Why Bad Economy is The Best Time To Start a Business

Recessions are hard times. People lose their jobs, companies get winded up, and lucky ones take the losses from their cash reserves. The economic disruption and loss of life caused by the coronavirus are and will get worse before they get better. No one knows the ultimate impact of the coronavirus on the economy. However, it seems nearly everyone believes a global economic crisis is upon us. But it’s not all bleak. Startups, with their inherent agility, can take advantage of a weaker economy and come out on top. 


Recessions are the perfect time to start a business: FedEx, Microsoft, Burger King, and even Google has started during the recessions. If you are motivated to start a business, the fact about economic recession should not slow you down. In fact, there are many reasons why you should start a business during the national economic downturn. 

5 Major Reasons To Start A Business In Downturn


Less Competition

When the economy is strong, every man and every man’s dog want to do a startup, A healthy economy attracts more competition. Established businesses are thriving and more and more startups take their chances at starting or expanding their business. All that seemingly evaporates in a crisis, and leaves room for those who are willing to take chances. The fact that you will inherently have low competition entering the market is one of the core benefits of starting a business during a downturn. 


Innovative Ideas

The flow of ideas to solve the problems caused by the downturn will be at its peak. An investor looks for great ideas, and finding a good investor during an economic crisis is very easy. An expert investor takes the risk to invest in good ideas during this time.  Focus on positioning your business, products, or services for that new and better solution. Even if there are substitutes available, show how your solution is more immediate, reliable, affordable, etc. 


Things Are Cheaper

Weak economic means weak businesses are selling off certain products. If put simply, things cost less. Your typical overhead costs such as office space, or one-off purchases such as office furniture, tend to have lower base prices and vendors are more likely to discount prices to move stock quickly. In an economic downturn, businesses and customers alike are looking to cut costs, which may allow you to step in with your answers.  You can establish a relationship with them, turning them into advocates for your business. As the economy grows, you can always look to increase prices or add new services that these customers will be more willing to accept due to how you helped them before. 


Talented People are looking for Jobs

If you’re able to secure funding or grow your business rapidly, you’ll probably be looking to increase your headcount in office. But finding the right staff is really, really hard. In a downturn, when layoffs are common, highly qualified, talented and effective individuals can be found much more easily than during the good times. Such talented individuals are often desperate and willing to talk themselves into nearly any position that will pay their bills. 


Lower Credit Rate. 

Not only do things cost less, the central banks of affected countries generally start to drop interest rates to keep consumers spending high. This means loans and particularly credit cards may start to make sense for your business in its early days, compared to the high-interest rate used to control inflation when the market is strong. Do keep in mind if you do end up taking out a loan, you’ll need to have a solid business plan, including financial documentation and forecast to apply through most lenders. Not only does this help support your application. But it assures that you are thinking long-term and will know how to manage funds effectively.

Final Thought


As you can see there are many benefits to starting a business during a recession, but that doesn’t mean establishing one will be easier. You still need to develop a business plan, test your business idea, and establish a financial plan that assures your business is feasible. There are plenty of reasons to start a business in a downturn, and plenty of business models that are considered recession-proof.

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