Starting a Business During the Pandemic
Starting a new business is always like approaching the unknown territory. It is a time of initial struggle. Every entrepreneur faces challenges, doubts, managing risks, and making big decisions during this period. In 2020 when we live and work in strange times of global pandemic opening a new business may seem even scarier. In this article, we will discuss whether opening up a business is a smart choice during COVID 19 pandemic. As the title of the article suggests we will conclude that it is smart to open a new business but in certain conditions.
Crisis as an opportunity
Covid-19 pandemic has its influence on local as well as the global economy. As a result, that influence creates a global financial crisis.
As we learned from previous financial crises many businesses will fail. But that it also opens up opportunities for new companies. Although in the period from March to May we have seen a drop in new companies registered by 20% compared to the previous year, in May till September it increased by around 19% to the previous years.
There are three key aspects to why this would be a favorable time to start a company:
(i) It is easier to open a new company that will answer the needs of the current business environment than to adapt an existing company to accommodate to the new situation,
(ii) There is less competition and existing resources can be accessed at a lower price; E.g. many closing companies are selling at reduced rates, the cost of real estate and office spaces are going down, as well interest rates on loans.
(iii) The crucial aspect would be recognizing new customer and market needs, that is brought on by the crisis.
Companies that succeeded in the time of financial crises
The proof that new companies can make a huge breakthrough can be found by analyzing previous financial crises. Some of now well-known industry and tech giants that succeeded during and because of financial crises include General Motors, Hewlett-Packard, Hyatt, Trader Joe’s, Venmo, Instagram, Uber, and Slack. Science their success is closely related to the crises, it is safe to say: if you have the right idea maybe this is the best time to open up a new business.
High demand services
When opening up a company you can consider either already existing services that are in higher demand during the crises (e.g delivery companies) or examine the market and go with a novel concept that solves the current problem in a unique way.
Opening a company that offers an existing service\product which is in high demand at the moment is the safer option. The main disadvantage of this strategy is that the heightened demand may disappear with the end of the pandemic. Also, unlike the unique product option, the safer option has a smaller chance for rapid growth.
No matter what option you choose the fear of losing money if your company fails remains present. Besides the good business plan and great team one thing that can lessen that fear is insurance. By insuring your company or assets you greatly reduce the risks that come with opening a new company.
For example, the demand for delivery services is rapidly rising. More and more people have to work remotely and most often they work from home. That combined with other restrictions puts a lot of demand on delivery (food, medicine, retail delivery, etc.).
Some other trending needs in the time of global epidemic include cleaning services, online fitness classes, mask production, and remote health advice.
New needs open up a space for new companies
The best and the riskiest option is to develop a unique patent that will answer the newly developed needs. It is the best option because, if you succeed, the potential for fast growth is exponential. On the other hand, it is the riskiest option because it new and it is very hard to push a new trend as a young company.
If you have an idea and not sure would it work in reality it is smart to hire a consultant. Make sure that is the consultant firm that has a good reputation, for example Creation Business Consultants. Hiring the wrong company can do more harm than good so do your research. With a unique idea, it is likely that you will not have strong competition. The advantage in that situation is that you will more easily grow. But there is also a bad side of not having competition. You won’t be able to analyze the reasons for their success and failures. That would be of enormous value because you could learn what not to do and what works.
Once you have a strong idea you can start forming a good team. For a new company, it is smart to start with only small essential team members that are highly qualified. Then as your business grows you can easily expand your team with original team members as the department heads.
Once you have a team you can start developing an MVP (minimum viable product) as well with a marketing campaign. Designing a good marketing strategy for a unique product can be challenging. Try to balance associating your product with already existing ones while emphasizing its unique features. In the early stages of starting a company, things can get too complicated. So, asking for outside help is more than welcome. For example, Carrot & Stick Agency is a renowned marketing agency that will gladly accept the challenges of marketing a new product.