Tips for starting a business in recession

They don’t strictly all have the same things in common, but there are several lessons to be learned from them in terms of how to successfully start and grow a business during a recession.

COVID-19 has no doubt placed us squarely into recession territory, but if you can play your business cards correctly, there is no reason that you can’t get your new business off the ground. If you think your business is ready to launch, here are 4 tips to help you navigate the current economic climate in 2021.

A Recession Has Its Benefits

Let’s remember that every business in the world is currently in the exact same economic environment that you are, and there are benefits in that. Many companies (in particular service providers) are offering steep benefits to drum up business. Most companies will claim it’s a gesture of goodwill during dire times, but really, they just need revenue like the rest of us.

Take a look at the service providers you’ll need, like web hosting, email marketing, and website development. Nearly all of them will either be providing a lengthy free trial or a substantial discount in an effort to attract customers.

Done shrewdly, you could save a good amount of money on your startup costs, and help keep fixed costs down during your inception.

Don’t forget also, many companies have laid off staff, so there will be a good talent pool out there just waiting to be hired by a startup with a vision for the future. They will provide not only labour, but a wealth of knowledge as to how your sector and market is behaving.

Find Your Place in the Current Environment

Walt Disney incorporated Disney in 1929, certain that the world would need a reason to smile with the economic devastation set to take hold. Airbnb flourished because people were looking for more affordable accommodation after the global financial crisis of 2008. These companies succeeded because their offering filled consumer needs that had arisen because of the times.

Ask yourself how your business can help solve problems that have arisen due to COVID-19 or the economic recession. A perfect example would be how Zoom has exploded because of COVID-19’s requirement for us to stay at home.

Take a look at the world around you and think about the issues you, your colleagues, friends, and family are facing. Perhaps it’s a way to make video conferencing easier, or maybe it’s a way to help children learn outside of school. There are problems that are looking for a solution everywhere.

If your offering doesn’t slot nicely into that modality, see if you can adapt your current model to work with the current environment. If you want to start a cleaning service, perhaps you can offer contactless home sanitization of COVID-19. If you want to start an IT company, you could help upgrade a business’ remote working capabilities.

It is very possible that COVID-19 will redefine the way we live and work for a very long time to come — look to the future and see how you could help decide the ‘new normal’.

Related Read: How to start a Singapore company in 2021 »

Ride the New Media Wave

While social media has been a staple of everyday life for a long while now, COVID-19 has taken things to a new level in terms of engagement. In fact, one study showed that overall social media engagement has increased 61% because of COVID-19.

In isolation people are even more so compelled to connect with others, whether they be friends or strangers — it’s a basic human need that is very much fulfilled by social media around the world.

So while we’d recommend leveraging social media at the best of times, now is the time to really turn it up a notch. But don’t just use social media for the sake of the numbers; really make an effort to talk with (rather than at) your audience, and help solve problems together.

Endeavour to create an environment of connection by genuinely helping real human beings with the solution you promise through your product/service offering.

You’ll Probably Be in It Alone — for Now

40% of venture capital firms have stated that COVID-19 will essentially slow down early stage investment activity. That makes sense of course, as the risk profile of any business, let alone a startup, is going to increase during a global pandemic. The obvious outcome of this of course is that it is going to be very hard to get big backing.

Which means in terms of capital, you will have to dig deep into your pockets for the funds to get going. If you don’t have ample savings on hand, we’d recommend you delay your startup plans, as the personal risk is probably too high. If you are currently employed, don’t leave that job until you are absolutely certain your new business can support your lifestyle. Other entrepreneurs and businesspeople are all in the same boat at the moment too, so a partner may also be hard to find. For now, that might mean you are on your own.

So if we must assume it will be on your back alone, it’s time to ask some very serious questions, and provide some very honest answers. Take inventory of your current life, and make sure you can absolutely dedicate yourself to your business dreams.

Because you are effectively on your own, you will have to be even more diligent than usual — but that can be used to your advantage. Think of it as your startup being uncorrupted by other influences, and that is your vision to manifest, and your vision alone. Work hard for your dream, and in time, people will be queuing up to invest with you.

Conclusion — Where to Next for Establishing Your Startup in a Recession

It’s not all doom and gloom — your idea just might be the catalyst for a wildly successful business with unlimited growth potential. It is of course a tricky environment at the moment, so you will want to have someone on your side that knows the terrain.

As Singapore’s premiere company incorporation service provider, Rikvin can help you forge a path to success in uncertain times, and create genuine prosperity once the dust settles. If you’d like any advice on getting your startup off the ground, please do contact us, it’s both our job and pleasure to help.