Starting a new business is hardly ever easy. Successfully gaining financing, understanding your competitors and how your new business relates to the market, and building a company culture that is positive and goal-oriented – these are just a few of the challenges that await those who want to start their own business.
However, for those who remain driven despite the long list of challenges, for those who remain hungry for the chance to become their own boss, an important question awaits them: namely, as far as economics, when’s the best time to start a new company?
It would seem obvious that the best time to start a new business would be during a robust, strong economy. After all, during strong economic times, consumers have more free money to spend and are more likely to spend it; credit for new businesses is more readily available; and consumers and businesses alike are flush with confidence and a feeling of financial security.
But, what about FedEx? Or how about Microsoft? Or Revlon for that matter? Or the thousands and thousands of other companies that chose to set up shop right in the middle of a recession or depression? Clearly, FedEx and Microsoft are examples of long-term successful businesses, and they share something else besides the fact that they were both founded in poor economic times – they also both flourished at least partially as a result of these unfavorable conditions.
In Microsoft’s case, Bill Gates founded the company in 1975, right when the country was still suffering from a period of stagflation. However, not only did the economic times allow Gates to hire more people at a lower cost, the bad economy also potentially eliminated other competitors. Meanwhile, although FedEx was founded in 1971, the company didn’t actually begin its operations until 1973, which happened to coincide with a significant part of the 1973-1974/1975 stagflation.
Fast forward to today. Yes, the economy has certainly improved from the days of the 2008-2009 credit crisis. However, signals continue to appear that there are fundamental issues underlying the economy and the markets.
But, as Calgary’s Robert Peers comments, media reports that signal that the economy may hit another recession – whether those reports are justified or not –shouldn’t be an excuse for entrepreneurs to not start a new business. Robert Peers, who is a founder of C2 Business Services, has over a decade of experience in consulting with businesses in the areas of proper business structure, as well as tax and accounting matters. It’s experience that’s taught him that new businesses can in fact thrive in rough economic times.
“In my opinion, a recession or depression actually presents opportunity for entrepreneurs who want to start their own business,” comments Robert Peers. “Start-ups are inherently leaner and more nimble than established companies. That means that they can operate at a lower cost and in fact thrive in challenging environments, especially compared to larger, more established companies.”
Robert Peers continues, “… the competitive advantage of a startup business is innovation. In strong economic times the established companies are succeeding at their well-established systems, and it is very difficult for a start up to steal market in that space, but in a recession, companies have to rethink their delivery and marketing models, and it is here that the startups have the competitive edge.”
There are plenty of factors that go into whether or not a start-up will actually succeed. But, to think that entrepreneurs shouldn’t begin a new business simply because the economy may be in a recession would be a mistake. Smart entrepreneurs, and those who are more likely to succeed, will understand that a poor economy can present compelling opportunities for new companies and will have the insight to realize these opportunities and build their businesses to take advantage of them.