Starting a new business is seldom easy and during poor economic times, you may be forgiven for thinking it is even harder. But a poor economy is not a bad thing for everyone!
Sometimes, just sometimes, a bad economy can offer up unexpected opportunities. We are going to explore these in this article.
But first, here are some common questions you may have asked.
Are Startups good for the economy? – The answer is unequivocal, Yes! Any economy good or bad needs to expand, to do this you have to increase production and employment which benefits all.
Can a small business thrive in a bad economy? – With the right product or service, effective marketing and sales, and excellent service delivery there is no reason small businesses can’t thrive even in a bad economy. Small businesses are often better placed than bigger businesses too as they can change strategy or adapt to changing situations and can be run leaner.
With the above out of the way, there are three key points I want to touch on to as to why a poor economy provides opportunities for startups.
Hard Times Create Problems
Bad economies create very stressful situations for people and businesses, uncertainty being one of the biggest challenges. While it is true that money ‘seems’ to be in short supply it does not mean people have no money or are not willing to spend it.
The problem is that uncertainty leads to fear which leads to holding on to money which creates a poor economy. Money is no more than an idea whose worth is determined by confidence. When production declines confidence declines and you get uncertainty.
The key to building or rebuilding a business lies in ramping up production, building confidence by ensuring you deliver what you promise, and that the monetary exchange (the function of marketing and sales) between you and your customer is fair to both. If you can exceed your customers’ expectations and still get paid what you need to operate and will allow you to expand then even better.
Production combined with exchange then leads to greater certainty, willingness to buy, and business expansion. This will eventually result in a better economy and higher employment provided that a majority of businesses actively focus on production and delivery.
Doing the above is best done by finding out what your customers need or desire or what their problems are and then providing the right solution.
Startup Costs in a Poor Economy
The second point I want to briefly share is this …
In bad economies, many businesses will be offering price reductions. While this is not really a very good business strategy (I’ll talk about this another time) it certainly provides Startups and expansion-minded businesses with opportunities to purchase assets and stock at lower prices than would be normal which means you can get by on a smaller budget or get more than you were expecting from your existing budget.
Additionally, businesses that are going under will often sell equipment at even larger discounts which can benefit you.
While it is sad that you may benefit due to the misfortune of others, it nonetheless represents an opportunity to build or rebuild a business and revive a failing economy.
Poor Economy – A Catalyst for New Ideas
Startups can further benefit during tough times as bad situations typically force people to become extra creative in how they tackle problems.
It is amazing what an increase in pressure can do to make you excel. The fact is society’s greatest advancements are typically made under the pressure of tough or dangerous times.
While many people prefer to retreat and look for easy ways out, those of us who grow and go on to thrive are the ones who look for solutions or find ways to change the world for the better for all. It is visionary entrepreneurs who get the show back on the road and move forward.
Put another way, bodybuilders do not grow unless they tear their muscle fibers. It is the pressure and the extra exertion that forces growth and increase their strength. Businesses require pressure and sometimes pain in order to grow. Growth is not an easy thing and takes effort.
In a world where effort seems to be frowned upon and many seek to reduce effort and automate more than they should, you have a fantastic opportunity to rise above those who wish the easy way out.
With some hard work, your example may even inspire others and if you succeed and then lend a hand to help others up then we all will.