Many may be forgiven for not taking any chances during these uncertain times. The COVID-19 pandemic has done more than disrupt supply chains and ruin business. It has led to thousands of lay-offs and furloughs. It is no wonder that many potential new entrepreneurs are hesitant to leave behind all that they have left and risk it all in a new venture.
Alex Gold, CMO of Myia Health thinks otherwise. He believes that there are extraordinary opportunities to take advantage of during this time, especially because of the current situation’s relatively low barriers to entry for starting a company. Not only that, thanks to the global employment situation, you will have access to people and talent that you would not have had previously.
As technology futurist Kevin Kelly would say, right now is the best time to start a new business. Unfortunately, many prospective founders remain fearful. This is not anecdotal. Between 1978 and 2012, the number of new companies declined by nearly 44 percent, according to the Kauffman Foundation.
Paradoxically, recessions and unstable periods present the best opportunities to start new companies. During the 2008 Financial Crisis, billion dollar startups like Uber, Airbnb, and many others were founded partly as a response to game-changing market paradigms.
As mentioned, access to talent is one of the advantages of rough periods such as now. During boom periods, engineering, design, product and sales talent can be a real problem to recruit. Such talent is often scarce, but the best ones command fees that most startups can barely afford.
Now, many established companies and even startups have laid-off talent due to decreased marketplace demand. And due to larger market dynamics, overall salaries have also declined for once in-demand positions. This opens up new opportunities for talent recruitment that entrepreneurs can take.
Fixed costs are another area that entrepreneurs can negotiate, now that the economy is not doing so great. Although the fixed costs to start a new company have come down considerably over the past 20 years, they are still relatively high for early stage entrepreneurs. However, during rough times, real estate costs often decline considerably and landlords are more willing to provide more attractive deals. Contractors and suppliers are also more open to negotiation as the economic downturn continues.
In the current environment, customer-acquisition costs may decrease considerably. First, due to economic necessity and changes in routine, consumers may be more willing to try new products and services or even switch brands from their normal selection. Even more important is that with the “new normal”, new behaviours and routines are developing, leading consumers to adopt different products and services. This provides ample new opportunities for acquisition.