Here are the biggest reasons why a recession is a great time to start a business:
- Recessions create an abundance of problems, all of which are great opportunities for startups to come into play and try to solve them.
- Startups will have to make do with less capital than in other economic times — if one can solve a problem for cheaper, then it’s a perfect pitch because clients and people will be looking for the cheapest alternatives to most things during this time.
- Highly-skilled and talented workers will be in greater abundance, because layoffs are more frequent during a recession (this isn’t an issue for a flexible, fast-growing startup).
- Because things in general are cheaper (e.g. furniture, equipment, offices), overhead costs are lower than they otherwise would be.
As of the time of writing, there are lots of startups being formed because the economy is stronger and funding is easy to obtain. In a recession, the inverse is true — this means less people are looking to start-up a business, which means less competition.
Most importantly, a startup formed during a recession is designed to be efficient and low-cost from the ground up. When things get better, the subsequent increase in profit margins will reflect that.
Keep an eye out for opportunity during the next recession, and dive for one you genuinely believe in if you are committed, you will benefit!