Is an economic downturn really a bad thing? Some say a bad economy is good for business, but how could that be? Most people are led to believe that a bad economy is a bad thing for everyone. While this may be true for the vast majority of people employed by big and small companies, for the entrepreneur it could be a great time to start or grow a business.
- A bad economy means competitors are tightening their belts and likely are spending less on marketing and R&D, so a poor economy may the best time to enter a new market. In a good economy, customers don’t spend much time looking for a better deal. However, when the economy is not as good, customers are much more willing to consider new and often cheaper alternatives. Periods of economic downturns are some of the best time to build your customer base.
- During a bad economy, suppliers are more willing to take on new business customers and extend discounts they would never offer during good times. Accordingly, a poor economy is often the best time to sign up new suppliers.
- During economic downturns, commercial real estate landlords have greater vacancy rates. They are more willing to lease space at below market value and provide expansion space just to keep the lights on.
- During times of high unemployment prospective employees recognize they may have to take a lower wage, so it is a good time to hire new employees.
- When laid off, many former employees resort to starting non-employer type businesses (businesses where there are no employees other than the owner) so it is a good time to hire independent contractor workers.
- And finally, a bad economy often means early retirement packages for some very talented and senior workers, so now may be the time to grow and expand your business.
If you have the ability to act on new business opportunities during an economic downturn, great fortunes may await you. You will find yourself in good company; over half of all the fortune 500 companies were started in a bad economy.
Is it time to work on that business idea to take advantage of the fruits that a bad economy has to offer?