With all the uncertainty in the world right now, you might think your clients are crazy to consider starting a business in 2020, but don’t be so sure. There are numerous examples of successful businesses that started during a recession, including Microsoft and Burger King.
Startup entrepreneurs are inherently bootstrappers and agile thinkers, willing to put in the time and effort to hurdle any problem thrown their way, including a weaker economy. The latest survey from SCORE looked at The Impact of COVID-19 on Startups and found 18.4% of startups have scaled their launch plans and only 2.6% have abandoned their business idea. So, with consumers eager to get back to spending perhaps now is the right time for your clients to consider starting a business. Another bonus: there’s likely to be a little less competition right now.
Here are four reasons a recession can be a good time for your clients to start a business.
1. Time of Innovation
Entrepreneurs are problem solvers, and, in a recession, problems abound. Consumers and businesses want solutions and that means opportunities for startups to solve. Many businesses during the pandemic suddenly found their old ways of making a profit no longer viable in a “safer-at-home” economy. Unfamiliar problems led to innovative business ideas and to survive the changes, businesses pivoted to meet market needs. Likewise, startups need to pay attention to the challenges consumers and businesses face and then solve those problems.
In a time of problem solving, innovation is needed when:
- A product or service is too expensive.
- A product or service doesn’t exist or is too hard to find.
And then there are the solutions needed for altruistic reasons, to make the world a better place.
Along with being innovative, make sure your clients vet their ideas and conduct market research. Knowing their financial circumstances, you might also suggest some bootstrapping ideas, such as starting the business while still working at their job, buying used equipment, using contractors instead of hiring employees, or running the business from home. Fortunately, because vendors and suppliers are also eager to get back to work, startups may discover it’s easier to negotiate, barter for services or find favorable payment terms.
2. Consumers are Open to New Ideas
Another thing in your clients’ favor is how consumers were “forced” into accepting new ways of doing business. Where there was once hesitance to try new things, the pandemic made certain trends necessities. According to Forbes, there are five Covid-19 consumer habits that here to stay:
- Contactless delivery including pre-payment/drop-offs and self-pickup lockers.
- A cashless society. Mobile payments on the rise.
- Millions of people worldwide tried telemedicine for the first time during the crisis.
- Distance learning as schools turned to online classes.
- E-commerce explosion. Under lockdown, consumers bought things they would not previously have purchased through the internet.
Because consumers have a new comfort zone which includes e-commerce, remote working and more, your clients have an opportunity to reach a more accepting and adaptable consumer base. In fact, a recent survey from CouponFollow shows 73% of respondents shopped at least one new online retailer since the onset of the coronavirus. Plus, 43% have shopped one to two new online stores, 24% bought from three to four e-tailers and 5% tried five or more new online merchants. Also, in a recession, consumers are usually more open to finding new sources of products and services.
3. Consumers Emotional Needs
Consumers have been on an emotional rollercoaster throughout the pandemic. Their practical needs have not quite been met. And their emotional needs were at risk due to social distancing guidelines. As the economy works toward recovery, your clients may be able to take advantage of consumers’ needs for security and comfort and focus on delivering a customer experience keeping those needs top of mind. Startup entrepreneurs should consider fulfilling the following key emotional needs for the post-COVID-19 consumer:
- Security: Consumers want to feel more secure in their everyday lives. As restrictions lift, uncertainty about “the new normal” and about the devastated economy will still reign.
- Health: Understanding, controlling, and improving their health will still be the top priority for many consumers.
- Family: People are seeking solutions for protecting and improving their family lives as the crisis evolves.
- Control: Consumers want a better sense of control in their everyday lives.
- Empathy: In a time of crisis, consumers want to feel like the brands they support understand them and have their best interests at heart.
4. Talent Surplus
With the unemployment rate the highest since the Depression era, the one silver lining for startups is the availability of talent to hire. Where normally an employee might be uncertain about working for a startup, the talent your client needs is more apt to apply to a new company. Startups should keep the needs of the post-COVID employee in mind as they recruit. According to a Robert Half survey, employees will require more telecommuting opportunities, a safe/social distanced work environment, less in-person contact and less business travel.
What kind of workers need employment right now? Per Statista, the highest unemployment rates in the U.S. are in the following industries:
- Leisure and hospitality: 35.9%
- Other services: 18.4%
- Wholesale and retail trade: 15.1%
- Transportation and utilities: 14.2%
- Construction: 12.7%
- Manufacturing: 11.6%
- Information: 10.9%
- Professional and business services: 9%
We’re Here to Help
Your clients will need lots of your help as they navigate the path to starting a business in 2020. You’ll be there for their professional needs and we are here for yours.