The coronavirus pandemic has hit everyone very hard, and there are few signs that it will be ending anytime soon. If you watch the news, you’ll hear about the constant economic hardships that people have endured. Small businesses have been undergoing massive amounts of strain, and applications for new businesses plummeted when the pandemic began.
…And then they stopped plummeting. America is nothing if not the land of opportunists and bootstrappers, and, as of the third week of June, there have been 87,950 new business applications. This is 33% more than last year had at this time. America is bouncing back, and people are seeing small business growth as people try to tackle the pandemic through the free market.
This article will give some tips/advice for starting a new business in volatile times. This isn’t America’s first rodeo. According to Bloomberg, small business applications spiked in 2009 after the recession, too.
Why Start Now?
You might have read the introduction in surprise, wondering why someone would ever want to start a business during a crisis like this. It’s hard enough starting one in perfectly calm conditions, let along during a pandemic that has thrown us into a recession.
However, a recession can actually benefit startups. The old saying, “Necessity is the mother of invention,” is very true. Startups that take advantage of the problems that coronavirus brings—healthcare-related, deliveries, helping people stay at home, making masks, etc.—already have a built-in demand for the product.
Economic recession also likely means that interest rates are lower, making loans more affordable. Investors can sometimes use a downturn to get more loan money for less. Additionally, there is a lot of top talent available, as people have been laid off during the recession.
The competition is also lower, as everyone is struggling. You may be able to negotiate for lower prices and better terms on new custom, and, if you’re in a good cash position yourself, you might be able to buy up other companies or new assets that have decided to cease trading.
While every business will not succeed, there are factors that put startups in a positive position during a recession such as this.
Some Successful Businesses that Began During Recessions
Need proof? Burger King, FedEx, Microsoft and General Motors all were founded during a recession, and these companies have gone on to become global powerhouses.
Burger King was founded in the fifties after the Korean War took its toll on the American economy. It wasn’t enough to send the U.S. into a Depression, but it did create a small recession. The Burger King founders sought to capitalize off a need for affordable fast food. Thus, BK was founded.
FedEx was founded as a college project by university student Fred Smith during the recession of 1969 (which lasted until 1971). Smith was able to turn FedEx into a $70-billion business. Microsoft was founded a few years later during a recession, when the American GDP was stagnant. Though there was high unemployment and rising inflation, Bill Gates took a chance that paid off heavily.
Lastly, General Motors started before the Great Depression, but it used those economic conditions to give it a major boost. The GM founder bought up smaller, struggling manufacturers in the early 1900s and used it to expand the GM empire and reach.
Best Businesses to Start
When you look at the pandemic, you will see that there is a huge need for Internet-related and delivery-related items and services. People are not able to go to restaurants, and the Internet has taken the place of shopping and schooling. Online tutoring, online sales, food and gift delivery, and similar endeavors are all example of businesses that might do well in the pandemic (but, of course, there are no guarantees in the free market).
Being in the middle of a pandemic and a recession has never stopped Americans before, and it doesn’t appear to stop them now, as the statistics indicate. Small business planning for a recession will go smoother if you hire a lawyer to help you with the necessary documents. Contact an attorney for more assistance today.