Are you crazy to launch a venture now?
I keep hearing lately how a recession is a good time for people to start businesses.
Call me cynical, but this sounds like something a crazy person would say, or someone just being counterintuitive to get attention. There’s a lot of that going around lately.
“It’s completely counterintuitive,” agrees Thomas Koulopoulos, author of
"The Innovation Zone: How Great Companies Re-Innovate for Amazing Success.”But he still thinks there’s some benefit in unleashing your entrepreneurial juices during a crummy economy.
“It’s not going to be a cakewalk. I’m not going to be Pollyannaish about it,” he maintains.
However, he adds, with so many people unemployed right now and the prospects of finding comparable work not that great, “why not take that break and innovate something, provide a benefit to folks, or start a new business?”
The question for me still is, is it a good idea, especially now?
He offers five reasons why it is a good idea:
1. Many people will fall back and try to create their own venture while looking for new employment and waiting for the economy to get better. Of necessity, many of those folks end up building their own businesses at a time when costs are low and labor is relatively cheap. These new business often deliver the same services as their past employers at a far lower cost with lower overhead.
2. Large companies are far less likely to interfere with competing employees and small entrepreneurial ventures even though they may pose a threat, since they have bigger problems to content with; therefore, innovation flourishes under the radar.
3. Powerful new alliances are formed among unemployed workers who join forces to recreate everything they felt was wrong with their old employers.
4. The companies that are started in a recession are very capital efficient and don’t need a lot of money to keep going.
5. The abundant supply of cheap office space to rent and talented staff are easier to find.
OK, ok, so there are some good reasons. But I needed examples of companies that actually were born during tough economic times.
To that, he offered this list:
1876 GE
1931 Allstate Insurance
1939 HP
1954 Burger King
1955 McDonalds
1957 Hyatt
1973 FedEx
1975 Microsoft
1976 Apple Computer
1980 CNN
1981 MTV
1992 Cliff Bar
2000 Methods (soaps)
Hmm. There’s still this particular recession, one of the worst on record. Maybe this economy is different than the rest. Indeed, credit markets are squeezed, and good luck getting a loan to fund your idea.
“When you’re in the middle of a recession people always want to say this is different,” he says. “They’re right, but most small business owners get their funding from home equity loans or refinancing their house.” And with low interest right now, he adds, that may be an option for many people.
Another factor making it easier for entrepreneurs to follow their dreams, he says, is social media and networking.
Good points, but what do you all think? Did you start a business during an economic rough patch? Or have you shelved your dreams until things turn around?
