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.
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.