THE RURBAN FRINGE

Recession = Rise of the Entrepreneur

Posted on | April 17, 2009 | No Comments

With the recession on the top of everyone’s minds these days, it’s often hard to see a silver lining amoungst all the clouds.

But a recession can be a great opportunity to cultivate your entrepreneurial spirit and develop or grow a business idea from the ground up. 

Even during a recession, people and businesses spend money.

Vivek Wadhwa, a successful tech entrepreneur, wrote a constructive article in Business Week providing advice and encouraging entrepreneurs not to wait to start a business during a recession; instead, he identifies how a recessionary environment can be supportive of a well-crafted business idea.

Excerpted below are four core concepts he feels businesses should keep in mind during recessionary times:

Less competition.  An economic downturn clears the competitive landscape for startups.  Most of the “me-too” companies with inferior products and weak business models go out of business, and fewer are started. 

Lower costs.  It is a buyer’s market, and you can negotiate deals on real estate, equipment, and materials like never before.  Salaries are lower for new hires, and there is little pressure to give salary increases to existing staff.

Easier to recruit and keep employees.  You will readily find people who have been laid off and are eager to get back to work.  They will accept lower salaries in return for stock and take the risk of joining a startup.  And rather than focusing on getting a job with a competitor who pays a little more money, employees are usually content to build tenure and focus on your success.

Less pressure to expand.  Rather than rushing to expand your business, you have the luxury of doing it right.  You can conceive of better products, test them carefully to make sure they work and meet customer needs, and experiment with different business models.  Since you are not in a frantic rush to get a product out or build market share, you can do things more methodically.

Do you agree?

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