First, let's get reality and the negatives out of the way...The Bank of England has warned of a looming recession that could be the worst for 300 years.
However, entrepreneurs should not be disheartened at this looming doom and gloom. Starting a new business always comes with challenges, but there is plenty of opportunity for those ready to take on the challenge. Household names, such as Uber and Watsapp were founded during the financial crisis of 2008/09. Indeed when Purple Accounts was launched in 2007 in the Isle of Man, it was right at the start of a recession. Finding a way to reach customers in challenging times, meant we needed to really consider how people wanted to do business. For it's day - offering the convenience of 24/7 online alongside the expertise and personal touch of accountant was a winning formula. For all types of business in 2020, technology is an integral part of the day to day running of a business and convenience for customers. So why could right now be a great time to start a business? 1. Access to funding and investment Accelerators and incubators can be ideal sources of funding and support for start ups. You might also look to more traditional credit options such as banks who are currently reducing their interest rates in a bid to encourage spending and business growth. Banks may also offer higher credit limits in times where start ups are few and far between. Investors do not necessarily stop funding small businesses during times of recession and may even be more interested in diverting funds usually invested in the stock market to put into your idea with potential. Pitching to potential investors will need to be very clear how the business will succeed during difficult economic conditions.
2. New opportunities The way customers buy has changed in such a relatively short time. The growth of home deliveries and online courses has grown massively. New businesses can take advantage of this shift to build and grow a brand. However, during this crisis, consumers are more sensitive to the actions organisations are taking. So startups must provide something of real value and a new business with a 'social story' or the start of business borne out of tough times resonates with people.
3. Wider range of talent It is unfortunate fact of the current situation that unemployment is higher, but the benefit for a new business is the increased talent pool of potential employees. Many employees may be prepared to accept a post in a start-up business at a time when jobs are scarce. 4. Learning opportunities You could find yourself better positioned to enjoy the fruits of your labour when the market improves. The challenges you face now can force you to be more creative, determined and resilient – qualities that will serve you well running a small business. We need more people right now with the guts to back themselves and their business idea. For those with the tenacity to get the job done and start a viable business - the payoffs will come both financially, personally and for the recovery of the economy as a whole.
5. More affordable resources Another advantage that can be exploited during a recession is the ability to source items at a lower cost. These could include products, equipment or assets that other companies are selling off as a result of the recession. New businesses can look for new partners, suppliers and vendors that are offering reduced rates, which can potentially save on both initial costs and long-term payments. Business landlords could offer more favourable terms, or it may be possible to get 'rent free' initial terms.
6. Less competition In more prosperous times, markets can quickly become saturated as a result of an abundance of competitors fighting for the same space. While competition keeps an economy healthy, an excessive amount of competition can make it hard for small businesses to survive and thrive. In a financial crisis, demand may be lower but there will also be fewer businesses entering the market and fewer businesses shouting about what they do - leaving more opportunities for those that remain.
7. Opportunities for exposure For entrepreneurs competing in a new market, getting noticed can be their biggest concern and challenge. In a vibrant, competitive market, attracting the attention of potential customers amid the industry noise is not easy for a start up. However, small business are highly flexible, can make decisions quickly, act quickly and can offer a very personal service unlike larger businesses. New businesses have a much greater potential for increasing exposure and building brand recognition in a very short space of time. Successful new businesses are easier to notice when the market is suppressed.
If you're thinking of starting a business and need expert advice, please get in touch and we will be happy to help. Follow us on Facebook, Linked In and Twitter: https://www.facebook.com/purpleaccounts/ https://www.linkedin.com/company/purple-accounts-ltd/ https://twitter.com/purple_accounts