design, your bargaining power is a lot higher when everyone is touting for business. This will make your limited budgets go a lot further and also give you real grounds to get favorable terms from suppliers. When the economy is strong, you’re just a small fish and larger vendors will set the rules.

A shrinking customer base gives you more power to ask for concessions, which can be really beneficial. And as you grow, keeping the lean, entrepreneurial mindset will be a huge benefit – keeping costs down and profit margins high even in better times.