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Entrepreneur Opportunities are High in a Down Economy

Entrepreneur Opportunities are High in a Down Economy

If you decide “I better not become an entrepreneur now, because the economy is still bad,” you may be making as big a mistake as the people who thought during the dot-com bubble “all I have to do is start a company, and I’ll be rich.” In reality, what matters more is how well you do it, not when you do it.

Paul Graham says that he see startups succeed or fail every day based on the qualities of the founders. The economy has some effect, certainly, but as a predictor of success it’s a rounding error compared to the quality and effort of the founders. If you’re worried about threats to the success of your company, don’t look for them in the economic forecasts. Look at yourself and your competitors.

Here are some real-world reasons from Paul and others to convince you not to wait for the next business bubble before taking the leap:

  1. More qualified talent available. It’s hard to hire good people in good times because they already have many job alternatives. But in a poor economy the odds are in your favor — companies are cutting back and layed off many people, even the stars. Check your business network for a great financial guy or a great salesman.
  2. Alternatives are not as attractive. If your alternative is poor job security and low pay, why not follow your dream and build your startup? You’ll be investing your time and energy into something that is fun and potentially lucrative. If you’re talented and have always been waiting for the right moment, it makes sense to do it now.
  3. Infrastructure cost savings. Notice all the available office space as you drive down the street? Make them an affordable offer. Need more advertising? Ad revenue is down as companies lose their budgets. Negotiate hard and use social networks, which are essentially free.
  4. Competitors are struggling. They have high overhead, mounting bills, too many advertising contracts and high office leases signed years ago. Their prices are high and costs are fixed. They’re burning cash. You have none of these pains; you’re stingy with cash, with minimal overhead and lots of energy to focus on coddling every customers.
  5. Technology continues to advance. So for any given idea, the return for moving now in a struggling economy will be higher than waiting for good times. Technology trains move forward to help you fight the economy. If everyone else is hunkering down to survive, you may have a view not seen by others.
  6. Customers don’t “reduce headcount.” As a startup, you have a real opportunity to control your customer base. You’re not going to lose your customers you never had, even though the growth rate may be lower than you had hoped.
  7. Investors are still looking for good deals. Every investor hopes to buy when times are bad and sell when times are good. Good investors always think that way, so be there. You’re actually an investor too. As a entrepreneur, you’re buying your own stock with your own efforts.

The way to manage in a down economy is to do exactly what you should always do: manage cash flow as tightly as possible. If you don’t walk away, the most common cause of failure in a startup is running out of money. So the lower your burn rate, the harder your company is to kill. And fortunately the cost of entry to run a startup is lower than ever.

The most popular day for initiating a startup is the same as starting a new diet: Tomorrow. So take the first step today, not tomorrow. If you don’t do it now, the odds are you’ll never start. If you are an entrepreneur at heart, don’t spend your life trudging through jobs, depending on a boss you don’t like for salary and bonuses and health care and retirement. This is a life’s work without satisfaction or upside.

You can be better than that. That’s probably why you are reading this blog. So now is the time; go for it.


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Original Publication DateJanuary 28, 2011
Related categoriesNuts & Bolts

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  • John R. Sedivy

    Great encouragement for would-be entrepreneurs! About a year into the recession I remember reading about forced entrepreneurs gaining success out of necessity; they didn’t seek the entrepreneurial path, but were forced down it only to find there was probably a hidden entrepreneur deep down all along. It’s been said that hunger makes one creative. I also recall at one point reading that some of our nations most successful businesses emerged from the Great Depression.

    • Speechcoach

      Entrepreneurs and their small enterprises are responsible for almost all the economic growth in the United States. -Ronald Regan