Starting a new business is a rewarding and exciting time, but it can also bring with it more than a bit of anxiety. With so much talk about economic recovery and the ongoing uncertainty in the economic climate, it’s not always easy to determine the best time for taking on a new venture.
Start-ups are facing a bit more adversity in the post-recession world, but this doesn’t have to mean that starting a new venture is necessarily a bad idea. Securing funding can present a challenge when investors are more hesitant to back something new, and it seems like lending criteria is becoming more stringent every day.
Tough Times and New Start-ups
Whether the economy is strong or in a downturn, it’s not easy to find the “right” time to start a new business venture. There is a strong case to be made, however, for rolling the dice in a tough economic climate. After all, some of the United States’ biggest companies have been established during or immediately following a recession. Walt Disney, Bill Gates and Steve Jobs all started their storied business ventures during tough times, and they’re only a small sampling of bad-economy success stories.
When the economy is relatively weak, there is almost always a corresponding drop in real estate and rental prices. When product is moving at a slower rate, suppliers may also be more willing to negotiate, and people who have felt the fallout through long-term unemployment are more likely to accept a lower starting salary. When you scratch the surface, a slow economy can actually be an entrepreneur’s best friend.
Finding Your Niche
Whether the economy is strong or struggling, it’s always important for a start-up venture to have a niche. If you’re competing against a large, established business for the same customer base, you’ll have to be able to compete not only with their pricing but also their business model. In a down economy, when potential clients and customers aren’t flush with cash they’re itching to spend, your ability to compete with existing ventures is crucial. Even when the economy is thriving and money is changing hands at a rapid pace, this same tenet still holds true. You have to be able to offer your clients fulfillment of needs which are currently going unmet, regardless of the economy.
In the end, the “right” time is a relative term. When money is flowing and the economic prognosis is great, you’ll pay more for real estate and may not be able to negotiate for much leeway with suppliers. When the economy is struggling, you’re more likely to secure commercial space and talent at a bargain, but there may be fewer buyers in your niche. Finding the right time for your start-up venture is more about finding your niche and building a strong business plan, and not as reliant on the economy as it may initially seem.
Tags: small business