Is now the right time to start a business?—Anand Deb, Vancouver
What? Did we read that right? If so, thank you. In a week when we received a torrent of e-mails from people feeling panicked, irate, and/or depressed about the economy and their careers, your simple e-mail query was a welcome surprise.
And it was a welcome opportunity for us to realize, well, yes, it could be a very good time to start a business. In fact, we can now think of at least four compelling reasons why.
We can, that is, if and only if the business you're hoping to start passes one major test.
It can sell more for less.
To be clear, we don't mean a little bit more for a little bit less. In these recessionary times, a new business doesn't stand much of a chance unless it provides a demonstrably superior value proposition than the market's current offerings. Sure, not that long ago, you could still take a competitor's service or product, tweak it or slap on a new feature or two, and persuade customers to buy it at a premium. But with everyone in hunker-down mode, the days of marginal up-selling are gone, and could be for some time to come.
That said, if you're an entrepreneur who has actually come up with a product or service that will significantly improve people's lives—for significantly less than the going rate—here's why right now might be the right time to forge ahead.
Hungry People Available for Hire
First, if there is one thing a startup needs to get out of the gate fast and compete effectively against established players, it's smart, driven-to-win people. And those people happen to be more available right now than at any time in our memory. Now, obviously, layoffs are a terrible, terrible thing, and there are millions of painful human stories behind the unemployment rate of 8.1%. But the fact is, new businesses live or die depending on how quickly they can bring together bright, flexible, "hungry" employees. The current climate, with seasoned professionals and freshly minted MBAs alike looking for work, facilitates that process.
The second reason that this might be the right time to start a business is related to the first, although it has to do with something more ephemeral: the general urgency and lack of arrogance that most people are feeling these days. The economy's implosion has really taken everyone down a notch. "Masters of the Universe" have discovered they're mere mortals, and people who thought it was all about them have discovered that unless their company succeeds, no one does. Even regular folks have had to confront the fragility of their industries and livelihoods. So not only has today's environment made it easier to hire good people, it has also created among many a new understanding of the importance of true teamwork and unrelenting productivity. Such a "vibe," for lack of a better word, is every manager's hope, but it is an entrepreneur's dream.
The third reason concerns money—though in a good way. Despite all the news you hear about the tightness of the credit markets, financing for startups does exist, especially for those mentioned earlier that offer more for less. We're not suggesting, of course, that entrepreneurs today can expect the fairy-tale conditions of yesteryear, when money truly did seem to grow on trees. But many regional banks in particular are eager to lend. And venture capital firms are always searching for breakthrough ideas—after all, new businesses are their lifeblood.
No Time Like the Present
Finally, right now might be the right time to start a business because doing so will position you especially well to enjoy the upside of the eventual recovery. Just think about it. If you start your business now, it will be staffed with smart, energized employees who have learned how to work together to keep costs as low as possible and innovation sky-high. Your company overall will carry no legacy costs. Nor will it bear the monetary and emotional scars of layoffs. You will, in other words, be poised to catch the earliest wave of the turnaround and ride it to the next level. How exciting.
And how exciting to hear from you, too. The world needs thousands of entrepreneurs asking your question right now, and as many as possible discovering that there may indeed be no time like the present to start anew.