When the stock market loses 20% of its value, very few negative effects are immediately felt in the small business community but if you recently formed an LLC or own a business startup you, as well as most of the nation’s business owners are certainly apprehensive wondering what’s next.
Neil Blumenthal is one of the founders of Warby Parker, a small business that sells designer glasses at discount prices. In a recent New York Times interview after being asked what he thought of the recent stock market and economic turmoil present in world economies, he said: “It highlights that it might be too much to ask Washington to help with entrepreneurship when they can’t even get the basics right, like maintaining a decent credit rating”.
It’s clear that small business owners are having a tough time believing that there is any help on the way. They believe that they are on their own through times like these but is the situation as dire as it looks?
This isn’t 2008
Everybody who was a business owner in 2008 lives in fear that 2008 will come back and now that the stock market is making moves just like it did in 2008, business owners believe it might be happening. Although things look bad, there are a lot of differences between 2008 and 2011. The biggest difference is that European banks are the ones in trouble this time around. American banks are under pressure but they are much better off than they were in 2008. If you’re planning to start a business in the near future, don’t let the current investment market stop you. Here’s why:
These Things Shall Pass
Bespoke Investment Group, a leading institutional research company reports that after a large move downward like the one we’ve had as of late, 6 months later, the market is almost always higher, often by double digit percentages and often well on it’s way to recovery. Although nobody can guarantee that this won’t be another recession, most of the time, these moves are short lived and don’t have enough of an effect on the business environment to keep small business owners from starting or growing their business.
Quality Still Wins
There’s a misconception that in a down economy every business, regardless of the fundamentals of that business, will find themselves under pressure. This isn’t true. When your business is booming, make sure you put money in to an emergency or rainy day fund to protect it from times of economic slowdown. Second, businesses who execute at the highest level or business startups who open their doors with a well funded and solid business plan may see a slow down in business but it won’t wipe them out. Quality, well ran businesses have a way of surviving through any market.
The stock market may be hurting right now but that doesn’t mean that you should abandon your dream of starting a business. In fact, when the economy is down and goods and services are a little bit cheaper, now may be the perfect time.