This question keeps coming up in many conversations with existing business owners and prospective ones. In almost all situations I encounter two diverging opinions. In one camp you have those who say the economy is so bad; consumers are spending very little money, banks are not lending and many other issues facing small businesses today. In the opposing camp there are those who say this is the best time to start a business because you have many businesses for sale at good price, your business will be ready to take advantage when things start looking up and so on.
These conversations remind me of a story of two shoes salesmen who are sent to an African village to explore business opportunities for shoes. One salesman goes to the village and finds that nobody is wearing any shoes. She sends a message to the headquarters – stop this project. No one here wears any shoes. The other salesman goes to the village and finds the same situation. However, she sends an urgent message to the headquarters saying – crank up the production in full force. No one here wears any shoes. As you can see the opportunity is in eye of a beholder!!!
Many of the well-known businesses of today were started in bad times.
Hewlett-Packard (HP) was founded in 1939 when the Great Depression was ending. Several well-recognized names of today such as Apple, Microsoft and Genentech established their roots during recession of 1970.
Our view is that opportunity always arises from crisis. The best time to start or buy a business is when things are not looking up. The stock market principle of “Buy Low and Sell High” applies here too. In addition, there are several advantages of starting a business in bad times.
- You can find many good businesses at bargain price. Not everyone will survive in the bad economic times. There will be number of owners who simply cannot make it through the recession for one reason or another.
- You can find good talent at a reasonable salary. When unemployment is high you will come across number of highly talented individuals who will be willing to work for reasonable salary.
- Everything is cheap in the downturn. You can find good office space at a discounted rent. The material is selling at lower price and so on.
- There is less competition. The bad times will weed out number of weak competitors from the market. Only the strongest will survive and prosper when good times return. And they eventually do return.
What do you think? What are your reason to start business in tough economic time? Let us know in the comments.
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