Is A Downturn The Time to Start Your Business? Could Be.
“When it hasn’t been your day, your week, your month, or even your year” hits different in 2020. By the end of Q1, people were shutting in and businesses across the country were shutting down.
Nothing about this scenario encourages striking out as an entrepreneur, and yet, there were more than 500,000 applications for Employer Identification Numbers (EIN) by mid-March according to the US Census Bureau.
From March to April, The Small Business Administration issued 300+ start-up loans totalling more than $153M, and Stripe reported processing more than $1B in sales for new businesses on its platform during that time.
Although start-up volume slowed (down from 20% from 2019 based on EIN application data), new businesses are forming despite the pandemic … or, plot twist, because of it.
Cameron Sepulveda, Founder of The Social Language, turned furlough from full-time into prime time for launching her social media consulting firm focused on clear communication and genuine connection across channels. Now, more than ever, it’s mission-critical to stay top-of-mind for your customer base and she’s stepped up to help her fellow entrepreneurs and small business owners do just that.
Hampden Farms Founder Zephrine Hanson mapped out a whole plan for launching her organic, small-batch artisanal production business this summer that took a hard right due to Coronavirus. Instead of putting her venture on hold, Hanson pivoted to focus on sustainable farming and strengthening local food systems in Denver’s food desert through her pilot project, Seed to Sustainable.
It may seem counterintuitive, but past economic downturns inspired many high-profile American companies including Disney, Microsoft, Slack, Venmo and more.
My take is that this all comes down to doing what we do best - being scrappy and agile. Find the need and fill the gap.
“Downturns or challenging times are seen as good times to start a business for two reasons,” said Rashmi Menon, entrepreneur in residence at the University of Michigan’s Zell Lurie Institute for Entrepreneurial Studies as quoted in the New York Times. “One is, there is less competition for resources. The second reason is that whatever changes we face, positive or negative, bring up new customer needs. And customer needs are at the core of any business.”
So. Is now the time to start your business? It could be. Take three deep breaths and ask yourself:
Do I see a need that’s emerged as a result of the current crisis and circumstances?
Can I step up and serve in a way that’s better than what’s currently available?
Do I have the start-up funding I need (without going too far down a debt hole) and some padding in the bank to tide me over until my business is profitable?
Am I qualified to tackle this? If not, am I willing to learn (say yes!) and ask for help/outside expertise?
At the end of the day, this dumpster fire could be a hard reset clearing the way for you to do your damn thing. I believe in you. Get after it.