When starting a business, most entrepreneurs feel like they’re taking a huge risk. After all, 2008 is still fresh in the minds of many business owners. Between 2008 and 2010, a staggering 170,000 small businesses closed their doors. Furthermore, according to the Business Journals of US Census Bureau, the drop in the number of new entrepreneurs was equally sharp. From November 2007 to June 2009, the number of self-employed Americans fell by over 4%.
What’s more, when it comes to the stock market, history does have a nasty habit of repeating itself. The patterns of boom and bust tend to have a cyclical trajectory, with years of prosperity and recession arriving sequentially. For instance, a study conducted by JP Morgan suggested that there’s an 18% chance of an economic recession occurring in 2019. Moreover, the chances increase as the years go on and the memory of 2008 fades.
However, the reality of the situation is that when the next economic crisis may arrive is anyone’s guess. What’s important is that with every market fluctuation, businesses and entrepreneurs learn something new. These experiences help big banks and small business owners alike learn how to weather these storms and move forward. Furthermore, a challenging economic environment doesn’t spell certain disaster – for some, it creates incredible opportunity. Below, we explain why no matter the economic climate, there’s no right or wrong time when starting a business.
Rising to the challenge
For example, of all the companies on Forbes magazine’s America’s Most Promising List a few years ago, a third were founded during the financial crisis. One of these companies was the fast-food chain Smashburger. According to their CEO Scott Crane, the economic situation post-2008 was the perfect time to set up an affordable restaurant brand. Crane commented that it was a time when consumers were tightening their belts, so they were looking to eat out for less. Furthermore, real estate was more affordable at the time. As a result, the company could take advantage of lower rents in key locations.
The same principle worked for marketing company Zeta Interactive, formerly XL Marketing. From 2007 to 2008, it wasn’t just real estate that was cheaper – everything was. As a result, Zeta was able to acquire smaller companies at a favorable price with less competition. According to the company’s CEO David A. Steinberg, “their limited access to capital stunted their growth, which allowed us to gain leverage very quickly once they were part of XL Marketing.”
Why mindset is the key to success when starting a business
As these examples demonstrate, a depressed economic landscape can present opportunity. Therefore, buoyant markets aren’t necessarily the prerequisite for growing a successful business. Although we’re not denying a healthy economy definitely helps, often determination, resourcefulness, and resilience are the essential ingredients to success when opening a business. Plenty of people have reservations when they’re thinking about how to open a new business, but ultimately, getting past your anxiety and taking the plunge is often the solution. It’ll be a scary time, but when starting a business, there are a few key lessons that will help you manage the process.
1. Get believers on board
Surrounding yourself with a group of people who believe in your vision and are willing to support you is crucial. Whether that’s a partner, good friend, or family member, make sure there are people who can support you no matter what. The demands can put a strain on your relationship, but if your ensure roles are clearly defined, having back up is invaluable.
2. Embrace being a leader
One of the biggest challenges for small business owners is coming to terms with being a leader. Although your support system is vital, it is important to learn to take responsibility and be accountable for your actions. If you accept this fact when starting a business, the initial stages will be far easier.
3. Manage your time
A big part of learning to be a good manager is learning to manage your time. This means that you need to be realistic about when can and can’t be achieved in a single day. We’ve already discussed the importance of surrounding yourself with people who believe in your vision – so make sure you give them the time they deserve. Furthermore, it’s important to take some time for yourself – starting your own business is stressful, so factor in some time for self-care.
4. Scale doesn’t always equal success
Remember, growing your small business fast isn’t always the best policy. Just because a company is scaling up, doesn’t necessarily mean its successful. For instance, a common mistake that entrepreneurs take is to open new locations when the numbers aren’t matching up. Be sure to keep an eye on competitors and customer behavior.
5. Be flexible
One of the most important things to remember when starting a business is that you need to be flexible. This is particularly the case of the economic conditions aren’t as favorable as they could be. With a resourceful, agile attitude, you can make sure you and your business can adapt to new challenges the business landscape throws at you. When starting a business, pay close attention to the conditions and plan how your company will maintain dynamism.