A missed business opportunity can be an expensive mistake, and even though global unrest and financial uncertainty may seem like a daunting time to start a business, if you look at the data and listen to people who made it, now could be the opportunity you`ve been waiting for.
For example:
Did you know that the US currently ranks #1 on the “world`s most entrepreneurial countries list,” making it the best place to start a business in 2022?
Source: ceoworld.biz
And some of today’s most successful businesses began during the last recession.
So, is now a good time to start a business?
Let`s look at the facts and find out.
A common belief is that a booming economy is the best time to start a business. But statistics show that past economic downturns, like the 2008 financial crisis, have been excellent for start-up success.
Here’s Richard Branson’s, Virgin Group founder, view on it:
“In times of recession, there are massive opportunities and fortunes to be made, so for new up-and-coming entrepreneurs, this is the time to start a business.”
Rich knows what he’s talking about, but let’s look at recent examples of entrepreneurs who did it.
Several of the most innovative and successful companies today began during the great recession, including:
Sure, they’re all online-driven businesses, worth considering when looking for small business ideas. Still, all were born from necessity and during an uncertain financial climate.
For example, Airbnb’s CEO, Brian Chesky, and his buddies needed extra cash during the downturn, so they rented airbeds and space in their living room. Uber founders Travis Kalanick and Garrett Camp couldn’t get a cab on a snowy night in Paris, which changed how we travel!
On or offline, successful businesses provide products and services people need, which applies to every market during an economic downturn.
The number of people leaving their jobs to start a business has risen yearly since 2020, and the trend is likely to continue.
5.4 million new business applications were filed in 2021, surpassing the record set in 2020 of 4.4 million.
Let’s look at the data:
In the spring/summer of 2021, the Wall Street Journal quoted the latest federal data, which showed a 60% increase in job resignations compared to the same 2020 period and 12% higher than 2019–which was the hottest job market in 50 years.
(Read more about the great resignation here.)
Workers weren’t happy, and almost one-third saw starting their own business as the answer to a work-life balance.
2020 saw an explosion in start-up business applications, with almost 4.5 million by year’s end. That was a 24.3% increase in 2019 and 51% higher than the 2010 to 2019 average.
And it didn’t slow down!
By August 2022, over 400,000 new business applications were filed, showing that American entrepreneurs believe 2022 is an excellent time to start a business.
We don’t have a crystal ball and base stats on past figures. However, a 2021 survey from the Digital.com review site shows that one-third of people who just quit their jobs want to start their businesses.
But before you quit: Why do some businesses thrive during an economic downturn?
The answer is so simple it might surprise you!
Although most businesses suffered during the 2008 recession, small US businesses experienced disproportionate declines, with 1.8 million going bust.
Economic uncertainty, poor sales, lack of cash flow, and unavailable funding contributed to their demise. But weak consumer demand for non-essential products and services was the critical factor.
We bought almost 39 million existing (second-hand) US homes in the past 6 years; 2021 hit a 15-year high with a further 6.1 million alone.
When people buy old homes, they usually improve them. Recent statistics show that home repair businesses like handymen, interior decorators, landscape gardeners, and small construction businesses are booming.
Home repair businesses work equally well in uncertain times because people who can’t move renovate when interest rates rise.
Another option is to sell home improvement products. A 2021 Houzz & Home study showed an increase of 15% in home renovation products compared to 2020.
As with homes, new car sales often take a nosedive during an economic downturn, which is excellent news for mechanics.
And you don’t need a brick-and-mortar repair shop to take advantage; you could do minor repairs from your garage, but get the proper license and permit first!
Only one industry ranked twice in the top 10 best-performing stocks during the 2008 recession: discount stores.
Dollar General 2nd and Walmart 6th made a fortune while other businesses went bust because they sold cheaper, substitute essential products that people couldn’t do without.
You don’t need your website to be Amazon if you want to be an eCommerce entrepreneur, especially during a recession.
During the 2008 Financial Crisis, 2nd hand stores saw a 35% sales increase; reselling items will happen online in the next downturn.
Sites like Poshmark, Depop, The RealReal, thredUp, and eBay enable you to set up a profile and sell within minutes. All you need are the 2nd hand products (go to garage sales), brilliant images, informative descriptions, and you’re in business.
We’re a nation of pet lovers and spend a lot looking after them. Check out these statistics; they’re impressive:
And the pet industry has so many business opportunities; you can walk, feed, groom, train, cloth, or care for them.
I began freelancing in March 2020 when my non-pandemic-proof physical business shuddered to a halt, and I’ve never looked back.
Freelancing is an excellent low-investment business option that thrives during an economic downturn because companies that fire during a recession often hire part-time freelancers to fill the gaps.
You can start immediately using your field of expertise, either as an extra revenue stream alongside your current job or as a full-time occupation!
While many new business owners understand how to start an LLC, few know which costs are tax deductible or how to prepare and file their returns.
And during an economic downturn, asset management and financial planning services often prove invaluable.
Online tutoring became a much-needed service during the past economic downturn, and it’s still popular because of the privacy and convenience of a home-class setting.
All you need is a Zoom account, a marketable skill, and a well-thought-out lesson plan.
And you can teach any subject you’re qualified for or have experience in, including fitness and cooking classes, writing tutorials, and makeup applications.
The takeaway
You could capitalize on the weaker economy during an economic downturn by choosing an in-demand business in a flexible niche.
Those are only some businesses you could start in an uncertain economy; however, the following tips apply to all:
An upside-down economy is an excellent time to start a business. But to ensure you stay in business, you’ll need preparation, positive thinking, and the following tips:
Your business purpose is why you’re starting a business.
Successful entrepreneurs often tell us, “if you start a business only for the money, you’ll fail.” And that applies tenfold during an economic downturn.
Your business purpose should inspire you; it’s why you`ll get up at 05.00 AM and work weekends. It’s also how you connect with and convert your target audience into lifelong customers.
Speaking of which!
For any business to thrive during uncertain times, it must know who its ideal clients are, their pain points, and how to solve them.
Your ideal client is someone who needs your product/service badly enough to pay for it when times are tough. Their pain points are the problems your product or service resolves.
You find both by researching your chosen market and asking:
When you confirm all 3 of those points, you’ll have a viable business idea that should thrive during economic uncertainty.
Once you have your purpose, product/service, and an audience that needs it, your next step is writing a business plan.
We know that writing our goals increases our chances of achieving them. A business plan is similar, as it outlines your business goals, how you plan on achieving them, and when.
Business plans come in 2 styles, traditional and one-page. A traditional business plan is an extensive document you’ll need to get a loan. In contrast, a one-page plan cuts the jargon and acts as your guide.
Here’s what your business plan should include:
NOTE- Think before you take a business loan because reducing your debts is the best way to survive uncertain times.
Specialists can charge more for their services for the following 3 excellent reasons:
Ways to find your niche:
My son’s school has an inspiring slogan, “Alone, you’ll go quick, but together we’ll go far.”
And it’s true for your business, too, because the right team enables you to use each individual’s experience and knowledge to ensure your business grows.
As Steve Jobs said-“Great things in business are never done by one person; they’re done by a team of people.”
With today’s gig economy, finding the right team at the right time for your business has never been easier.
Here are some services you can outsource on a need-only basis:
And some of the best outsourcing websites available today:
An online sales process is how you promote and sell your business products or services over the internet.
Your sales process could be your website, social media platforms, organic SEO, or paid advertising. Its purpose is to connect with your target audience, engage their interest, and convert them into paying customers.
You might think you don’t need an online process if you’re a local business. But there are several reasons you should have one:
Source: SEO Tribunal
Your online sale process also helps you establish your business and distinguish it from your competitors, which creates trust, and that’s crucial for every business.
According to a US Bank study done by Jessie Hagen, 82% of businesses fail because of poor cash flow, and that’s when times are good.
Whatever business you start, ensure it keeps consistent cash during uncertain times because you might need it to pay the bills. And keeping track of your finances is how you do it.
Now is when your business plan proves its worth. When written correctly, it should include your business set-up costs, running costs, future financial projections, and a break-even point (when you’ll turn a profit).
And accountancy software tools can help you do the math, track your debits and credits, and balance your books; here are 5 of the best:
Conclusion
Is now a good time to start a small business? The answer depends on you.
Because anyone can start a business when times are good, but that’s why markets become over-competitive.
Identifying an opportunity takes a particular type of person when times are tough, but when you do, the sky’s the limit!
Still unsure?
Perhaps these most popular (people also ask) questions will help:
To determine whether now is a good time to start your business, break the question down into the following 3 parts:
Your circumstances, financial situation, and business idea.
We’ll have to wait and see. But odds are the businesses that thrive provide what the public needs.
Even though government officials say a recession in the US is “pretty likely,” signs still point to now being one of the best times to start a business.
Global central banks are raising interest rates, the World Bank tells us the global economy is in the steepest slowdown since 1970, and both say a 2023 global recession could happen.
But does that mean it’s too late to start a business?
No, if you choose a recession-proof business, start it the right way, keep track of your finances, and take action now.
As the Irish proverb goes- “You’ll never plow a field by turning it over in your mind.”
This portion of our website is for informational purposes only. Tailor Brands is not a law firm, and none of the information on this website constitutes or is intended to convey legal advice. All statements, opinions, recommendations, and conclusions are solely the expression of the author and provided on an as-is basis. Accordingly, Tailor Brands is not responsible for the information and/or its accuracy or completeness.
Terry is a serial entrepreneur with over 25 years of experience building businesses across multiple industries – construction, real estate, e-commerce, hotelier, and now digital media. When not working, Terry likes to kick back and relax with family, explore Taoism’s mysteries, or savor the taste of fine Italian red wine.
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