With the emergence of COVID-19, market-watchers worry about signs of another recession on a global scale. We’ve already seen the cancellation of large in–person events, conferences, product launches and entertainment venues canceled crippling their income for the year.
The stock market is plummeting in the United States and abroad losing more than $9 trillion in March 2020. However, if we learned anything from past recessions, economic downturns are a good time to start a new business venture if the entrepreneur is savvy enough.
What We Learned from 2008
The last time America was in an economic downturn was in the Great Recession of 2008. There are many lessons to be learned from the businesses that emerged victorious during that time.
- Recession makes room for disruption. New industries (especially on the technology front) emerged out of the 2008 Great Recession. Look at the businesses formed below for an idea on where to start with your entrepreneurial innovation!
- Learn to be agile with low overhead costs – Prices come down on property rentals and there are opportunities to work remote. Think lean!
- The time is ripe for hiring your Jack (or Jill) of all trades! It’s easier to find good talent with unemployment high and more folks would be willing to join start up.
- Investors are looking for alternatives to the public markets. Many investors forgo investing in startups when times are good in the stock market since they achieve good returns with (theoretically) less risk. Once the stock market turns sour the ‘smart money’ investors start looking for alternative investments like promising new businesses.
Businesses during the Great Recession
According to Fox Business, American workers took a hard hit after the 2008 recession, but a wave of new startups emerged from the financial downturn. It’s hard to imagine a time before many of these businesses that are now considered essential to everyday American life a decade later.
- Venmo – An app that allows you to securely send money to your friends and links back to your credit card or bank account.
- What’s App – An international texting and chat app that allows for wi-fi calls. This company was eventually bought by Facebook.
- Groupon – What better time to look for deals on local shopping than during a recession? This company quickly became a household name for families looking for a deal on local entertainment and shopping.
- Uber – The app that has now become a verb! This company allowed for those that were underemployed to get a side hustle with very low startup costs.
- Square – This company provided a lower overhead cost for small businesses and non-profits looking to process credit cards at events or in store. You don’t see a musician or food truck without one of these in 2020!
- Instagram – When unemployment is high, the digital landscape expands. Instagram has now overtaken Facebook as the most used social media app less than a decade later.
Types of Businesses that Thrive in Downturns
If the above list didn’t give you any ideas, there are certain industries that thrive during an economic downturn.
Additionally, innovative technologies are always in demand, and building a new business with the infrastructure necessary to successfully commercialize these technologies is actually easier in a downturn for the reasons mentioned above.
Guidance Through the Storm
The key to thriving in a downturn is the ability to find opportunities and mitigate business risks through the advice of experienced professionals. The Bridgeford professionals have personally contributed to the success of companies that were built in the last downturn. Contact us today to start your new venture.
Need help forming a business during COVID? Call on the Bridgeford team today!