Many people incorrectly assume that a slow economy is a bad time to start a business. However, the evidence indicates that this is incorrect.
In fact, recessions have historically been excellent opportunities to launch a new corporation. Some examples are Disney and Microsoft. Here are some of the factors that permit an entrepreneur to profit with a startup in a slow economy.
Many new companies that start in recessions are home-based businesses. This structure permits entrepreneurs to avoid overextending their financial resources. That’s important because borrowing is limited in a slow economy.
By maintaining low costs as a startup, entrepreneurs utilize limited cash to excel at providing products or services to customers. Reasonable prices and efficient service are the top priorities. A slow economy is ideal for new businesses to find customers who appreciate low cost providers. It’s also an economic environment that permits entrepreneurs to make bargain purchases.
When money is tight, streamlined home-based businesses are likely to gain customers from larger competitors. In fact, few large competitors can arise during a recession. Entrepreneurs actually find prospective customers more easily in a tight economy.
New business concepts also take hold during recessions. For one thing, more large enterprises are looking to outsource some of their work. These represent opportunities for entrepreneurs to provide services. Moreover, a new business can cast a wide net to reach customers by using the internet.
In addition, many talented individuals lose their jobs during recessions. A new business therefore easily finds a pool of attractive business partners or employees. This opens avenues for starting a business with someone else possessing complementary technical expertise.
There are plenty of businesses that are resistant to recessions. Many are simple consultant services. By starting during a slow economy, these businesses can grow quickly with limited resources and small amounts of capital in an environment of few competitors.