Is Now a Good Time to Start a Business?
With many businesses struggling or outright closing permanently, it may seem counterintuitive to start a new business in the middle of a pandemic or a recession. But did you know that some of the biggest companies today were started during an economic downturn? Today we take a look at why starting a new business in the midst of a pandemic is still a good idea.
Business Insider listed companies that got their start in the middle of a recession. The list includes giants such as Microsoft, General Motors, Hyatt, and Hewlett-Packard. Previous downturns also paved the way for mobile companies such as Square and Slack. NerdWallet was born during the 2008-2009 financial crisis and CEO Tim Chen lists these factors why a recession is the perfect time to start a business:
- Better talent at cheaper costs
- Inexpensive marketing
- Less competition
- Nimbleness of new businesses
Rashmi Menon, entrepreneur in residence at the University of Michigan’s Zell Lurie Institute for Entrepreneurial Studies, echoes some of Tim Chen’s sentiments in a New York Times article. She notes that “there is less competition for resources” during these times and “whatever changes we face, positive or negative, bring up new customer needs. And customer needs are at the core of any business.”
Most economic signs seem to say it’s crazy to invest in a business or to start one during challenging times. However, there are still many out there whose entrepreneurial spirits are undefeated. There are still people applying for small business loans and requesting EINs, albeit at a slower rate than previous years.
“There have been more than 500,000 applications for an employer identification number since mid-March, according to the Census Bureau, although that is down nearly 20 percent from a year ago. Between mid-March and mid-April, the Small Business Administration issued nearly 300 start-up loans worth about $153 million, a 36 percent drop from a year earlier. Stripe, the credit card processing firm, said it had handled more than $1 billion in sales for businesses that started on the platform during that time.”
To do business well, consider legal counsel to make sure all aspects of your endeavor are in accordance with and protected by the law.
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