Yes, we’re in a recession. Yes, we’re still under COVID-related restrictions on how businesses must operate. But despite these negative concerns, there are some compelling reasons why now is a great time to begin a new venture. Some of the biggest companies around today got started during the Great Depression (e.g., United Technologies, The Walt Disney Company, which was incorporated in 1929 as Walt Disney Productions, and HP), the Dot Com Bubble Burst (Google, Mailchimp, and Salesforce), or the Great Recession of 2007-2009 (Airbnb, Groupon, Square, and Uber). So if you have an idea for a business, don’t let current economic conditions hold you back.
Here are 5 reasons why now may just be the best of times to get started.
1. Innovation is always a plus
Whether in the best or the worst of economic times, if you have something new to offer the public, you likely can receive a favorable response. The previous list of companies is evidence of this.
Finding solutions to problems is the key to demand for any business during any economic condition. Obviously, large pharmaceutical companies are now working on COVID-19-related solutions. But small businesses can offer other types of solutions, such as designer face masks and other novel protective gear. How can your startup solve a current problem, whether or not COVID-19-related?
2. People are eager to support businesses now
After being cooped up and with many out of work, purchasing goods and services other than necessities has been on the back burner for two months or more. There’s a need to replace items, obtain new items, and take advantage of services of which they’ve been deprived (e.g., haircuts). As people get back to work and once again have money to spend, hopefully small businesses, including new ones, will be the recipients of this increased patronage.
3. Competition is down
There are no firm statistics yet on the number of business closures, but anecdotally many small businesses have shut their doors for good. Some have held on with the help of PPP loans and other resources, but some experts predict additional closures in the months to come. With that said, it may be easier now to find room in the marketplace for your offering.
Keep in mind that businesses are always starting while others are closing. According to SBA FAQs last year, over 430,000 businesses started while 400,000 (not necessarily the same) closed. So, current economic conditions many not be the biggest factor; others such as competition may mean more now.
4. Startup costs are lower than ever
The price of many goods and services have dropped dramatically. For example, for the moment gasoline prices are low (although they likely will continue to rise as the economy recovers). Interest rates are also at record lows, allowing for low-cost borrowing for startup costs (assuming owners are in a financial position at this time to take loans). This means it may be less costly for you to get started now with the things you need. Many vendors eager to increase their businesses are willing to negotiate favorable prices. And landlords may offer free rent for a short period or reduced rental prices for a considerable time to fill their empty units.
5. Long-term prospects look good
No one knows for sure how long the recession will last and how severe it will be, but history shows at some point things get better. As reported by AP, Federal Reserve Chair Jerome Powell said a prolonged recession is possible, but added that the Fed and the government’s steps may help to provide a stronger recovery. If you can launch now, you might just ride the wave of recovery.
If you’re planning to start a business that will be run from home, consider buying my new book Home-Based Business Start-Up Guide published by Home Business Magazine. Now may be the best time to do it.
As journalist Norman Cousins said: “Optimism doesn’t wait on facts. It deals with prospects.”