Leadership Lesson: 5 reasons to start a new business in tough times

Published in the Phoenix Business Journal on July 20, 2020

It has been done before, many times. Some argue that challenging economic conditions are good times for startup businesses. Here are some major businesses that were begun during difficult economic times: 3M, Apple, Disney, Enterprise Rent-A-Car, CNN, Exxon Mobil, FedEx, General Electric, Hyatt, Johnson & Johnson, Kraft, Microsoft, Southwest Airlines. Convinced?

Several of them were started during the Great Depression, others in the Great Recession and in other economic crunches. And remember, some 70-90% of startups fail, per Harvard University.

Yes, it might have been more difficult to get sales, to obtain financing, to move forward, but they did it. And they lasted. These companies learned to play tough with fewer assets — and they have continued to work with leaner resources as part of their culture.

Startup today?

The Bloomberg Index of Startup Businesses (technology sector) continues on a long-term upward trend — after a hiccup during much of the Covid-19 period. The success formula remains the same: understand what people want, and provide it at a price they can pay.

The successful entrepreneurs dance and pivot through challenges until the business has traction and is growing. Then they continue to steadfastly follow their recipe for success.

What else matters when beginning a business in tough economic times? Here are some valid reasons to start a new business in less than optimum conditions:

  1. We are forced to run lean, be efficient, flexible, resourceful, and creative. We can retain these behaviors even in the best of times. And we are more aware of avoidable risks.
  2. There is likely less competition than in a burgeoning economy. Good investors can see the potential bargain that our new company represents.
  3. The resources we need can cost far less because of discounts and bargains available during times of economic pressures: office space, people, services, materials and equipment.
  4. Your new customers may appreciate the new good-value products and services you provide and stick with you after the economic crisis lifts — especially if you helped their business (including your excellent customer support).
  5. And if you are running lean you have a better shot at pivoting through difficulties to twist and turn through a field of obstacles on your way to ultimate success.

Amid a crisis, you will find out who are your best team leaders and you will keep them in better times.

The bottom line

Don’t shy away from starting your innovative new business. There are some advantages that can carry you through to better times and great successes. Just ask Apple, Disney, and Johnson & Johnson.

Click here to read this article on the Phoenix Business Journal site.