We tend to think of recessions as negative events, and to a large extent, they are. Still, a recession is a good time to start a business. This may sound counterintuitive, but that’s the very nature of economics. For example, investors know that a fall in prices, called a bear market, is always followed by a rise, or bull market.
As you will see below, every economic downturn contains the seeds of future prosperity.
A Recession Creates Opportunities
A recession opens up many opportunities for entrepreneurship. To begin with, a lot of valuable workers may be looking for a job. This solves one of the main problems that businesspeople encounter when they start a business: staffing. During an economic downturn, the right people are available and ready to work with you.
Low prices are another type of opportunity you find during a recession. There are fewer buyers, so sellers have to adjust their prices accordingly. This principle applies to everything, from rent prices to office supplies, so the cost of starting your own business may be significantly lower during a downturn.
You Have More Leverage
If you want to start a business, then your leverage increases exponentially during a recession. For example, not only can you can get better conditions from vendors and suppliers, but you can also ensure that those favorable conditions remain in place after the market recovers. This increased negotiating power also puts you in a better position to craft bartering deals that allow you to keep your money, ensuring positive cash flow for your budding business.
Crises Favor Innovation
Times that are difficult from an economic standpoint tend to favor innovation. For example, many “gig economy” powerhouses like Uber and Air B&B originated during the crisis of 2007-2009.
Downturns foster innovation because two things happen during a recession: Big or medium players are vulnerable and customers are more open to trying new options. If you add to the mix that there are few competitors because not a lot of people are willing to start a business during difficult times, then you will find a landscape ripe for innovation and disruption.
Starting a Business During a Recession Fosters the Right Culture
Finally, a recession is a good time to start a business because it guarantees that you build the right culture into your organization from the very beginning. A company that makes a habit of staying focused and optimizing resources will keep this mindset after the recession. And if a company can survive a downturn, then it has all the resources to thrive when things go back to normal.
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Whether you need a financial solution, assistance with the incorporation of your business, or marketing expertise, Uniko Biz can help. Take advantage of our comprehensive array of services and start your business today.
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