Research has confirmed what experienced entrepreneurs already knew—that a weak economy is the best environment for starting a business. A study by the Kauffman Foundation reveals that more than half of the largest and fastest-growing companies in the US were founded during economic downturns.
The report further suggests that there’s no disadvantage to starting a business during rough economic times. The same number of businesses succeeded whether the economy was strong or weak.
Some experts has advocated that a down economy actually offers plenty of advantages for starting a business. For one thing, a slow economic environment usually has gaps in services because existing competitors are cutting back their positions. In addition, many of the companies in place are weakened by being overly leveraged. These are opportunities for entrepreneurs to penetrate the market as a new option that is flexible enough to provide better service.
Another benefit during a slow economy is the ability to negotiate for lower prices from suppliers. Cheaper office space and retail locations are also important factors that permit new businesses to open with lower costs than existing companies.
The other aspect of lower costs is that acquiring talent is more affordable. A pool of high quality employees is available for work with a startup. Also, talented professionals are available to freelance. Many of these individuals will not ever head back to mainstream corporate employment. Being entrepreneurs themselves is more secure than a job when the economy is slow. This means you can find plenty of help for such things as forming your corporation, designing your website, and handling IT functions.
You’re sure to find low costs for just about everything during a weak economy. Part of the reason is that other entrepreneurs are starting businesses where their low costs result in attractive pricing to you. So there’s no reason for slow economic times to deter you from creating a company. You’ll find plenty of customers ready to accept your low-cost offerings as an alternative to the existing operations.