Thinking of Starting Your Business Amidst the Recession? Here are 5 Reasons Why You Should Do It
Recessions are, without a doubt, the toughest time for all people. But did you know that it’s also a great time to start a business? In fact, a lot of successful companies started amid an economic downturn.
Take Airbnb as an example. The vacation rental marketplace started in the middle of the 2008 recession. Now, it brings over a billion dollars in revenue. Another example is Disney. Walt and Roy Disney rebranded their cartoon studio into Walt Disney Production in the middle of The Great Depression. The company is now worth over $130 billion.
These examples show is that it’s not impossible to open your business in the middle of a recession. In fact, you may even find opportunities that you otherwise wouldn’t come across if the recession didn’t happen.
Here are other reasons why opening a business during an economic downturn isn’t a bad idea:
1. You Can Find Great Hires
Chances are, if you’re starting a business during a recession, you’ll find a lot of people who are looking for jobs. Some of them may also have the qualifications you’re looking for and more. Many of these people would accept work at an affordable rate if it means it could help them pay their bills.
2. You’re Motivated
The recession can cause even the most established entrepreneurs to lose hope and passion. You, on the other hand, remain motivated. Since you’re still starting, your motivation to succeed is at its highest. You’re more likely to dig deeper for solutions to your business problems.
Starting a business during a recession gives you a different mindset. You’re driven by your goal of succeeding despite the economic difficulties. Your motivation will drive you as a start-up entrepreneur throughout the hardest times.
3. Everything is Cheaper
With recession also comes a decrease in the prices of stocks in the world market. Since everything is cheaper, starting a business becomes less expensive. Wherever you go, you can find amazing deals in each direction. Whether you’re looking to invest in construction equipment or real estate, this is the best time to do it. The asset prices are down which makes business resources easily attainable for start-up businesses.
Moreover, vendors are also more likely to offer start-up businesses with cheaper deals. Everyone will be willing to settle for a specific price to bring in sales to their companies. While you negotiate with your suppliers, you’ll also get to build a lasting business relationship with them.
4. You’ll Have Lesser Competition
The economic downturn forces businesses to adjust to the current business climate. Oftentimes, companies have no choice but to reassess their business models and cut costs. Others close their businesses for good. Moreover, people who are planning to open their business may not do it during a recession. What this means is that there are lesser companies for start-ups to compete with.
Many customers are also looking for a new store to avail of the products or services as businesses close. You can fill in the gaps and get the customers to avail of the products or services from you.
Companies are at their most vulnerable during recessions. Established companies may not have the resilience to survive the storm. Most of them won’t be able to cut off some costs without affecting the quality of their goods. But as you’re still a start-up, you’re more flexible than them. As long as you can survive with minimal overhead, you’ll be able to survive the tough economic times.
5. Banks and Lenders Tend to Offer Favorable Credit Terms
Banks and lenders don’t usually lend money to small businesses. But during a recession, they will offer lower interest rates and better loan terms. They do this to encourage consumers to keep spending. They may even offer lesser penalties and a higher credit limit to businesses. As a start-up entrepreneur, you can take advantage of this and make most of your business line of credit or credit cards.
Remember, though, that as you’re applying for a loan, you’ll still need to submit the same requirements. For instance, you need a solid business plan, financial documents, forecasts, and others. You may also need a good personal credit background to qualify for financing.
Recession or Not Now is the Time to Start a Business
There’s no perfect time to start a business. You just have to do it. Starting a business in the middle of a recession can be challenging. But that doesn’t mean that it’s impossible. That’s why you always need to plan. If it gets tough, let SMB Compass help you through it.
There is no shortcut to success. Like established businesses, you have to go through ups and downs before you reach your desired destination. The recession will slow your company’s growth, but if you survive it, your company will eventually come out strong.
© 2020 Rumzz Bajwa