Why the current economic recession is great for entrepreneurs
The current economic climate is considered falsely by some as a bad moment for entrepreneurship. I can tell from experience and from talking with many top entrepreneurs that this could not be a better time to start new businesses.
Below I will list some of the top reasons why you should start now your new business and what you should avoid.
- Everything is at a discount (even people).
- Starting now makes you a smarter entrepreneur.
- There are new opportunities on the market.
- Some markets have extended to allow new players to enter.
- Limited monetary resources to start the business.
- Some people and companies have limited willing to pay for products and services.
1. Everything is at a discount (even people).
Due to the economic recession you can run your business at a lower cost than that one your would have to pay a couple of years ago.
In Bucharest, until the end of 2008, unemployment rate was so low that finding good people was next to impossible and even entry level people demanded unreasonably high salaries. This was also true for finding office spaces, where the occupancy rate was so high that you sometimes had rent and to commute across town just because you could not find any empty office space in your area. Commuting daily for 2-3 hours doesn’t help productivity at all. This was very unusual for a startup here.
And then the recession came to calm things a bit. Now you get an impressive number of potential employees sending CVs (usually over one hundred – sensing the fear of losing their current job) for any kind of job. There are more places to rent at more decent prices as well.
All there advantages should add up into helping you start a better business with less monetary resources.
2. Starting now makes you a smarter entrepreneur.
The limited resources force you to learn how to keep costs down and be creative about the ways your clients will find about the product or service you are offering. You have to learn to start small and slowly and securely manage your way to the top.
3. There are new opportunities on the market.
When businesses fear the depression and lower sales they turn to external help and knowledge they don’t currently posses to enhance their visibility or lower their operational costs. This is where some new businesses will emerge, into helping existing companies cope with the new economic reality.
If you have an idea on how you can either help existing companies make more money or reduce existing costs this is the moment to get it out and test it. This is something many companies need now.
Outsourcing to countries with cheaper workforce and good understanding of technology (like India and Romania) will be a growing trend that will be exploited by some entrepreneurs. Anything from consulting companies into outsourcing to actually running outsourcing businesses is something to be considered .
4. Some markets have extended to allow new players to enter.
As I said above, management and cost optimization consulting will continue to grow through the recession as the business owners fear losing their businesses due to declining sales and ask for external advice on how to survive.
1. Currently there are limited monetary resources for entrepreneurs.
Banks do not loan money any more and business angels and venture capitalists tend to keep to money in their pockets, waiting for better times. Now is a great moment to be able to fund businesses from your own money.
2. Some people and companies have limited willing to pay for products and services.
This is clearly wrong, but some business owners decide to keep money inside the company as much as possible instead of hire external help to lower their costs or diversify their marketing. Some even skip on upgrading hardware or software at the costs of employee productivity.
Fear is a major negative factor during harsh economic times, fear that makes things worse by slowing the economy even more. Money should move so more people are employed and more money are invested into the economy. Keeping money and not spending on expanding or diversifying the business or the markets it is found on is a dangerous practice that should be avoided at all costs.