Learn what industries were affected during the pandemic along with tips for testing the waters for your new business venture.
Starting a small business is hard work in any environment, but it’s even more challenging in a tough economy. Small business owners must hone their business plans. If you create a thorough business plan for starting and growing your company you can stay focused on your goal when things inevitably get tough.
If you are thinking of becoming an entrepreneur, consider the following tips for successfully building your business in a challenging economy.
Tips for Starting a Business in an Uncertain Economy
1) Be Real with People.
Don’t gloss over the realities people are facing. Offer support.
2) Prepare to adapt.
Prepare for business to be slow, but also be open and willing to adapt. You may have to broaden your horizons or niche down.
3) Track your expenses.
Keep track of your finances. You need to know where every dollar goes. Cash flow is crucial in times of uncertainty.
4) Get clear on your audience and their problems.
Know the problems they face and how you can solve them. Don’t start a business if there is no need for your product or service.
5) Build an audience first.
Network and build an audience before launching. You can build an audience for free through a blog and on social media. Make sure to collect feedback — it will tell you whether or not you’re heading in the right direction.
6) Get moving.
Crises inevitably end. If you start moving now, you’ll be the one standing while others take time to get back up and running. Start small and grow over time.
7) Do your research.
Nearly 50% of small businesses fail within the first five years. That number jumps to almost two-thirds by 10 years. There are plenty of reasons why a business fails, but CB Insights found that 35% of startups fail because there’s no market need. The way around this is to research your target audience before starting a business. Look into economic trends, consumer behavior, audience demographics, and competition.
The Truth About Uncertainty
While uncertain times surely make it harder to build a business, the truth is that there truly is no certain or perfect time to do so. If you’re considering starting a new venture, evaluate your life, relationships, and bank account and decide if they’re sturdy enough to ride the waves of entrepreneurship.
Be prepared for the ups and downs of business-building. Add safety nets before starting your business (whether that’s having X months’ living expenses saved, a healthy pipeline of leads, etc.), and know that there’s always risk involved.
Data from several sources continues to support those looking to start a new business. The Census Bureau reported that more than 4.4 million new companies were created in the U.S. during 2020 — a record-setting high. This is a 24% increase from 2019 and 51% higher than the average from 2010-2019.
The influx of entrepreneurial activity during 2020 didn’t just set records in the US. It was also the largest increase of any country in the Organization for Economic Cooperation and Development or the G20 with available data.
Before taking the leap, consider which industries have been most affected by the pandemic and which may be the most profitable. Retail, food service, and logistics have seen major losses. However, finance, construction, and eCommerce barely slowed down.
Your chosen industry plays a part, as well as the amount of additional funding you can get from the government and private stipends. But it’s clear that the economy is getting back on its feet, and more people than ever before are setting up their own businesses.
When Is The Best Time to Start a Business
Ask any entrepreneur when is the best time to start a business and they’ll probably tell you “there is no perfect time.” Every business takes dedication, strong leadership, a great product or service, and a little luck.
Research from the Kauffman Foundation found that 30% of new entrepreneurs in 2020 were unemployed when they started their companies. Some entrepreneurs had ideas brewing for a while and took advantage of downtime during lockdown to create their own companies.
The Bottom Line
There are unique benefits associated with starting a business in any economy. If you do your homework, think strategically, and take advantage of every opportunity to minimize costs while maximizing the value to your customers, you can build a foundation for long-lasting business success.