The coronavirus outbreak has left the global economy weaker than ever. Businesses, facing incredible economic stress, have shut down. This may even be the worst global recession since the Great Depression. However, with every crisis comes opportunity. As problems arise, the potential to find their solutions do as well. It is up to you to identify the changing dynamics of the market and adapt accordingly. Hence, in this article, we are going to list down a few reasons as to why a financial crisis is ideal for starting a business.
As businesses shut down, unemployment rises. Through no fault of their own, suddenly millions of people find themselves out of jobs. According to Forbes, the New York State’s 2020 Unemployment rate is at its highest since the Great Depression. This number is expected to increase as the Coronavirus stays. These unemployed people can be of great use to you.
By starting a business, you can offer relief and employment to these people while also getting the added benefit of high-quality labor at a lower price than before. Not only does this allow your business to thrive, but also helps feed the mouths of these peoples’ families. Furthermore, with more people working from home, you can explore talent internationally, giving you greater options to choose from.
Due to the immense economic pressures that the pandemic has brought, governments have introduced policies to help safeguard businesses. Tax exemptions, granting of export licenses and rent exemptions are just a few of those policies. In some areas, governments have even resorted to direct lending in order to keep businesses alive and flourishing. A report by the Organisation for Economic Co-operation and Development (OECD) in 2020 laid out several policy measures taken by these countries. Canada, for example, is offering wage subsidies and tax exemptions to workers and the self-employed.
You can take advantage of these benefits being handed out by starting a business with favorable policies and terms. These will allow for greater profit margins and lower risks.
New businesses and startups are usually more agile and adaptable than older ones. With the ever-changing dynamics of markets, this is a very valuable trait to possess. These new businesses can adapt better to these constant changes because they have fewer prior commitments and prior product or service identity to maintain. However, you should be careful with respect to where your focus is. If you keep moving from one position to another, your customers will be confused about your identity. That is why you should first focus on your foundations, and then look to expand or diversify.
With the Financial Crisis in full swing, businesses will look to sell off assets and services under market prices to keep their companies afloat. You can take advantage of these offers by stocking up on material or negotiating better deals. Even labor, as mentioned above, will come at a cheaper price. As highly skilled people find themselves out of jobs, you can offer them one. They will be willing to work at lower wages in order to sustain themselves.
The biggest deterrent for many aspiring entrepreneurs is the increasing competition in their fields of interest. With the economy seemingly shattered, most of these people will be discouraged from starting their own ventures. Already existing players will find themselves hurt by the ongoing crisis. This is exactly the kind of opportunity you need to capitalize on. Take that first-mover advantage and implement your innovative idea. Act while others are lost in thought. This will help you gain a valuable competitive advantage.
These are but a few reasons why a financial crisis may be the best time to start a business. This may actually be the ideal time to finally give it a shot. Go for it.
Also Read: COVID-19: How your Business can survive during this pandemic.