The world has changed for those considering starting a business. COVID-19 has knocked the stuffing out of the economy, and things are certainly different today than they were at the beginning of 2020. If you are considering starting a business, or perhaps you had business plans that were put on hold because of the COVID-19 lockdown, you might be wondering whether you should.
Look, starting a business is never easy. I’ve been there, done it, and I’m writing the book. I know how hard it can be. But, with every challenge comes opportunity. Believe me, there are plenty of opportunities today.
Why do you want to start a business?
According to the Small Business Administration (SBA) there are more than 30 million small businesses in the United States. Eight million of these are minority-owned. These small businesses (the SBA defines a small business as one that employs fewer than 500 people), employ around 59 million people. The small business sector isn’t so small, and the it keeps growing. Around 630,000 new businesses are created every year in the United States.
So, why is the small and new business sector so vibrant and so valuable to the U.S. economy?
According to a nationwide survey conducted by Guidant Financial, most new business owners open their own business because they want to be their own boss. But other common reasons include:
- To pursue a passion
- Dissatisfaction with corporations
- Little preparation for retirement
- Having an opportunity to start your own business
This year, more than any other, I think we could add being laid off to this list. If you’re in this situation, you may have decided that you no longer want your fate in someone else’s hands. Perhaps you’re crushed and disheartened from the torment of redundancy procedures following years of loyal service to your employer. Perhaps you can’t find another job and need to work.
Whatever the reason for wanting to start a new business, I think there’s some great opportunity to succeed. One of these is that you may have less competition from other startups.
Would-be entrepreneurs, who have never been in business before, get scared when the economy is in a tailspin. That’s natural. But when things look their bleakest, that could be a great time to jump in. Like Warren Buffett said about investing, “Buy when others are fearful and sell when others are greedy.”
What new businesses could do well after COVID-19?
The economic experts and business brains are telling us that the way to go in business is digital. That COVID has taught us that we can work from home, and that this is what more people will be choosing to do. Certainly, if you’re planning to open an online business there is some real potential to do well.
But you know what? From my experience, people are social creatures. We want to come together. We enjoy interacting in restaurants and bars. We have a need to build relationships before we buy from suppliers. And people still need places to live and roads to travel on.
People are consumers, and consumers drive the economy. The ability for the following sectors to bounce back in the coming months shouldn’t be ignored by entrepreneurs:
- Business services
- Construction and contracting
- Food and drink
In short, there are a lot of opportunities for business startups to do well, ride short-term bumpiness, and grow in the future.
Take advantage of the current economy
How do you take advantage of an economy that the experts tell us is in freefall? You’ve got to look for the opportunities that exist. Here are a few.
· The consumer is more than hanging in there
Recessions usually mean huge debt and financial difficulties. But this time round it’s different. The U.S. government has supported consumers, however their spending habits may have shifted.
Some people have put more in their pocket because they have been furloughed or laid off than if they had been working. They haven’t been financially disadvantaged yet. That should provide a cushion for many, and help the economy recover more quickly than if that money hadn’t been made available.
· Business finance is the cheapest it has ever been
Through federal, state, and locally supported programs, small business owners and startups have access to a wide range of grants and financial help. The government has made a huge amount of money available to SBA to help small businesses.
Even so, most of your finance is probably going to come from more traditional sources – and interest rates are going to be as low as they have ever been. We may never see interest rates lower. That’s a wonderful opportunity to compose a real business plan and get financing for your business at incredible rates.
· Suppliers want your business
Okay, so the economy isn’t going to bounce back to its vibrant best immediately. There will be spikes and troughs. On the flipside of this is that you may find it easier to work with new suppliers. They’ll be looking for new sources of revenue and new customers to sell to.
You’ll need to stay agile though, and always have a plan B. If your main supplier stops delivering to you, you need to be able to switch fast to keep your customers happy.
· There will be great people available to hire
Most companies are going to wait this thing out before making their hiring decisions. Others will be letting good people go. There’s an opportunity to hire the talent you need to get your business out of the starting blocks first time. No false starts.
But beware when we come out of the other side. At some time in the future, we’re going to see companies rush to hire. There will be more vacancies than candidates. For example, as the hospitality sector opens, manufacturers will need more employees to make the produce to supply to restaurants, bars and hotels.
Here’s what I know
Starting a business is never a stroll in the park. Successful entrepreneurs work hard. Get it right, though, and you could be starting a business at a time when others don’t see the advantages that you do.
Here are five keys that I think are crucial to all would-be entrepreneurs and business startups today:
- Know your target market – who are your customers?
- Compose a sound and energetic business plan – what makes you the ideal investment?
- Get advice on startup financing – how are you going to finance your business?
- Maintain sound financial control – how will you maintain your business through those difficult first months?
- Develop trusting relationships – how can you win the hearts and minds of customers, suppliers and employees?
Let me know your answers to these questions in the comments below. Or, if you’d prefer, drop me a line and let’s start talking about building your opportunities.