Is This Really a Good Time
to Start a Business?
For several years now, one word has loomed large over the economy. UNCERTAINTY.
We are now well into the slowest recovery from a recession in American history. And indicators suggest that the economy will do little more than muddle along for two or three more years. Perhaps longer.
Which then raises the very relevant question: Is this really a good time to start a business? Wouldn't it be better to wait until the economy is healthier to launch a startup?
I've been mulling that over quite a bit lately. The economic collapse in 2008 slowed the number of business startups. And statistics suggest that we have not yet returned to pre-recession levels.
This is not because fewer people would like to start a business. To the contrary, the economic downturn has actually multiplied the number of people who are open to such a move. Especially among older workers. With job prospects limited, with savings earnng only token interest, and with the adverse impact of the economy on retirement investments, many see business ownership as a logical path forward.
Up from Discouragement
Yet, in spite a mounting openness to becoming an entrepreneur, the business startup rate continues to be somewhat lower than historical levels. This shortfall reflects apparent discouragement among large numbers of would-be business owners.
I would argue, however, that such discouragement is not justified. Let me offer four reasons why this is a good time to get your business underway.
1. The notion that there is an ideal time to start a business is more myth than reality.
Without a doubt, there are unique challenges to starting a business in a low-performing economy. What's often overlooked, however, is that there are equally distinct challenges for startups in good times.
When an economy is booming, retail and office space are more expensive, often notably so. Qualified workers are in shorter supply. And lower supply usually means higher wages.
Moreover, during strong economies, rates for advertising, equipment leases, and supplies typically increase. And because startups multiply so rapidly once an economy takes off, you may face more intense competition at the very time that you are still trying to establish your business.
Thus, while finding customers or clients is likely to be easier in a strong economy, the cost of launching your business is greater. And higher expense puts added demands on cash flow.
In summary, then, you must contend with serious challenges, regardless of when you start a new business. Looking for the ideal time is likely to be more futile than fruitful.
2. It's often easier to build collaborative relationships in softer economies.
As a business startup, you want to leverage your opportunities to find customers. One of the best ways to do this is to establish collaborative relationships with other businesses whose target customer is similar to yours.
For example, consider two consulting firms, one specializing in change management, the second in process improvement. Together they could go after companies which want to improve their processes, but also need to change their culture to make it more receptive to continuous improvement. By joining hands and marketing together, the two firms position themselves to find customers like this, customers with needs that neither firm could handle on its own.
In weak economies, when successful marketing is particularly urgent, the synergy of this kind of collaboration is attractive to most businesses. And because they are all pressed to find more customers, they are more open to collaboration than they might be if things were going well.
3. What if economic sluggishness continues for years?
Economists are now talking about an American "lost decade." The term is borrowed from the experience of Japan, which saw ten years of economic lethargy and decline in the 1990s.
Three years ago, speaking of a "lost decade" might have seemed unduly pessimistic. But today, six years after the recession and with our economy mired in meager recovery, a lost decade seems increasingly plausible.
Other businesses have learned how to survive in these difficult times. You can, too. Even the smallest businesses are learning how to plan more carefully, to target customers more precisely, to optimize technology and outsourcing to constrain costs, and to change course quickly in response to customer feedback and an ever-changing business climate.
Running a business, not to mention starting a business, always means hard work. Today it also calls for working as smart as possible. If this is truly a lost decade, it will be no easier starting a business in two or three years than starting one now.
4. Time is not our friend.
For those of us who are old enough to be classed as "encore entrepreneurs" the clock is working against us. We're not twenty-somethings any longer. Our time horizon for building a successful business is more compressed than it is for entrepreneurs half our age.
Every year that we delay our startup, the more our time horizon shrinks. For encore entrepreneurs who are already in their 60s or older, the shrinkage is already rather pronounced. We urgently need to take advantage of every year at our disposal. Otherwise we might not have enough time to build a business which is successful enough to support our long-term dreams and financial goals.
The Lion in the Street
From what I've said, I trust that you can see the case for starting a business even now, in a sluggish economy. A bad economy can always be a convenient excuse for not launching that business which you're thinking of. But if you want excuses for not starting a business, you can find them in good times as well as bad ones.
One of my favorite quotes from ancient literature is a Jewish proverb which says, "The lazy man will say, 'There is a lion in the street.'" The idea is that if you don't want to do something, any excuse will work fine.
If your hesitancy to start a business right now is based on objective, solid analysis, then well and good. Hold off for the moment. But test your motives. Be sure that your analysis is not simply your way of saying, "There is a lion in the street."
While this may not be the best of times to start a business, neither is it the worst of times. Overall, however, it's a good time.
This article first appeared in Encore Entrepreneur inbox magazine on February 19, 2014.