The news has been shot through with economic doom and gloom in recent weeks.
As the European debt crisis deepens, and serious talk of a double dip in the UK returns, many potential entrepreneurs are understandably feeling spooked. Established businesses are retreating, and many wannabe business owners have decided to simply wait it out.
But despite the uncertainty, downturns present entrepreneurs with a number of valuable opportunities. Many of the world’s most successful businesses were started during recessions. Here are five reasons why you should think about getting started now.
1. You can keep your costs down
A downturn presents all businesses with a unique opportunity to drive down costs – and this is particularly beneficial to startups. Many small businesses fall at the first hurdle because their initial costs are too high. In a downturn, though, suppliers are more willing to negotiate on prices and payment terms. This means that you can secure better deals now, allowing you to concentrate your resources on developing great products and services – and making sure that you are able to compete in an admittedly difficult market.
2. Downturns encourage frugalness
Although downturns are, of course, difficult for almost everyone, they can help businesses to develop financial discipline and a sense of frugalness. If you are forced to keep your costs low in the beginning, you are more likely to remain agile and competitive in the long-term. Downturns can help you to build a sustainable financial culture within your business.
3. Your competitors are struggling
Virtually every sector is feeling the pinch in the current economic climate. But this means that your potential competitors are also likely to be finding times hard. This provides you with an opportunity to exploit your competitors’ potential weaknesses – and, in some cases, to absorb market share that has been lost by other businesses that have contracted or ceased to trade.
4. Downturns lay your business bare
A downturn will very rapidly shine a light on any potential weaknesses in a business or its products. If your product or service can survive during a recession or downturn, it stands a pretty good chance during the good times. As such, a downturn can be useful for some business owners, as it will make clear which elements of the organisation or its offering are unsustainable. This can help you to build a successful, stable business in the longer term.
5. You can get a head start
Downturns tend to cause businesses to hunker down and retreat. Similarly, many potential entrepreneurs are choosing to sit the downturn out, and maybe start their business when the good times return. This provides you with another golden opportunity to get ahead. By striking when the iron is hot, taking advantage of the reduced prices and the relative timidity of your potential competitors, you can help to establish yourself now – ready for the upturn.