Thinking about starting something new? Why recessions are good for start-ups and new projects.
So, 2020 is behind us, and the world has changed beyond recognition
Covid is still very much defining our lives and has changed the way we work perhaps forever. We are constantly being told by the media that a recession is coming, and not just any old recession (we’re used to those by now!) but the ‘worst recession for 300 years.’ So is now really a good time to start a business, or develop a new arm of your existing business?
What no one seems to talk about is the fact that many businesses start in recessions and go on to be very successful.
“What do General Motors, Burger King, CNN, Uber and Airbnb all have in common?
They were all founded during economic downturns.
GM launched in 1908, when the US economy was in turmoil after “the Panic of 1907” financial crisis. Meanwhile, Burger King flipped its first patty in 1953, when the US was again in recession, and CNN started its news broadcasts in 1980, when US inflation hit almost 15%.
Both Uber and Airbnb set up business during the global financial crisis of 2007-09.
These examples show that many of the best, and longest-lasting, companies are set up during downturns, according to Dane Strangler, a fellow at the Bipartisan Policy Centre, in Washington DC.
He says that the difficult economic backdrop makes them both tougher and more nimble for years to come.
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The list of companies started in a recession also include, Hewlett Packard, Microsoft and WhatsApp. Not exactly lightweights in the business world!
The managing director of Virgin StartUp, Andy Fishburn, says that recessions provide fresh opportunities for start-ups because they are an opportunity to fix a problem. Recessions show that something has gone wrong, which means we have to find solutions, and a business is nothing more than a solution to a set of problems faced by a certain group of people.
As we look to rebuild our world, communities, and the economy, and build something different from what has gone before, small and micro businesses will have a huge role to play. And this is where you come in.
In this blog we will be exploring what it takes to create a start up so you can decide if this is something you want to explore. And if you are already an established business, it will help you think about how you could develop other products and services to right some of the wrongs we see in our world today, and earn more money doing what you love.
And while we are on the subject, let’s name the elephant in the room - money.
Shrinking Economy?
“But Marisa, doesn’t a recession mean that there is less money around so in fact it’s a really bad time to start or grow a business?” I hear you cry! Now I don’t want to be glib. Of course, many people have lost their jobs and might be struggling financially, but just like the pandemic enabled some businesses and industries to thrive, a recession does the same thing and creates new opportunities. Here are some of the industries that have seen the most growth during the pandemic:
Gifts
Food and drink
Fashion
Beauty and wellbeing
Health and fitness
There is PLENTY of money out there. Trust me. If you have identified a problem that a particular community has, and worked out how your ides or business can solve it, you will find that there is money there to support it.
Take the steps I suggest and you will be well on your way to creating a thriving enterprise or developing an existing one.
So what steps should you take if you are at the conceptual, start-up stage, or wishing to develop an idea within your existing business?
6 Start-Up Steps:
Research, research, research
As they say “There are no bad businesses, only ones that haven’t been researched enough.” The point of doing thorough market research isn’t to confirm what you already know, it is to challenge your assumptions about things you think you know, so it is important to go into it with an open mind.
Your idea is only the beginning, and most likely not the one you will end up going with. The way to think of it is like this; your idea for a business is a response to a problem for a certain community of people. You may even be one of the people you are trying to solve a problem for!
Keep bringing it back to this idea of problem solving, figuring out in detail, what the problem is, for whom, and how your business/idea solves it. Problem solving is part of the entrepreneurial landscape so use that as your starting point and identify the following:
i) Who your community/target audience is
ii) The problem they have and why it keeps them awake at night
iii) Exactly how it will solve their problem
iv) What your product or service is in detail
v) How life will change for that community as a result of your product or service and therefore why they will tell other people about it.
2. Have a plan
When you have conducted all that research, you need a document that serves as a repository for all that data and that is where your business plan comes in.
The trouble is, words like ‘business plan’ can be very triggering for some of us, so if thinking about writing a plan for your start-up, or your existing business, sends you into a cold sweat, do not panic! Help is at hand.
Because this is an issue that comes up so much for business owners, I have written a blog about my take on business plans, and how to approach things a little differently so you can get the most out of the process. In this blog I talk about one client who said at our first coaching session “I f***ing hate business plans”! So I have some experience with this…
I have also created a four-week online course that uses many tools to write a business plan and conduct helpful and relevant market research. This course is available as part of my Doing Business Differently Membership Programme, a community I have created to support small and micro enterprises at any stage of business.
3. Get a mentor (or business coach)
Ok, you will probably say, I would say that! But the truth is, everyone who has started a business, has had a mentor. It might be a partner/spouse, family member, friend, peer, but it will be someone who you bat ideas off, and take concerns to.
The thing is, we know our friends and family have our back, but when someone is emotionally invested in you, such as nearest and dearest, it can be much harder for them to be fully objective about your idea and plans. This is where a professional coach or mentor comes in. We also have your back, but because we are not emotionally invested in the same way, we are there more as a ‘critical friend’, someone who will challenge your assumptions, and provide the time and space for you to work stuff out, and see things from another perspective.
I know this works because I have had my own mentor for over 15 years and without Anni, I wouldn’t be where I am today. I would also have potentially wasted a lot of time (and money) going down dead ends.
I’ve always seen my work with Anni as an investment in my business, and you should too (not least because it is all tax deductible). Obviously I would love it if you chose to work with me through one of my coaching programmes or through my membership programme ;) but whoever you choose to work with, make sure it is someone who shares the same view of the world as you do and has the same values, so you can build that trust and connection together.
Here’s Anni interviewing me for her fantastic podcast Leaders In Conversation.
4. Use your networks
Ditto above, no one started a business in isolation. Everyone always starts with the networks they have at their disposal, personal and professional so don’t be afraid to tell people about your idea and use those networks as your first customers.
The received wisdom on networks is that it isn’t our nearest network that is the most useful to us, but the networks around that network, i.e. not necessarily your closest friends and family, but their networks. I have certainly found this to be true and some of my first clients were partners of friends, or friends of friends. I also found the school gate a great place to do business!
Use who and what you have at your disposal, and if you feel awkward about talking to people about your idea or asking for help in promoting what you do, remember this is a pay it forward kind of deal. You can also offer to promote new enterprises for people you know. If Covid has shown us anything, it’s that we need each other, to reach out and ask for support.
Lastly, find networks of like-minded business owners and start-ups. Obviously for the foreseeable future we will be networking online, but this is no real barrier to making good connections.
5. Think about funding
Let’s dispel another myth about starting a new enterprise; you don’t necessarily need venture capital to start a business and in reality they only fund a small percentage of businesses anyway. Most entrepreneurs fund their businesses through personal savings, or borrowing from friends/family or lending institutions, I know I did.
Now you can also fund your enterprise through crowdfunding platforms like Indiegogo (for tech startups) or Kickstarter for everything else.
There are lots of resources online to help you put a campaign together that take you step by step through the process. This is also a great way to test and idea and create a network so it’s a brilliant tool for start-ups.
There are also organisations like Virgin StartUp, and some government schemes, so make sure you do your research.
6. Surround yourself with successful people
Another myth about business is that you have to be selfish/ruthless/want to get rich quick in order to run a business. While there may be selfish people who run businesses those attributes describe precisely no one I have ever worked with. All my clients are wonderful, thoughtful, compassionate human beings who are on a mission to make things better in whatever way makes sense to them.
So when I use the word ‘success’ I don’t mean it in the narrow sense of big house/car, six-figure income (although you may well have all of those things from your business). I mean in the way that they see the world, that they are optimistic about the future, and are rooting for you. More importantly that they understand why you are doing what you are doing.
Becoming an entrepreneur is an exciting, crazy, terrifying, exhilarating and fulfilling journey, so take people with you that will be there for you when things are tough, and will celebrate with you each step of the way. If people don’t ‘get’ it or you, just choose to share your vision with those that do. Surround yourself with those people that want to share your success.
Being an entrepreneur is not for everyone, and may feel very scary for some people, especially if they have been employed for a long time, but don’t get caught up in their story. Follow your vision and choose the people that feel your excitement/enthusiasm.
“If not you, who? If not now, when?”
Entrepreneurs want to solve problems and make the world a better place. You don’t need an MBA to start a business (most business owners don’t!). Just a desire to follow through on your idea and take action.
As the Chinese proverb goes, “The best time to plant a tree was 20 years ago. The next best time is now.” Get started today and find out what the entrepreneur you looks like.