Is this a bad or good time to get into business?
If you are thinking about starting or buying a business in 2021, you may be worried about the economic uncertainty.
While the pandemic has created a great deal of turmoil, it has also created new business opportunities. In another podcast episode, we explore survey results about why people are motivated to get into business.
The successive lockdowns have had an invisible impact and many people have lost interest in their jobs.
2021 is both a bad time and a perfect time to start a small business.
Firstly, opportunities exist everywhere, all the time. Secondly, 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 a consequence, 2021 could be the perfect time to quit your job and start a business.
Because a set of bad circumstances for one business idea may be excellent for another there are always winners and losers. Incidentally, this has always been the case. For example, while international tour operators are currently suffering, domestic tourism operators might enjoy massive demand.
Consequently, there seems to be a jump in new businesses in Australia.
So, if you are thinking of starting or buying a business, the most important thing is to evaluate your business idea thoroughly. We suggest the part of the evaluation is Your personality, mindset and motive to be successful.
Furthermore, we also suggest you consider if you have the mindset of a business owner or an employee.
Starting a business without being prepared is very risky which leads some people to make a big mistake.
Some considerations might be:
- When a business relies on local trade, the national or international situation may be less important.
- If social distancing or travel restrictions negatively impact your business idea, 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.
- 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 Harvard Business Review article How To Market In A Downturn explains this nicely.
The weakest businesses will fail 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.
What are some of the opportunities that downturns can bring?
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 this 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 version 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. As a result, it comes down to how well you evaluate your business idea. Consequently, waiting for 2022 or 2023 may not be any better.
Whenever you choose to own a business, your evaluation must consider all the risks and rewards objectively. Additionally we recommend that your prepare yourself to own a business which is every bit as important as your business idea.
Remember to consider your attitude to money and your financial circumstances when you write the business plan to ensure you don’t put yourself or your family into difficulties.
There will be an impact on your family and friends which you can prepare for.
If you are thinking about starting a business, buying a business or franchise, it’s essential to know what to expect.
How does the Should I Own A Business Podcast help?
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 which include things like the personality and mindset of an entrepreneur.
There’s no doubt that owning a business could be one of the most rewarding things you do in life. In fact, 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.