Coronavirus has led to record high layoffs and high unemployment across the nation. The current unemployment rate across the nation is 7.9%, but in spite of this the pandemic has sparked a wave of entrepreneurship.
Banks and the Small Business Administration (SBA) are reporting a major spike in new businesses. With so many Americans out of work, they are turning to entrepreneurship and kicking a recent downward trend in new business applications.
If you are thinking of starting a new business venture, now could be the time. So, why shouldn’t you be afraid of starting a business this year?
Starting a Business in a Recession is not an Automatic Failure
Many would-be entrepreneurs are, naturally, fearful of starting a business in a recession. But history has taught us that recessions are ripe for innovation. Some of the famous names that started in recessions include: Burger King, Microsoft, FedEx, and General Motors.
Recessions are disruptive and entrepreneurs are disruptive by nature. Taking advantage of the changes across the country provides opportunities for entrepreneurs to meet the needs of the population that simply were not there prior to the recession.
Fear of starting up in a time of economic turbulence is no reason to avoid starting a business.
Borrowing is More Accessible
Believe it or not, borrowing terms are much more favorable during a recession. Economic uncertainty historically creates a superior environment for entrepreneurs seeking outside investment.
Interest rates are lower, which makes loans more affordable. Individual investors are also more likely to want to get involved with your new business venture.
If we examine investor behavior from previous recessions, we can see savvy investors searching for cash-strapped startups to invest in.
Top Talent is Now Available
Any good startup needs the right people to drive the venture forwards. The sad reality of the pandemic is a lot of highly skilled workers are now out of work. Ordinarily, such talent would never be available to small time entrepreneurs.
A third of the U.S. workforce is now freelancing amid the pandemic, contributing $1.2 trillion to the economy. That is a 22% rise in the number of freelancers since 2019. This number is only expected to increase, as skilled workers desperately search for new work to replace lost income.
The COVID-19-sized recession gripping the country now has unlocked a wealth of talent entrepreneurs should rush to take advantage of, while they can.
The Key to the Pandemic is Survival
Businesses are struggling. Some are doing better than others. What this results in is an overall decline in competition.
For businesses without the ability to innovate and companies without the necessary cash reserves, they are looking at closing their doors forever. For those with the means to survive, there is a tremendous amount of opportunity.
If you have everything you need to get started, now has never been a better time to acquire a foothold within your chosen market.
The Power to Be Predatory
Businesses NEED cash more than ever before. Many organizations must take what they can get. They are not able to negotiate. This is reflected across most industries. For entrepreneurs with cash available to start a business, they will find favorable results in their negotiations.
General Motors is a perfect example of this. When they were incorporated in the recession at the start of the 20th century, they were able to buy up the assets of other businesses and negotiate lower prices and better terms. It gave them what they needed to become one of the most successful companies in the country.
But Running a Business is Still Difficult
New startups are in a favorable position during a recession. This does not mean entrepreneurs can cut corners, though. Running a business is an enormous task and most startups will still fail.
Entrepreneurs still need to prioritize:
- Coming up with a great idea that fills a real need people have.
- Hiring the right team to make it happen. Avoid trying to handle everything by yourself.
- Investing in marketing ranging from the naming of the business to mastering social media. For help with the former, consider a business name generator and get inspired!
- Managing logistics. Your business needs to be scalable or it may not cope if it takes off.
- Great customer service. Studies show that 90% of Americans use customer service as a determining factor when choosing an organization to do business with.
Starting a business in a recession is not as filled with danger as most people like to believe. There are many advantages of starting a business during a recession because it is geared towards innovation.
The best entrepreneurs are the disruptors, those who can change the way we all live. Disruptors are at their best when they are operating in a naturally disruptive environment, and 2020 is about as disruptive as it gets.
Avoid allowing fear to cloud your judgement. Take the leap of faith and start your new business venture today!