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NOW'S A GREAT TIME TO START A BUSINESS
By Rhonda Abrams, 2008
Okay, you’re going to think I’m nuts, but listen up. Because right now is a terrific time to start a new business. Yes, I am very much aware of what’s going on in the economy and the stock market. Yes, I know credit is tight, customers are cautious, the equity in your home is plummeting, and your 401K is more like a 201K. Doesn’t seem promising for starting a business, does it? But it is.
History bears me out – when times are bad for the economy, it can be a great time to start a business. In fact, 16 of the 30 companies that make up the Dow Industrial average were started during a recession or depression. These include companies such as Procter & Gamble, Disney, Alcoa, McDonald’s, General Electric and Johnson & Johnson.
Let’s take a look at the years 1973-1975. The US had an unpopular president, was in the midst of Watergate, at the tail end of an extremely costly war that divided our country. Gas prices jumped by nearly 50% in two years. Consumer confidence dropped to an all time low.
It was a terrible time to start a business, right? Well, here are just a few of the companies started in those awful years of the early 1970’s: Supercuts, Chilis, Cablevision, Industrial Light & Magic, Famous Amos cookies, Oakley, and oh yes, a small company called Microsoft.
Why? What makes it possible for new companies to thrive when times are so bad? Why can it be a good time to launch out on your own? First, there’s a lower “opportunity cost.” In good times, if you already have a safe job or the company down the street is hiring, starting your own business means giving up the opportunity of a good job. There’s a cost to that – a salary, health insurance, other benefits.
Of course, if you have a good job or are offered a good job, I’m not telling you to quit to start your business now. But what happens if you lose your job or you’re just finishing school and no one’s hiring? There’s little opportunity cost in hanging up your own shingle rather than staying home and watching a rerun of the Simpsons or Oprah.
Okay, but that might just mean creating some income for yourself ‘til you find a job. What actually makes it a good time to start the next Intuit, Whole Foods, J.Crew, Costco, or Applebee’s (all launched during recessions)?
Here’s what happens in bad times – disruption. Disruption means things change. And things often change quickly and dramatically. When things change, there are opportunities. And entrepreneurs seize opportunities – that’s what makes them entrepreneurs.
Some of the things that are changing:
That means opportunities for you. Specifically, what you can do:
In a world of good times, customers are happy, with an attitude of “If it ain’t broke, why fix it?” But suddenly, things are
broke – and they need fixing. You can be the fixer.