The recession that the coronavirus pandemic has caused may not seem like the best time to be thinking about starting your own business. There will be people out of work, people are spending less and many businesses are going out of business. But, as unlikely as it may seem, starting a business during a recession can have it's advantages. Think different: a recession can be just as much an opportunity as a threat. Here are nine reasons why an economic downturn could be the perfect time for you to launch your new business venture...
1. Easier to find a 'gap in the market'
Often during periods of uncertainty, we find there are problems and issues which need addressing now. We all saw how businesses responded to the need for protective equipment, including masks and hand sanitiser over recent months and used this compelling consumer demand to grow their businesses.
As we continue to navigate our way around this “new normal”, gaps in the market will start to come to the surface. If you can identify those gaps and act to fill them, it may give you a strong head start.
2. Because others won't be!
A recession is an excellent time to start a business because other people in your sector will likely be reluctant to do the same. During an economic downturn, most people become more risk-averse, so they will be likely to put their business plans on hold for the time being. The reluctance of your competitors to enter the market will allow you to get a foothold before they even get off the ground.
3. Established businesses will be struggling
An established business will be geared up for higher turnover when a recession begins. A company that was trading before the recession may find itself burdened with high fixed overheads that it can no longer afford.
A new business, on the other hand, can start from day one optimised for the slower economy. You can run a leaner and more agile operation from the start, and possibly undercut even big companies on price.
4. People are looking for cheaper alternatives
During a recession, consumers and businesses alike will be looking for cheaper alternatives to products and services. So, with your lower operating costs, you will be able to sneak in under the established suppliers with more affordable products.
5. Cheaper rents and lower supply costs
Most things that you need to buy for your new business will be cheaper in a recession. Raw materials will likely not be so expensive and general supplies and stationary items will be more affordable. If you're in need of premises, you will likely be able to rent at a reduced cost.
6. Better deals with suppliers
As well as lower prices, you will also find that suppliers are more willing to negotiate terms during a recession. For example, you will likely be able to negotiate smaller minimum order quantities, or more favourable credit terms.
When customers are challenging to find, suppliers become much more willing to negotiate and work with you to find a solution that suits you both.
7. Availability of liquidated goods and equipment
The assets of companies that are no longer trading will be up for sale, likely at auction houses, sale rooms and online such as eBay. So, if you need to buy machinery, equipment, office furniture, etc... you'll likely find second-hand goods prices way lower than usual. You might even be able to buy a business outright at a bargain price. Whilst no-one likes to benefit from someone else’s misfortune, if you don't take advantage of another company’s assets being liquidated, someone else will!
8. Greater availability of skilled staff
Unfortunately, people of all skill levels are finding themselves unemployed meaning an increased availability and choice of skill sets to employers. So, if you need to take on staff whether full or part-time, new businesses starting up during a recession will be able to hire higher-grade employees at lower salaries than would have been possible normally.
9. It makes for a good story!
Starting a business during a recession can provide many PR and marketing opportunities. The media love a story about an entrepreneur who defies the trend and brings a product to market during an economic downtown! Depending on the product that you sell, you could also find that you are praised for supplying an essential item at an affordable price during tough times. And, when the world (finally) returns to 'normal', you will have the story that your business was founded in a recession and survived a global pandemic. Put that on your “About Us” page!
To sum up...
As you can see, a recession could mean less competition, lower start-up costs, and lower operating costs for starting a new business. So, if you have a product or service that people will still need during a recession, then now may be just the right time to launch your new business venture.
You can get free start-up tutorials and new small business tips and advice simply by subscribing to my mailing list. I will also send you a free copy of my eBook 190 Home Based Business Ideas you can start at home today. How's that?! 💖
I hope you found this information useful and it has helped to inspire you to start your lovely new business during a recession.
Lots of love,
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