Some say it’s good to start a business in a downsizing economy

Posted on October 29, 2008

A lot of folks started to write about the financial turmoil and that you should do that and this and whatever. And the numbers of views and ideas is more or less equal with the number of people writing something about it.

I’ve decided to join the crowd that says starting a business now should be ok. Mostly because my own entrepreneurship attitude and desire to start a new business hasn’t changed with the recession. Also the interviews that I’ve did lately on Entrepreneur interviews, published or waiting to be published show that companies just go forward (of course adjustments have to be made) or even found new opportunities.

Of course there are layoffs. In theory, all these professionals without a job could or should start a business on their own, but the thing is that the human psychology won’t let them do it. Why should I start a business now when I don’t have income, I’ve just suffered a terrible breakdown being laid off and nobody buys anything?

The thing is that if you somehow find something to make a business out of it and you make it work even if it’s terrible hard, you will have a very big advantage when the crisis is over. First of all, you are going to be used to be frugal on your expenses which will mean better and more efficient business models when the economy will jump start again. So even if you will find very hard to make a buck now, it will be far more easy to make a buck after. Secondly, when the economy will get better, everybody will jump to that and start a business. But you will have at least 2 years in advance!

I’ve read somewhere that both Microsoft and Google started in rough times. Maybe that’s exactly what made them right. Because the crisis is also some sort of validation tool. Yeah, that right, because only the valid, real value building businesses will survive. If you ask me, I would prefer to see my business dying in one year if it’s the wrong business, that loosing 3-4 years hoping that it will work.

The lack of money is also a good reason for the needs to appear much more stronger. I mean that if in normal times sometimes is harder to spot a need, in rough times, if there is a need chances are that it will pop up in your face. And less competition of course.

So anyway if you’ve been laid off, what are you going to do? Watch TV for the next 2 years until things will get better? Man, you have less to lose now! Or at least you don’t have to deal with the burning questions: should I leave my business and start something?

Of course that’s going to be hard! I can preview long working hours for a bad reward. I can see fighting for the last penny. I can see businesses going down. But actually as I’m looking to start a new business, the crisis is just a variable that I need to take into account. It’s like it takes 5 days to open a business, you have to have a banking account, of and by the way, it’s the crisis and I have to watch the spending and work harder for the same customers and money.

Of course you should start with an old laptop and trash your own car to make the business run. Of course, there is no saying if you are going to make it. Of course you will have problems finding customers and then make the sale. Of course you will have problems getting financing.

But how is this really different from starting a business in good times? You have the same set of problems but right now, some of them are just a little bit harder to overcome. Making the crisis just a variable in your business plan is your task, entrepreneurs!

So what are the keywords to the entire situation?

  • crisis is a very good validation tool
  • if you’ve been laid off, are you going to watch TV for the next 2 years?
  • you got the same set of problems like in normal times, but some of them are just a little harder to overcome
  • crisis should just be a variable in the starting a business mix
  • it’s going to be hard
  • finding ways to deal with the crisis is an entrepreneur task

PS: Mike Michalowicz, author of the The Toilet Paper Entrepreneur book made an interesting video on WHY now (in a down economy) is the best time to start a new business, or to grow the one you already have. Additionally Mike outlines WHAT steps to take and HOW to do it. Have a pen and paper ready. The video is here.

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Comments

2 Responses to “Some say it’s good to start a business in a downsizing economy”

  1. Susan/Unique Business Opportunity on October 30th, 2008 4:34 pm

    It’s true that not everyone has the mindset to start a business and especially when times are tough. But if you do have a desire to build something of your own, there are ways to start even when money is tight. The key is the desire

  2. admin on October 30th, 2008 10:34 pm

    Indeed Susan, Entrepreneurship is also an attitude. And money is just one of the resources a company needs to run, just like the others.

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