If you are thinking about starting or buying a business in 2021, you are probably worried about economic uncertainty. After all, the pandemic has taken the world by storm and massively disrupted our lives.
Across the globe, there has been a succession of lock-downs, quarantine and social distancing. Our economies are experiencing a recession, yet stock markets remain high, seemingly defying logic.
While the pandemic has created a great deal of turmoil, it will also create new opportunities. We have another article that explains why people are motivated to quit their job and get into business.
2021 is both a bad time and a perfect time to start a small business.
Opportunities exist everywhere, all the time. And while economic conditions need considering, they are only one factor.
In some cases, the general state of an economy may present opportunities for some businesses. As such, 2021 could be the perfect time to quit your job and start a business.
There are winners and losers in every sector, and this has always been the case. A set of circumstances that are bad for one business idea may be excellent for another.
For example, while international tour operators are currently suffering, domestic tourism operators might enjoy massive demand.
If you are thinking of starting or buying a business, the most important thing you need to do is evaluate your business concept thoroughly and objectively.
Some considerations might be:
- Where a business is reliant on local trade, then the national or international situation may have less impact.
- If your business idea is negatively impacted by social distancing or travel restrictions, it may be unwise to go ahead.
- Online businesses may experience strong growth.
- Manufacturing businesses may experience growth as locally made goods become more valued as international supply chains falter.
- Your community may support businesses that adopt local suppliers.
History shows how some companies get stronger during a downturn.
In previous downturns or recessions, we saw businesses that continued to invest in innovation and marketing survive. They survived and emerged even more potent than their weakened competitors.
The weakest businesses will succumb first during economic stress, and the stronger ones will survive. Nothing new there.
Your business model must enable your new business to cope with rough times and grow stronger as the upswing happens.
A downturn or recession can provide some surprising gifts such as :
- Fewer competitors when weaker businesses fail
- Less marketing noise as defensive businesses cut costs
- More talented people may be available for hire
- Government financial incentives may be available
- Lower interest rates
8 Tips to help you decide if 2021 is a bad time to own or buy a business.
- Evaluate your business opportunity carefully and consider all the facets, not just macroeconomics.
- Make sure you can survive comfortably during the poor economic cycle.
- Carefully examine your personal and home budget requirements to make sure your business cash flow can support you.
- Work out your Business Model before you start your business to avoid wasting time or money.
- Put effort into writing your business plan so that you have a more objective view of your business.
- Produce three versions of your business plan
- a realistic scenario,
- a vserion showing better than expected growth
- and a worst-case scenario
- Make sure that you can cope with all three!
- Get some independent people to read your plan to get different perspectives on your assumptions.
Your business plan is your best friend.
There is no simple answer as to when it is a good or bad time to start your business. It comes down to how well you can evaluate your business idea. Waiting for 2022 or 2023 may not be any better.
You might find this article about Business Model Design helpful in working out how good your business idea is.
Whenever you choose to start a business, your evaluation must consider all the risks and rewards objectively.
Remember, consider your financial circumstances when you write the business plan to ensure you don’t put yourself or your family into difficulties.
If you are thinking about starting a business, buying a business or franchise, it’s essential to know what to expect.
The Should I Own A Business Podcast explains the reality of business ownership and what it takes to be successful. We also focus on how to avoid some of the hidden causes of business failures.
Owning a business could be one of the most rewarding things you do in life. Many business owners would never return to being an employee.
Take our Entrepreneur Personality Quiz for some more insight into what it takes to be a successful business owner.