Think the best time to start a business is in a growing economy? Maybe. But some of the biggest business success stories in recent decades came from a good idea captured during a recession.
The pandemic effects of COVID-19 are forcing existing businesses to restart themselves, and some of today’s most important business barriers will encourage new start-ups offering innovative solutions.
With the pandemic moving consumer behavior abruptly, more than $ 3 trillion is expected to be lost or shifted to the most prepared businesses to take advantage of the opportunities, according to an Accenture study in the UK. -November 2020.
Here are ways to plan and identify business opportunities in difficult times.
1. Adapt quickly to a changing market
During the 2007-09 economic downturn, Jonathan Slain was the owner of a personal training and fitness studio. That is a personal expense that many people put away when money is tight.
“So I spent several months of the downturn in my desk, trying to figure out what to do,” says Slain. He needed money for operations and pay and eventually borrowed money from his mother-in-law to keep his business going.
Every two weeks, he had to go back to her to pay; he had “10 separate phone calls,” he says, and received a total loan of $ 250,000. Eventually, he was able to pay it back.
Now a business consultant in Ohio, Slain wrote the book “Rock the Recession: How Successful Leaders Prepare for, Thrive during, and Create Wealth After Downturns.” He says the lessons he learned from failure, coupled with insights he learned from his friend and co-author, Paul Belair, are driving an economic recession strategy.
As he says in the book, “Learn from my mistakes. Don’t be like me. Be like Paul. ”
Belair had a heating and air conditioning company during the same decline.
Knowing that customers would buy fewer new units but opt for service instead, Belair and his management team shifted the company’s focus from 80% sales to 80% service.
Read also: Is the US returning to normal? Millions of Americans, still injured by COVID-19, say regularity is still years away
The nimble pivot allowed Belair and its investors to sell the business about five years later for more than 80 times their initial investment, Slain says.
The lesson: Adapt quickly to a changing market, rather than banking on a relative.
2. Try something that bothers you
Whether as a result of motivation or despair, many successful businesses are created by someone who is trying to find something that has upset them, says serial entrepreneur Trevor Blake.
“They found something that was still going, they realized there was no solution and they started to repair it. In fact, they became entrepreneurs, ”says Blake.
“When something grows under my skin that I want to repair, I suddenly have a winning idea. Of course, at the moment, I have no idea how I’m going to fix it, but that’s half the fun. We can all find solutions eventually, ”adds Blake.
Blake offers two high-profile examples: Sara Blakely cut her pantyhose to create a flattering look under her white pants. She later launched Spanx as a new clothing brand. Richard Branson desperately needed to get to his girlfriend in time, who was waiting in the British Virgin Islands. He kept his first plane as a solution and from there Virgin Atlantic Airways was born. That’s a successful troubleshooting solution, Blake says.
3. Look for a 5-step difference
Instead of looking for the next big idea, Slain says all it takes is probably a small change in an existing business idea.
“I don’t think sitting in your room thinking really hard, trying to plan the next Facebook. But [it’s] take what you know well and start thinking about where the future will be and how you can start to close the gap to get there. ”
You may have worked for someone else and see a small print that could be made to the existing business model. Not a 90- or 180-degree movement but probably a five- to 10-degree improvement.
Read also: People who make more money feel better about themselves, research says
Slain notes that the founders of Airbnb did not begin to think that they would transform the hotel industry. They just started putting air vents in a bedroom to make some extra cash.
4. Employees may be optional
And starting a business does not mean hiring a lot of people outside the gate. Blake has never hired an employee and is a No. 6 company, having put out previous ventures to the tune of about $ 300 million.
“When most people buy a house, they don’t hire a full-time member of staff to stay in an extra room in case something goes wrong. They hire contractors if they need them, ”says Blake.
Starting with no staff can be a smart move, he says – and will cost less. He recommends hiring problem solvers when you need them on a contract basis only. Make sure you understand the tax implications of contractors and employees.
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Hal M. Bundrick, CFP writes for NerdWallet. Email: [email protected]. Twitter: @halmbundrick.