Now we know what you’re thinking, a blog post on tips to start a business during a recession? How is that a good idea? But hear us out. Like other crises in history, recessions create real opportunities for new and existing businesses alike. And since COVID-19 has forced many businesses to switch gears and reassess their businesses entirely, this may be the only way forward.
Crises like COVID-19 are similar to forest fires, the scorching flames wipe some businesses out, but the heat that the fire brings also allows for new seeds to be scattered and released into the soil. In other words, many amazing businesses are given the opportunity to rise from the ashes of a recession once again.
We all remember when in 2008, the American economy took a nosedive, and as a result, saw people living in the USA seeking affordable accommodation coupled with short-term commitments. During that time of struggle, the now famous Airbnb emerged with a solution to offer a more flexible, affordable alternative. By the time 2011 rolled around, the company was valued at just over 1 billion US dollars! Proof that a recession is still a good time to take a risk and make your business work.
If you feel you are ready to take the leap once more or are thinking of starting a business for the first time, then the below 4 tips are sure to help you in your journey.
1. Find your niche
Airbnb defined the industry that it went into. Can you do the same by identifying a unique niche for your business? Look at offering a solution that will assist people during this time, or look at how you can adapt your original vision and idea for your business to address your unique and rapidly changing audience.
Take a step back to look at the world around you. Note issues that are currently being faced by the people you know and the ones you don’t. Come up with ideas and potential solutions to these issues that aren’t already being addressed and solved by what is already being offered.
Many different niches are currently being identified by business owners and appropriate solutions are being implemented amidst the turmoil. Education and healthcare, for example, saw the most disruption during COVID-19 and were able to adapt to the environment. Students relied on online education and kept in constant communication with teachers to continue their studies.
If you feel that the product or service your business currently offers doesn’t meet the current need, look into changing it in order to meet that need. Adaptability should be a top priority because it’s safe to say that things aren’t going back to normal anytime soon. Do your best to find and fill a niche with your product or service and seize the opportunity because such opportunities are scarce. Having foresight will facilitate the way forward.
2. Give people what they crave
A recession means that people won’t be looking to buy products that aren’t essential and that don’t address real needs. Impractical products will fail and only ideas that work to solve a problem will come out on top. To succeed, ask questions such as, “What do people need right now?” and “What do you need right now?” to gauge if the product or service you offer is, in fact, relevant to the current needs of your audience right now.
Everyone needs to feel some connection with others. It’s human nature to want to connect and feel connected. So work at creating and strengthening connections between people. You can use your online presence to do this. Develop creative, interactive content to market yourself and at the same time, build relationships with your audience. TikTok is a great platform for reaching your younger audiences, it’s light-hearted and fun. Instagram is great for showcasing the visual elements of your product or service and can be used to spark conversation.
3. Make plans to invest
If you don’t already have the capital needed to fund your new business venture, it’s best not to assume that investors will be willing, or even able, to provide you with the necessary funding right now. Investors are likely not looking to fund new ideas during this time but might be looking at businesses with an already established team with some traction.
Be prepared to take a step back if you are not in a secure position to come up with the money to fund your startup right away. You could try asking a friend or family member for the capital outlay, but it’s not recommended since everyone is having to cut back and make sacrifices during this trying time. Bringing a partner on board might be an option, provided you can come up with some of the capital needed to get going.
Getting yourself into the right headspace is crucial and is 100% necessary to operate as a business leader in a time such as this. How do you know if you are in the right headspace? Ask yourself if you are willing to be open and creative to see the world from different angles to identify opportunities. And if you have what it takes to solve new and unexpected challenges as they arise. Be open and flexible.
Having self-discipline is an absolute must! Doing things like writing a checklist every morning is a great way to maintain self-discipline and keep track of the things you would like to accomplish that day. Take things one step at a time and wait for feedback on your minimum viable product (MVP) development. Don’t quit your job just yet if you have one. Rather wait until you have received positive feedback and reactions that are undeniable.
4. Reap the benefits
Once all the hard work is done, it’s time to reap the benefits of launching your business during a recession. In light of what has been happening economically worldwide, many established businesses have been offering discounted rates on their products and services, meaning that for an entrepreneur such as yourself, the cost of launching is decidedly a lot less than normal and it’s likely to stay that way for at least another 12 months.
The current recession also means that there are probably many highly skilled workers who have suddenly become available as a result of being let go by companies who are struggling. As a result, previously unavailable highly skilled people are now available to you, and that’s great news!
The fact is that a recession forces people to get creative with their thinking, as seen with the earlier Airbnb example where those business owners were able to successfully create a category-defining company. Moral of the story? Businesses that think up alternative and creative solutions to common problems often have a big advantage over their competitors!
