The Chinese word for “crisis” is composed of two Chinese characters signifying “danger” and “opportunity” respectively.
At the time of company formation, a startup founder’s decision to begin a new venture rarely appears to be a logical choice, due to the high risk and significant probability of failure for any startup. Top founders can often see the invisible and execute on a vision that the rest of the world catches up to in the future.
“Victory comes from finding opportunities in problems”. Entrepreneurship is risky, but it’s riskier to not take action on uncertain times like now.
Now Is the best time ever to start.
Here are 10 benefits for starting a business during a crisis:
Crisis create problems – it slows down investment, and in return slows down innovation. Consumers and businesses are looking for solutions to problems which presents opportunities for your startups to solve.
2. People want to save money
As a startup with fewer expenses, you should be able to undercut your competitors. Their clients will be looking for cheaper alternatives, so it’s the perfect time to make a sales pitch to win them over. Wow them, and you’ll be able to keep those clients when the economy recovers.
3. Things are cheaper
Things cost less when the economy is weak and vendors are more likely to discount prices to move stock quicker. Even the good people will demand a lower salary and less benefits. Also, this means that loans and credit cards are cheaper (nevertheless, money is money – so be smart and take calculated risks always).
4. Talented people are looking for work
Finding the right staff is really, really hard, but during a downturn many layoffs will happen – and highly qualified, talented and effective individuals can be found much more easily than during normal times.
5. Incumbents are vulnerable
Many large companies scale back and hibernate through the downturn and smaller companies often don’t have the resilience to survive. Bootstrap, be agile and be flexible you sail your startup through the Covid-19 waves.
6. Cheaper Marketing
Google & Facebook ads are cheaper than ever. As businesses changed their operations, people stayed home and are turning to online search and news for answers to their questions and solutions to their new needs. These new searchers are driving new audiences to find their way to advertisers’ sites, and some are becoming new customers.
7. Less competitors
When the economy is strong, many entrepreneurs get funding and squash the bootstrappers. As less people try to start a startup in a downturn, it makes it easier for you to enter the market (and win).
8. Smart investors want to invest
There are plenty of investors looking for new business opportunities. Many angel investors look to move their money out of the stock market and are willing to fund you if your prospects are promising.
9. Negotiating power
When the economy is strong, a startup is just another startup, and the vendor sets the rules. But in times of crisis they have trouble moving products – making it a great time to negotiate (and get the benefits even after the downturn ends).
10. Build lean & good habits
When you build a startup during the tough times – you build a lean, mean, efficient machine. These habits stay with you when the market recovers, giving you higher profit margins since you’ll be able to increase prices once consumers and clients are spending again. If you can build and grow a business when consumer confidence is down and businesses are tightening their belts, your business will be bullet-proof when things improve.
Did you know that:
While economic uncertainty is never a desirable situation, some of the world’s greatest businesses have started during a downturn or recession.
Below is a graph to inspire you – that indicates the consumer startups formed during the Global Financial Crisis below:
It’s a time for experimentation and creativity. Covid-19 is expected accelerate a trend towards companies seeking simpler, more resilient solutions.
We hope that this article has given you 10 extra reasons to start a business and say goodbye to corporate life and go to work for yourself.
Written by Paula Mills, Founder of the Academy of Entrepreneurs
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