It is true that many iconic business empires around the world were started by entrepreneurial business builders during the depths of recession. About half of the public companies that make up the Dow Jones index began in recession. Why? Because that’s where the opportunities were (and still are)!
In recession, entrepreneurial spirit is often borne out of necessity. Put simply, if you have lost your job or have been cut back to part time, there may no other choice but to go it alone.
Hunger and scarcity can breed creativity faster than any business degree. You may have been harboring a good idea for a long time, but involuntary unemployment or retirement creates an opportunity and the need to act.
Before you start however, stop to think whether yours is a recession product or not. You can’t introduce just any old product into recession markets. It has to reflect recession-type needs.
A product that is popular in recession is likely to remain popular in times of abundance. However, the reverse may not hold true. Many boom time business builders have found that out the hard way.
There are many good reasons to start a business in a recession. They include:
- The resources you need to start a business can be a lot cheaper because decreased demand and oversupply drives prices down
- Many businesses downsize, shed resources and fail to fulfill contracts in tough times, thereby creating opportunities for newcomers
- There are many opportunities because of the rapid belt-tightening and changes in consumer demand; most businesses can’t adapt quickly to the changed market conditions
- Competitors are struggling and often weakened
- Suppliers are struggling as well so they are more inclined to negotiate better terms
Ironically, it is the creation of new small businesses that helps lead the economy out of recession because the small business sector plays a significant part in driving the economy.
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Until next time!