Over the past six months or so, all of us have spoken to at least one friend or relative who is considering starting a business. Some have been laid off, others have experienced cutbacks or pay cuts, and the rest are simply unhappy with their current situations. But regardless of the circumstances, the person looking to start a business always ends the conversation with the same sentence:
“But with the economy, it’s probably not a good time to start thinking about starting my own business.”
With the above in mind, I would like to collectively make all of the budding busines owners out there aware of one thing: you are absolutely, one-hundred percent WRONG. The fact is, a bad economy is by far the LEAST risky time to start your own business, and below are four reasons why.
Reason #1: Great Employees are Easier to Find—and Much Less Expensive
During thriving economic periods where nearly all types of businesses are expanding, qualified and experienced people are hard to find. In the mid-1990s, software development firms were hiring $40,000 per year, self-taught programmers right out of high school. In the early 2000s, anyone who knew what the letters ‘HTML’ stood for was working as a webmaster or e-commerce expert. But today, people with 20+ years of experience and multiple advanced degrees are fighting over part-time Barista jobs. If you’re hoping to start a business that requires employees, the talent pool is full to the rim with people who want to work for your new venture.
Reason #2: Equipment and Services are Cheaper
In slow economic periods there are always great deals to be found, both in hard-line items like equipment, and soft-line items like professional services. Within a five-mile radius of my home I have watched no less than seven (7) food service businesses close their doors this year. At one point or another, each of these places made a significant investment in equipment. But now their brand new counter units, refrigerators, cash registers, dishwashers and commercial-grade ovens are owned by the bank—collecting dust while waiting for someone like YOU to buy them . . . at pennies on the dollar. Also, the rash of recent business closings has left contractors who cater to small businesses (IT services, cleaning, general construction, etc.) scrambling for customers, and looking to make great deals to acquire your business. From personal experience, I can tell you that contracting rates have dropped by over 20% in my region, compared to rates just one year ago.
Reason #3: Existing Competitors Won’t See You Coming
During questionable economic times, market leaders have a tendency to curl up in the fetal position and wait for the bad news to pass. But where there is chaos there is ALWAYS money to be made—and while your competitors are too busy trying to stay in business to do anything innovative, they are leaving you an opening to swoop in and offer their products and services better, faster, and cheaper. If you truly believe you can enter a market and improve upon what is already being offered, starting a business in the middle of a rough economy is the ultimate surprise attack.
Reason #4: Customers are More Open-Minded to the Prospect of Change
When consumers see friends and relatives lose things like jobs, houses and retirement funds, they tend to become more accustomed to the fact that maybe—just maybe—there is a better way to do what they’ve been doing. With this in mind, any customer who was formerly locked into a competitor of yours is very likely looking for a better, faster or cheaper way (see above) to live their work and personal lives. Choppy economies force even the most loyal people to rethink their buying decisions; and if a startup business can truly offer something better, consumers will ALWAYS be willing to give the new guy a shot.
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