5) Recessions toughen up companies. A recession is a great time to start a company, but it isn't the easiest time to incubate a business. That doesn't mean entrepreneurs should back away from the challenge, however. Adversity brings out qualities that every entrepreneur needs to succeed – guts, problem-solving, strength and perseverance. Starting a company in the lean times helps develop those qualities more quickly, which will help the startups in the long-run.
Melissa Chang is the founder of Pure Incubation, an Internet incubator based in the Boston area. She blogs at http://www.16thletter.com.
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- Mark Cannice: The impact of Bear Stearns' collapse on entrepreneurs
- Mark Cannice: Venture Capitalists' Confidence Wanes
- Mark Anderson: Chavez, China, and the coming startup squeeze
Photo by squidish - http://www.flickr.com/photos/squidish/410698265/
Comments
Hi Melissa,
I really liked your 4th point about starting a company during recession times. That is a very good reason. you get the early head start plus VC then are eager to finance as you can provide them with some track record to show for.
Adam
Hi,
Great points, Melissa. Perhaps a recession makes other businesses afraid to move forward with their strategies. This may be an advantage for a start-up that can move fast. However, I think a recession is also a good time to really focus on a specific customer. Maybe this is an opportunity to target a customer group that is somewhat shielded from the recessionary hit. Additionally, in a recession the economy tends to lose jobs, which can mean that saavy entrepreneurs might be able to snatch-up some talent looking for a home.
Thanks,
Joe
Joe,
Thanks for your really good suggestion - targeting in on a specific customer that isn't hit as hard by the recession is a great opportunity. Because, of course, that customer wouldn't have been obvious at any other time except during the recession. Great point. - Melissa
Hello from China,
the US economic downturn has spread to every corner of the globe, China has seen the great slides from the highest almost near 6,000 to 3,700 calculated on this day in the capital market. which gives the investors a more pale prospect for further financing and raising capitals.
yet the consumption environment has not been completely or as seen in the stock market damped, crowds of people still in great demand for goods purchase.
personally I have heard of starting a company purposed for future strategy, however, the fields that you picked is of crucial entry for profitability, and China has already gone through the bubble that seen the boosting-up of internet and techonology-based industry, and China is now balancing the economy and cooling down which is originated from the purposed mind, get the max consumption from the inside and cuf back on the export are the main leverage tools the China government is doing.
Email: bianchinni@163. com
hope to hear more from who seen this post and love to reply back on more China economy.
Hi Melissa,
A very good post though I don't think that all VC's will shy away from funding start ups during a recession. The best VC's would concur with all of the points you and others have raised and also know that some of the best companies have been started during a downtown in the economy...MS and Cisco to name a couple. In addition, as technology continues to evolve the cost of building key components of a business has also declined and the time to market is generally shorter compared to 5 or 10 years ago.
i love to start now but i dont know how to go about it. can you help me
Thank you so much for your article. I think it is inspiring and right on track with what I was thinking. My business started in September and ever since then, the media has made me feel like I was wrong to get into this now, even when I have felt all along it was definitely the right time to start. I still have no regrets, but just use great caution when making buying decisions. I wish the best of luck to anyone out there who is thinking of starting up a business, now.
Thanks,
Jennifer Higgins
Metamorphosis
That's very true...but if I want to start a new business, how can I decide for which business I should go for. What may be the parameters to decide that. At each and every place people try to save money these days. So we have to find out the place where people have to go anyhow. Moreover, I would like to know which may be the best deal at this critical time. The business which can survive and also have a great future when the end of recession stars.
Thanks,
Rajeev