Economic upheavals are not uncommon, all markets have ups
and downs over time. My consulting clients often ask, is now a good time to
start a business? Surprisingly, business giants MicroSoft, Netflix, Airbnb, and
GE were started during an economic downturn. Below are #6 reasons why now may
be the best time to turn your idea into a business:
1. Business “Shake-out” – during periods of
economic uncertainty many businesses are not able to survive and a “shake-out”
will occur. For example, when the 2008-2011 recession happened in the
construction and real estate industries, many companies closed their doors.
This shakeout leaves a wide-open space for smart entrepreneurs to take
advantage of the lack of competition and consumers limited supply, to open a
business. The Covid pandemic has impacted the retail, restaurant, and event
industries particularly hard, opening new opportunities in these markets.
2. Hiring
Talent – with a strong economy comes low unemployment, which ultimately drives
up wages and makes it harder for small business to hire the talent they need. In
times of economic downturns, often employees are let go through no fault of
their own. This leads to a plethora of candidates to choose from, often at more
reasonable wages. Now is the time to hire that talent your small business needs
to get up off the ground.
3. Alternative Financing – often small
business owners are not able to obtain the financing they need to launch a new business.
When the economy is in distress, often investors are looking for a better rate
of return by investing in a new small business, rather than more traditional
markets. This is an opportunity for entrepreneurs to reach out to family, friends,
and acquaintances about your new small business plans and financing needs.
4. Commercial Occupancy Rates – savvy entrepreneurs
may be able to procure a great space for their business due to low occupancy
rates. If a business is shut down, that leads to open commercial offices, buildings,
and warehouse perfect for a small business to operate out of. Often you may have
more room to negotiate the rent amounts, lease terms and tenant improvement (T.I.)
money to help with any needed build out. Landlord’s do not make money if a
space is empty.
5.
Government Subsidies – recession leads to
new government subsidies to help entrepreneurs start small business. During the
2008-2009 recession, the SBA offered low-cost loans, refinancing opportunities,
and no-cost business training services. Currently, the SBA, through
congressional efforts, are offering SBA guaranteed loans with reduce equity
requirements and no fees. For example, on the SBA guarantee 7a and 504 loan
programs is offering six (6) months of paid principal and interest, equating to
extra working capital for an entrepreneur. All these special programs are for a
limited time, so take advantage now.
6. Interest rates – the Federal Reserve lowered
interest rates during the previous recession and have moved them even lower
during the current crisis. These super low rates are intended to spur economic
development. There is not a better time to close on a commercial loan when the
prime rate is hovering around 3%. Entrepreneurs
may even be able to negotiate a fixed interest rate for a period to help get
them started.
My question back is, are you ready to take the plunge and
open your new small business?
Laura D. Katz, MBA, is the Area Director of the UGA SBDC -
Athens Center. Ms. Katz is a national speaker on the topic of Marketing &
Business Development. You can follow her on LinkedIn and Twitter.
