Now is the PERFECT Time to Start a New Business

Mar 27, 2009 | Career Management, Entrepreneurship, Re-Imagine Work, Tapping Potential, The Leap

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The economy is in the toilet. Consumer sentiment has been very negative for quite some time. But there are some early signs of hope, a chance that we may be approaching the beginning of the end.

This was the mood when I first was thinking about starting a new business in 2002.

This week I had a very real sense of de je vu.

light-bulb-idea-590

The beginning of the end of a recession is the perfect time to start a new company. Numerous businesses have been conceived and launched in a terrible economy, only to ride wave of economic recovery to success. Examples include Hyatt, American Express, Burger King, Lexis Nexis, FedEx, Microsoft, Wikipedia, Sports Illustrated, GE and HP, just to name a few.

By January of 2003, I was seriously starting to play around with ideas for a new business. By January of 2004, my plan had been basically laid out. I incorporated World 50, in February of 2004, investing only $400.00 (to buy stationary for invoices). By the time 2008 rolled around we had grown into an eight-figure business, having never taken a dollar of investment capital.

We did not do this in spite of the terrible market we launched in. We were able to do it because of it.

Fact: There are 5 things that you need to successfully start a new business.

1) An Idea. An idea can be born in any economy. However, when things are changing at a rapid pace, the birth of new opportunities accelerates.

2) Time. Nearly every entrepreneurial idea starts out as crap. You need time to think things through, to give up and start again, to have people tell you that you’re crazy, to tell you why you’re wrong, and time to change things until you might be right. The tail of a recession gives you the time and space you need.

3) Money. If you are starting a company completely from scratch (with no track record), you won’t get venture capital, period. This may have been possible in the boom times of 1998-2000, but not before and not since. You need to bootstrap a new business until you have a team together and your business model is at least partially working in the marketplace.

Where you can get money is from friends and family. While they may be reluctant to invest in your business, at the beginning of the end of a recession, they are likely a) frustrated with their current investments, and b) starting to become optimistic that things will soon turn around. This is the time they may be most likely to take a chance on you.

4) Talent. A great idea without execution is no more valuable than the note inside a Fortune Cookie. You need great talent to execute. But in all other phases of the economic cycle, Talent is NOT interested in your low paying, unproven new business. Now is the time you can sell the vision. Now is the only time you have a realistic shot at attracting the very best people.

5) Attention. If a bear comes up with a GREAT new idea in the woods during a boom ecomony, does anyone hear him? NO! Everyone is too concerned with what they have going on that is already working. But in a recession? Everyone is still freaking out. They are trying to shake every tree to identify something that will pull them out of this mess. And they are not as busy. Now is when they are MOST willing to listen to something new. All you can ask as a start up is for someone to give you a fair hearing. Court is now in session.

Now is the time to begin vetting your new idea. Now is the time to bring some of the most talented people you know into the conversation. The door is beginning to crack open. Now is the time to prepare to walk through it.

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Date : Mar 27, 2009

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10 Responses to “Now is the PERFECT Time to Start a New Business”

  1. Al111

    Lots of practical details in this short post. Most articles on this subject fall back on the vague notion that "well, talent is cheaper". Rick Smith explains much more in just a few words.

  2. Very nice post Rick, I really like the way you boiled this down to a good list of five.

    Regarding your third point, about money, which spurred that comment about supposedly rich families, I want to jump in and add emphasis to the idea of bootstrapping, as in starting your own business without needing other people's money or a lot of your own.

    Bootstrapping, it turns out, is not at all unusual. There was a Wells Fargo study in 2005 that concluded that the average starting cost of a new business in this country in that year was $10,000. And although my evidence is mostly anectodal, if you just look around you, you see small startups everywhere.. Service businesses don't normally require nearly as much initial spending as product businesses, so look at the graphic artists, personal coaches, designers, landscapers, carpenters, and so many other buisnesses out there. And I've seen some product-based businesses that were started on the money from the first big sale.

    There are 25 million (or so) small businesses in this country. Your list is right on target. Well done.

  3. Jayme

    Really great, inspiring post. Thanks for this Rick.

  4. JobExchange

    With gainful employment out of reach for so many, people are now exploring entrepreneurial options that, prior to this, did not seem terribly practical. Now, out of necessity or sheer frustration, they are.

    For our parents or grandparents, lifetime employment with the same company was not only the norm, it was expected, as it formed the basis of a social contract and created a sense of mutual and fierce loyalty. Today, expectations of steady employment span no more than, at best, a few years. Workers are now as expendable as office supplies and know that when the economy falters, they will be cut loose with little or no notice or second thought, and with hardly a safety net.

    When entire industries are affected, such as the financial services, manufacturing, or retail sectors, workers in these industries, having spent a lifetime nurturing careers, find themselves with no where to turn for their next opportunity.

    These persons are our future entrepreneurs. The ones who, out of sheer necessity, create their next career"and the next small business"by combining their talents, skills, and passions. These folks know their jobs or the industries in which they worked are not coming back and recognize they need to do something"and soon. They must to do something with their lives that has meaning and provides the compensation to support themselves and their families.

  5. Asmodeus

    Sure dude. And what happens if you don't have a rich family that can 'invest' in your business idea? You're S.O.L. just like the rest of us who have ideas, and even a plan, but no money to make it go.

    Have fun with that Freeman model of 'Pull yourself up by your bootstraps' you're pedaling. We're all so glad to know how fortunate you've been compared to the rest of us who never got the chance.

  6. SteveNichols

    If you want something bad enough you will find a way to succeed. All great entrepreneur have faced challenges when starting a business. If you want it bad enough you'll figure out a way to start the business. I started my business with 6k that was all the saving I'd had. I worked a part time at night while I run the business in the day. Learn about networking, marketing, planning and research you business. New ideas come from old ideas, be creative.

  7. DrCadr

    Just because you don't have much $ doesn't mean you have no chance as you imply. Most wealthy people started with nothing or next to nothing. It is hard work matched by making opportunity that makes it happen. Go out and sell yourself, your idea…

    I know it's hard. I'm doing the same. I've been at it for almost 20yrs. It will pay off if you're flexible and have tenacity.

    Hate to sound like an old man (& I'm not) but, there's not much luck involved. If you have money and no talent, you won't keep or make it.

  8. Greetings from Florida! I’m bored to death at work so I decided to browse your website on my iphone during lunch break.
    I love the knowledge you provide here and can’t wait to take a look when I get home.
    I’m surprised at how quick your blog loaded
    on my phone .. I’m not even using WIFI, just 3G .. Anyhow, awesome blog!

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