You may think that starting a business in the midst of a global pandemic is rather like trying to row a boat with one oar in the middle of a hurricane. Depending on the type of business that is beginning, you may be right. But no one sets out to be an entrepreneur expecting a safe path. A recession can present an opportunity for entrepreneurs willing to brave it.
Entrepreneurs have the advantage of not worrying about the current uncertainty of the financial markets, or meeting the demand for existing goods and services. Instead, they are busy dreaming up or developing something new, that you never knew you wanted or needed.
During this crisis we are seeing businesses pivot; making necessary changes in how and where they do business. Working from home. Virtual meetings. All of the demands of this new norm are already resulting in opportunities for creative entrepreneurs to step up and meet the moment.
Market downturns are often sources of inspiration for startups. Over half of the Fortune 500 companies were started in a recession, according to a 2009 study.1 The list of companies includes familiar names such as GE, GM, IBM, Hyatt Hotels, Hewlett Packard and Microsoft.
For the aspiring entrepreneur, a recession provides an available labor market, low borrowing costs, and equipment and office space at bargain prices.
This is not to imply that it’s easy to start a business from scratch during an economic downturn. New needs spur entrepreneurship and lending rates are historically low, but credit is still a challenge.
“Start-ups are risky because they have no history of success, no revenue and no track record,” says Dan Casanta, President of Cardinal Financing in Southbury, CT. “Starting a new business requires an excellent, well thought out and effective business plan based on facts - concept, demographics, costs, etc. - and logic that proves to the lender that you can repay the loan.”
Venture capital is usually allocated to businesses that have already established themselves. The would-be entrepreneur is more likely to tap their own savings, home-equity loans, credit cards or the investment of friends and family. The lucky entrepreneur may find angel investors: wealthy individuals willing to take a risk with their own money, in exchange for an equity stake in the company.
The State of Connecticut has launched www.business.ct.gov – an online, one-stop-shop where entrepreneurs can easily find information and quickly create a checklist with everything required to start up or manage their business in Connecticut.
Interested in starting a business in Southbury? Contact the Office of Economic Development at 203.262.0683 or e-mail EcoDevDirector@southbury-ct.gov. We have a development team of professionals ready to assist you. Learn more at: www.southbury-ct.org/startbusiness.
Kevin Bielmeier
Economic Development Director
Town of Southbury
EcoDevDirector@southbury-ct.gov
(203) 262-0683
References
- Stangler, Dane. “The Economic Future Just Happened”. Ewing Marion Kauffman Foundation. June 9, 2009
[This article first appeared in Southbury Neighbors magazine.]