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5 Excellent Reasons to Start a Business During a Down Economy

By: Joe Daley


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When our economy takes a turn for the worse it means a very uneasy feeling for both the country and the people living within it. Inflation goes through the roof, companies lock their doors, unemployment of course skyrockets, and an overall general uncertainty hits both investors and consumers. Needless to say, everyone is hit in some fashion and is far more likely to spend on goods and services.

Everyone is touched by the pain and agony of an economic crisis. But there are always exceptions to every rule, someone is obviously going to make the best out of a bad situation, and flourish in the process. But that also has a downside. Seeing a startup succeed in a bad economy when so many are losing jobs, homes, and personal property, also sparks a lot of contempt, rumors, lies, and suspicious investigations.

When there is so much bad going on, then how is it these few seem to make it in an economic crisis? And why would someone want to learn from them rather than hold a negative opinion?

If you are still one of the naysayers and a true nonbeliever, then here are 5 good reasons that you are missing the opportunity of a lifetime.

Before you launch your new start-up will have to think about a logo for your business. This will be one of the first steps in branding and marketing your new business. You can hire a graphic designer to create your logo or you can try to make your own using a logo maker.

1. Raw Materials and Goods are Cheaper

A startup can save sometimes over 75 percent when business’ sell off their items and assets during a recession. This in turn produces more cash to the existing to make ends meet. A good example is when e-commerce companies start heavy deep discount sales campaigns to acquire more customers since they already know that consumers want to spend less in these troubled times.

You can acquire a major purchase item by taking advantage of low sale prices and buy those important items for your startup that you would otherwise pay a higher price for. That makes a win-win cutting costs and saving more.

2. The Number of Competitors is Down

The “Big Box” business’ that most definitely wipe up the smaller competitors find that during a down economy they can’t secure the funding from banks, and investors because they can’t prove that their business model is recession proof.

Since there are obviously a less amount of startups during a bad economy, it makes a lot of sense to start a business that solves a problem and has the adequate funds to help it push through the tough times.

Less competition calculates to faster sales and steeper growth index during a recession.

This is one of those situations where less means more.

3. People Are Always Looking to Save Money

People as a rule, want to spend next to nothing in a bad economy.  The fact is their purchasing power, income, and maybe even their jobs have been affected so they in turn are in no financial mood to let go of cash for just anything. With this knowledge under your belt, you can exploit the fact that you are a new company with low expenses to sell your goods and services to these consumers at a lower than average price. This not only gives a spotlight on your company saving people money, but there is a lot of traction there for solidifying your brand in the long run.

They will in turn remember you, and do business with you, long after the recession has subsided.  Again, being beneficial for the long run.  These subtle nuances can do wonders for your company and your brand.

4. You Can Save a Bundle on Interest

When an economic crisis takes place, the central bank moves the interest rate lower on loans from other banks to try a little stimulus tactic to increase capital lending, and the consumers spend rate.

Local production, less importing, and larger investment are crucial for a country to rebound from a down economy. And one way this happens is by the lowering of the interest rate on bank loans, and therefore more investments go into the country.

Money itself tends to be very cheap during a recession thereby allowing the small business owner better banking options to work with on their startup. The lower the rate, the more banks can loan, and the more they can loan the better the opportunities for new business owners.

5. People are Always Looking for Innovations

During a bad economy, people are looking for a business or a service that can solve their problems.  Startups too, are looking for innovative business solutions that don’t just make their overall operation easier, but also lowers their expenditures.

When you start an innovative business solution that solves consumers problems by making their life easier, well then you have a business that will truly grow and scale even through the tough times.

Overcoming all of these challenges will make your business a more rounded, better operating one. And building a business in a recession is in and of itself a tremendous challenge. But when you take it upon yourself to capitalize on the small things during a recession that’s almost bulletproofing your brand.

Be passionate about pursuing your dreams of owning a business and you will build a very successful business, regardless of the economic forecast.

Published: March 13, 2020

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