Five Reasons Why Now Is the Perfect Time to Start a Company
The markets are crashing, unemployment is jumping, bankruptcies are increasing, foreclosures are accelerating, and consumer sentiment is in the gutter. Now is a horrible time to start a company, right? Not so fast. There are several reasons why now is the perfect time to use your other 8 hours to start a company.
1. No baggage. It is incredibly challenging to downshift an existing company during a recession, but much easier to start a business during a recession. Why? First, an existing business has fixed overhead that cannot be reduced: long-term leases, employment agreements, and just plain excess that wasn't meaningful when profits were high but now can't be easily cut. Second, and just as problematic, existing businesses typically cling to old strategies and practices that may have served them well in healthier times but are counterproductive during a recession. For example, offering too many and/or too large discounts or misreading the severity of the recession and bulking up on inventory.
Start-up Advantage: You can avoid the traps faced by existing companies trying to adapt to a changing economy by being lean and focusing on products/services that make sense in today's market.
2. Less competition. I'm reminded just how bad the economy is every time I work out. My gym is in a retail complex with 40 or so other shops. At last count, twelve of the 40 storefronts were empty with "for lease" signs on the doors. But instead of being spooked, understand that bankruptcy is just a form of natural selection. The companies were not suited for the environment in which they found themselves and became extinct. Fewer companies = less competition for you.
Start-up Advantage: A business can take months if not years to adapt and evolve, but as a start-up, you can mold your own company to fit today's environment.
3. Find great people for cheap. You can find insanely talented and inexpensive employees and independent contractors because layoffs are increasing and nobody is hiring. I have several friends who recently lost their full-time jobs and are now freelancing. These are six-figure folks who are great at what they do and are now looking for any gig they can get at any price. Post your job on Craigslist and Elance, reach out to your LinkedIn connections, or get leads from your friends.
Start-up Advantage: There is no better time to find talented people across all areas (e.g., financial, accounting, technology, marketing, public relations) than right now. Your few bucks can go a l-o-n-g way.
4. Ads are cheap. All of my favorite magazines are about half the size they were just six months ago. Advertisers have dried up. If you have any money at all to advertise, you can get some incredible deals. But in order to take full advantage of these deals, you need to plan ahead and act quickly.
First, determine which magazines you want to target. Go to the website and download their media kit and rate card so you know the ad layout requirements. Create ads for each size/layout. Then call the magazine's ad department and negotiate a huge discount. Tim Ferris has written a good blog post on how to negotiate ad deals.
Of course, magazine advertising isn't the only game in town. Online remnant ads are down nearly 50 percent from a year ago. This translates into cheaper pay-per-click costs for you when you use Google's Adwords.
Start-up Advantage: Cheap ads are bad for publishers but great news for start-ups with limited ad budgets.
5. Deals abound. Few industries have been spared during this recession. Most companies are willing to discount their products and services just to make a sale. "Recession specials" and company discounts seem to be popping up everywhere.
Start-up Advantage: Cash is king. If you need products/services to get your company started and don't mind a little negotiating, most companies are willing to deal.
If you've ever thought about starting a business, now is the perfect time. Don't take too much risk, though. Start small and don't quit your day job until you're making enough profit from the business to pay your bills. And if you're able to do that, you can brag to your friends that your business skills rank up there with J. Paul Getty, one of the richest men who ever lived and one who happened to make his fortune during and after the Great Depression.
Rainbow image by Claire L. Evans, CC 2.0
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