UKStartups

Entrepreneurship blooms during downturn / recession. I read an article which says the biggest of the success stories have laid their seeds during recession.

Necessity is the mother of Innovation as people get out of their comfort zones and try and experiment

I agree, although I would add a few points:

– you’ve got nothing to lose
The best time to take the plunge is when you haven’t got anything to lose. If you have a half-decent job with mortgage and dependents there are strong disincentives to losing your stability.

I started my first business when I was a student…my second when unemployed.

– it is easier now to get bank finance if you have nothing!
The Government’s Enterprise Finance Guarantee Scheme guarantees your bank loan. However, banks don’t like lending without security, so if you have a house they will try and secure at least the 25% the government doesn’t guarantee on that…and often try and secure the full 100%.

– Even with a recession, 90% of people are employed and we live in the 6th (?) largest economy in the world.

The newspapers might be all doom and gloom about the economy, but there is a hell of a lot of money out there if you have the right product or service.

One of the businesses I am involved with has seen sales double every 3 months for the last 9 months. Why? Naturally the product is the best out there…but our sector (natural skin care) is booming.

Lots of other industries do better in a recession – not just pawn broking or supermarkets…I expect people trading down from using an expensive accountant to doing their own accounts online might have given a fillip to the online accounts software sector too 😉

– Established competitors start to falter
When you are starting a business it is sometimes disconcerting to compete against much bigger established companies.

However, you can take confidence in the fact that the vast majority of people in business today are pretty useless. Even the ones who are any good who can spot an opportunity, cannot marshall their legions to act quickly to take advantage of it.

Recessions are great for exposing the flaws in bigger companies. When times are good, everyone makes money. When times are bad, only the best make money and the rest falter.

Those big companies with expensive PR agencies, bloated marketing departments, free riding sales execs, inefficient distribution networks and expensive vanity offices suddenly find themselves with a massive cost base and not enough revenues to fund it.

If your costs are the spare bedroom and a blackberry, then it doesn’t matter if you make £50K a year and your competitor makes £500K – chances are you are making far more profit!