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4 tips to start a business in an economic recession

June 17, 2020

Read for 9 min

The opinions of the employees of s You are personal.


4 tips to start a business in an economic recession4 tips to start a business in an economic recession

COVID-19 has forced millions of companies to reevaluate their business modelsBut what about companies that are still ideas for aspiring entrepreneurs? With mass layoffs and desperate bailouts dominating the news, few are talking about what it’s like to start a business in today’s climate.

But like other crises in history, the next recession will create real opportunities for founders. Michael Loeb, founder and CEO of Loeb.nyc, said: “Times like this are like forest fires. The fire will paralyze some companies, but it will also provide the warmth to release new seeds into the soil. Many amazing companies have emerged from it the ashes of economic recessions and market declines. ”

After the collapse of finance and housing in 2008, people in the United States were looking for affordable housing with no long-term commitments. It was then that Airbnb It has proven to be a cheaper and more flexible alternative to traditional living. By 2011, this company was worth over $ 1 billion.

If you think your business idea is ready for the next step, use it as a solution to new customer needs. Here are four tips to help you.

1. Find your niche

Photo: Depositphotos.com

Companies that define the industry as Airbnb are taking shape in recessions. Can you now address a unique niche and offer a solution that will help people overcome the current crisis? Alternatively, can you adapt your original idea to address this niche?

Take a moment to judge the world around you. Identify the problems your friends, colleagues and people are facing in the news. Displays possible solutions to problems that are not answered by those currently available.

Many of these niches are forged in the midst of current turmoil. Healthcare and education, two of the most important industries in any society, are affected by significant disruptions. These industries urgently need innovative reconstruction initiatives. Education had not been significantly disturbed in 100 years. Now parents and students are trying to optimize their time, online resources, and interactions with teachers to avoid missing out on months of study.

If your product or service still does not meet current requirements, check whether you can adapt it to this new normal. Conditions will not normalize so quickly: adaptability is a strength. Do you have a software product that, for example, can improve the video conferencing experience for users, even if it wasn’t originally designed for it? Can your service make online experiences or company communication easier?

If you can fill a niche with your product, do your best to take advantage of this opportunity. Such opportunities are rare. Jonathan Greechan, co-founder of the global pre-seed accelerator, the Founder Institute, said to me: “You want to skate where the puck is going, not where the puck is now.”

2. Give people what they need: connections and connectivity

Photo: Depositphotos.com

During a recession, people are less likely to buy things that don’t meet real needs. Frivolous products will fail. Ideas that work focus on solving a problem well.

What do people need right now? What do you need now

One thing everyone needs is connection. Become indispensable by creating and strengthening connections between people. You cannot do this without using your online presence: the more interactive the better. Use digital tools to promote yourself and build relationships with your customers. Tiktok is a joyful way to reach younger consumers. Instagram can improve the graphics in your product and start a discussion. Organize a kick-off event at House party. Data protection and online connection are the pillars of the new normal, even if large gatherings are allowed again. If you now ensure that your online presence guarantees you more attention in the future.

Think about privacy, otherwise you will quickly lose confidence. South Korea and the United Kingdom have developed apps to track COVID-19 infection rates. However, advocates of data protection have raised concerns about the technology’s access to personal data. Always stay one step ahead of these difficulties by looking at what other companies (including your potential competitors) are doing and learning from their mistakes and successes.

3. Prepare yourself personally for the step

Picture: Shutterstock

Look at your wallet. If it has been difficult to get investors to spit out seed money, it is now becoming much more difficult as they tighten their belts.

“Investors are not currently looking for ideas, but for a business with team and traction,” says Greechan. “You need to have a minimum capital to get your business idea going and collect more money.”

If your savings are a black hole and you are currently unemployed, you may need to go back. Of course, you can ask your friends or family to invest, but this is a difficult time for everyone. So be careful: you don’t want to push people around in a time of need. Consider getting a partner on board, but remember that they also want you to make a financial contribution, at least a few thousand dollars.

Ask yourself internally and mentally honestly whether you are at the right time. To be a business leader at a time like this, you need to:

  • Be open and creative so you can see the world from different angles and identify opportunities where others cannot

  • The liquid intelligence have to solve new and unexpected problems as soon as they arise

If you are concerned about other parts of your life, your ability to be open and flexible may be affected.

Be disciplined to use your strengths. Every morning, write a checklist of things you will do that day, such as: For example, communicating with the industry leaders you want to work with, or developing your minimum viable product (PMV). In spite of the urgency, proceed step by step. Receive feedback in all phases of your PVM development. At this point, it doesn’t have to be sophisticated or expensive. All you have to do is include your idea and test how the markets will react. If you currently have a full-time job, do not resign until you have received strong positive reactions to your prototype.

4. Take advantage of a start during a recession

Picture: Shutterstock

Given the economic downturn, most companies that support new businesses offer discounted prices. Shopify, For example, it offers a free 90-day trial and Hubspot It has lifted the limits of email marketing and significantly reduced the cost of paid ads. For an entrepreneur, the start-up costs are lower than usual and are likely to remain so for the next 12 months.

Another benefit of today’s climate is the broadest range of talent available. Many large companies have problems. AirbnbFor example, it fired 25 percent of its employees because of the pandemic. Many highly skilled workers are now looking for work. Recruits previously unreachable are now within range.

New equity for employees is just as valuable as financial equity. His work experience will help you understand when to start pitching and to address potential customers.

A recession is when the companies that define the category take shape. As cryptocurrency companies grew as trust in banks and traditional systems reached record lows, companies that propose alternative solutions to common problems in times of crisis have an edge over their competitors.