The continuation of bear markets in investments paints a grim picture over the coming months as an economic slowdown and potential recession loom large over businesses. Yet many of the world’s greatest companies were built during recessionary times. Some experts say that economic downturns can present the best opportunities for growing a business while others are retreating.
Could launching or scaling during a market downturn help your new startup become the next household name? Here are some of the advantages bold entrepreneurs can face while scaling during a time of economic uncertainty.
Opportunities for starting a business or expanding into new markets exist even during an economic … [+]
Less Competition
Boom times attract investments from every corner. Everyone seems to have enough spare change to invest in the hopes of getting rich soon. As a market downturn sets in, many businesses start to fold. Charles Gaudet, CEO of the business coaching firm Predictable Profits, believes this is the perfect moment to strike.
“Right now is the time to take advantage of an open field. Your competitors are pulling back — spending less money on marketing and advertising. Some started laying off employees. Others are content to sit tight and hope for the best. All these factors make it easier for you to gain market share,” says Gaudet.
You can take advantage of the reduced or weakened competition to set a foothold in the market. Position yourself to learn and avoid the errors made by the current competition to leap ahead.
It’s Easier to Capture the Attention of Your Customers
Companies with accelerated growth during boom times may struggle to find a footing when money is hard to come by. This instability may be due to shaky foundations or poor business plans that didn’t factor in the cyclical nature of markets.
As businesses shut their doors, customers may look for alternatives to meet their needs. Your business can use the moment to provide value, capturing the attention of your target customers.
You may need to take note of the changing consumer behavior. “Keep in mind you must now adjust for a shift in buying behavior. Your potential customers or clients are more discerning these days. They’ve become researchers looking to make smart decisions. So you should be the purveyor of information that satisfies this need,” says Gaudet.
You’ll Enjoy Better Deals from Vendors
A recession will also provide many other opportunities to start a business. Businesses may look to lower their rates to entice customers and remain competitive. You may be able to access many items you need for your startup at reduced prices.
These value rates may be available for office space, supplies, raw materials, or technology. Buying what you need for your business is easier without breaking the bank. You can land a position to negotiate better long-term deals for your budding enterprise at lower than the market rates.
You Can Access a Talented Pool of Experts for Your Business
Unfortunately, a contracting economy leads to layoffs and organizational restructuring. The increased number of qualified individuals seeking work may provide an opportunity to get a talented pool of employees that matches your vision and dreams.
Your new company’s competition for those people will be much less fierce than it would otherwise be during an economic boom. In a recession, companies are more reluctant to hire and often lowball their offers for talented workers.
This reality means that if you can secure the services of such a person, the financial gains from doing so are likely to be greater than they would normally be over the long term. During a booming economy, everyone is fighting over each other’s employees and offering generous packages to attract them away from their current jobs.
Don’t Be Afraid to Start a Company During a Recession
Recessions are a great time to start your new business. Throughout history, recessions have been a driving force behind the creation of innovative and successful companies.
You can leverage the advantages of decreased competition, better access to talented individuals, lower rates, and the potential to give your all to your business. Finding the right opportunities (and being prepared for the worst) can put your business on the right track to success.
