Downturns in the economy can be seen as good times to start a business for a couple reasons:
1 – There will be less competition for resources
2 – A positive or negative economy will bring up new customer needs. And customer needs are at the core of any business
Timing can result in a number of benefits for the start-up entrepreneur: lower borrowing rates for start-up capital, cheaper equipment costs as businesses sell off surplus inventory or lower lease rates as landlords scramble to fill empty spaces. Not all of these necessarily come to fruition at the same time, but you will see one or more opportunities.
Even in good times, 20 percent of new businesses fail to get past their first year, according to federal statistics; tough economic headwinds present even greater challenges.
There will be industries that are winners, and inherently others that are going to be losers in both tough times and good times. We have seen this through the last two years of the COVID pandemic. Determining what customers need now is crucial to your success as an entrepreneur.
Our biggest concern is for the entrepreneurs, we don’t want to see them set up for failure.
If you want to start a business now, My Franchise Partners founder, Andrew Hoffman, suggests you ask yourself five questions first:
- Have I identified a need that customers have as a result of the current crisis?
- Can I serve this need in a way that is substantially better than the current alternatives?
- Am I qualified to solve this customer problem?
- If I don’t have the experience, can I hire others or find a co-founder to help me?
- Do I have access to funding that can tide me over until my business is profitable?
You just have to address a need.