10 reasons why recession is a bliss for startups
Recessions came and took a lot from our economy. They can come again to haunt the corporate world. Although recessions ignite the huge downfall to the owners and entrepreneurs, history says that they aren’t that bad after all. Most of the highest valued companies today started off in bad economic states. Microsoft, Facebook, Twitter, Flickr, Skype and many other large enterprises evolved at such adversaries.
The recession isn’t what the corporate world would ever want. It’s like that storm which destroys the things that took years of hard work to establish. But flipping the coin shows us another side.
The recession is a great time for startups. How? Read along to know the pros of recession.
#1 That demand for innovation
Startups are all about solving the common problems that people face. It’s about creating solutions that eliminate inconveniences. A recession weakens the economy and creates a lot of problems. These problems demand some of the never before technologies to get rid of them. There thus is an increased demand for innovation and startups can sail on successes if they bring those innovations.
#2 Demand for reasonable services
Recession makes people keep their pockets under strict surveillance. They want to spend less and save more. Smart founders can take advantage of the situation by winning those clients who are looking for reasonably priced services. Try offering the best that you can within their budget, and you will sure retain those clients even when the market stabilizes.
#3 Floating talents
Good times keep resources engaged and it’s not an easy job to find those talents for your startup. The bad economic times make people lose their job. Even talented, qualified and experienced resources get churned off. It’s a great opportunity to choose the best staff, and they would even be loyal to you for hiring them in odd times.
#4 Starting up is cheaper
In a weak economy, you would get anything and everything at cheaper rates. Your office would cost less, and even the human resources would be demanding lesser salaries. You can get huge discounts on necessary things thanks to the stock clearance policies of businesses. So the time of slow economic growth can be the time of better startup growth.
#5 Vulnerability of others
Recession affects all the businesses big or small. Some of the big corporate organisation would be trying to cope up the situation. Also, some of the smaller businesses would disappear. Whatever the situation is, every other business out there is weak and vulnerable in such an environment. In such conditions, the agility and flexibility of a startup can come in handy. If you are smart enough to make most of your business with limited funds, a recession can never eat you up.
#6 Lesser market competition
Even a kid tries a startup in a strong economy. You get to see an ocean of startups, and you might become a negligible part of the crowd. Only a few of us have those guts to start a venture in a downturn condition. If you decide to do so, the market has just a few startups and the competition is low. If you provide good services, you have a chance to create an identity for your business.
#7 Smart Investors hunt for best ideas
The recession is the time when some of the smartest investors look for some best investment opportunities. Angel investors tend to move their money from the stock market to a hopeful business. So you have greater chances of getting funds in such an atmosphere. Have a strong and profitable idea, and you would get investment quicker than non-recession times.
#8 Recession allows negotiation
A Strong economy is vendor’s reign while it gets reversed during downturns. In such conditions, you can even negotiate your deals with them as they find it difficult to move their stock. So, the time of recession reverses the power.
#9 Leaner startups
A startup started in a rough economy can survive the situation if it happens again. Moreover, if you continue to operate your business the same way even in better times, you achieve great sustainability.
#10 Government support
Downturns are concerns even for the government. It has to try and lift the economy to normalize things, and for that, it wants to encourage people to spend more. The government would easily avail loans and funding at reduced interest rates. Even the banks lower their interest rates to create more expenditure. Thus you can get easy loans at lower interests in recession times. This can give you better benefits when things get normal.
So the bottom line is that recessions are not that bad for startups. In fact, they are better for you to start anew.
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