How to Start a Business During an Economic Downturn

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Have a great idea, but been hesitant to launch a business due to the economy?

Plenty of great companies have launched during recessions – like Airbnb in 2008 and Hewlett-Packard in 1939.

Contrary to popular belief, a recession isn't the worst time to start something new.

There are often opportunities and market needs due to the downturn. The key is tapping into them.

1. Identify New Needs

Airbnb capitalized on a collapsed housing market in 2008. They saw a need for affordable short term rentals in light of the economic climate. 

The key to taking advantage of a recession is becoming aware of newfound needs. Keep an eye on the markets and take note of opportunities.

If your product or service idea doesn't quite fit a current need, see if you can adapt it to fit the new circumstances. 

If you can fill a hole with your business, seize the opportunity. You won't regret it.

2. Be an Alternative Option

Perhaps there's not a gaping hole in the market for your idea to fill.

But this doesn't mean the opportunity isn't there.

Economic downturns cause people to evaluate their plans and rethink their approaches – often presenting the perfect opportunity for an alternative to creep in. 

But you must find some way to differentiate.

No one will trade their allegiance for a product or service that looks just like their existing solution. Be unique.

3. Start Lean

With an unpredictable market, now is not the time to load up on liabilities and loans.

Now more than ever, you must start lean. Consider all your expenses upfront and cut anything not necessary or vital to the bottom line.

For example, you may not need an expensive office space. You can set up a virtual mailbox at a physical address while working from home or a coworking space. 

You might also benefit from one of the many free tools available online for bookkeeping and accounting like Wave or ZipBooks.

4. Work on your mindset and heal your money stories

Launching a business is no easy task because there's always risk.

Launching a business during the recession can take an emotional and mental toll on any of us.

First, ensure you have some personal savings. Having savings can calm our nervous systems and give us a sense of safety, which impacts our emotional response to financial and business decisions.

The more regulated anf calm our nervous system, the calmer we’ll be emotionally and the less likely we will be to make decisions out of desperation.

Work on your mindset about money, what you think you need to do to make money and grow your income and challenge your beliefs.

I know as entrepreneurs we think it's about the money and it really isn't.

It's never about the money. It’s about almost everything else but the money.

Prepare yourself mentally and emotionally. Make sure you're in the right headspace and know what you're jumping into.

Have some people around you to hold you accountable and bounce ideas off of when times get tough. 

Finally, be confident.

Resilience will be required of you during this season, and you're going to need a lot of it.

Keep in mind why you're taking the plunge in the first place.

Believe in yourself. And most importantly, be prepared to take a few hits. You can take them.

5. Get to Work

If you've found the opportunity, identified a need, positioned yourself as an alternative, and are ready to go – then get to work. There's not much else left to do.

Are you starting a business now? How do you feel? Let me know your thoughts in the comments section.