When the economy takes a downturn, or when the market is volatile, a person looking to start a business may think that all hope is lost for their idea. At least until the economy starts to pick back up again. However, economic hardship has proven to be a great time to start a new small business. Other businesses are looking for ways to revise their budgets and develop new business plans to accommodate the changes in the economy. You can start your new business a step ahead with some recession savvy tools and tricks. Learn how to make the most of an economic downturn and get your new small business started on the path to success.
1. New Market
When the economy is trending downward, new problems arise. Your small business could rise to solve these new problems. Start brainstorming business ideas by determining where your customers’ pain points are. If you already have a business idea in mind, determine where your business fits into the customer’s needs.
Even if these problems are coming to the forefront during an economic downturn, they may not be entirely new problems. Understand how customers were addressing the problems before. Learn who currently provides the best solution to the problem. Define why your business is better and why customers should switch to yours. Many customers are looking to make a switch during a downturn to cut costs or gain a more efficient solution.
2. Lower Expenses
During hard economic times, other businesses are most likely selling off equipment, assets and supplies and much lower costs. Some businesses may be closing or transitioning to a remote model and selling their office furniture at a lower price. Other businesses are offering deals and discounts in an effort to sign new customers. Take advantage of these deals as you establish your business.
3. Access to Funding for Small Businesses
Many times, the government releases funding packages to help stimulate the economy during a downturn. These packages are often available to small businesses, including ones that are just starting out. This may also include provisions for tax credits and incentives for businesses filling a niche left in the market by the trend in the economy.
Another perk of starting a business during tough economic times is bank rates. There’s a good chance that banks are changing their rates to accommodate the economy and encourage spending. This means lower interest rates for a new business account. There is also a higher chance of getting approved for a higher credit limit than you usually would. Typically, they also reduce the penalty for late payments for lines of credit and loans.
Investors are also usually still looking to invest in startups and small businesses, especially ones touting products that are higher in demand during the economic crisis. Startups are inherently risky, of course, but these investors are looking to move their capital from the stock market. Startups are their safest bet, providing them with more security and you with funds for your business.