Is 2020 a bad time to start a business?
The Coronavirus pandemic has taken the world by storm and bad news makes sensational headlines and effective clickbait.
Look at any news media and the overwhelming tone at the moment is depressing. Across the globe, there has been a succession of lockdowns, quarantines and the implementation of social distancing. Our economies are bracing for a recession and stock market volatility dominate the leading stories.
While the COVID-19 pandemic has created a great of uncertainty and unemployment it will also create new opportunities.
The pandemic will create new business opportunities.
Negativity seems to be contagious, and it is potentially the real danger to our economy at the moment. New business opportunities will exist but they may be overlooked if we are too downbeat.
Confidence in any economy is one of the most influential ingredients to its success. If consumer confidence weakens, the sales in many market sectors fall.
Business to business sectors also then suffer as a consequence and contraction can take place.
Confidence seems to be in free-fall at the moment as panic sets in and political leaders struggle with what to do.
Is 2020 the wrong time to start a business?
Opportunities exist everywhere, and so macroeconomic factors that influence economies are only one factor.
The general state of an economy also presents opportunities to some businesses.
There are winners and losers in every sector, and this has always been the case. A set of circumstances that are bad for one company may be excellent for another.
For example, Coronavirus has crippled tourism, and yet a business manufacturing medical supplies could experience massive demand.
If you were thinking of starting a business or buying a business then the most important thing you need to do is evaluate your business concept thoroughly and objectively.
Some considerations might be:
- A business that is more reliant on your local community, then the national or international situation may be less affected by global events.
- If the business idea will be impacted by social distancing or travel restrictions then it may not be wise to go ahead.
- Online businesses may actually experience growth.
- Manufacturing businesses may experience growth as locally made goods become valued.
- Businesses that rely on overseas suppliers are likely to suffer interruptions to their stock levels.
History repeats itself.
In previous downturns or recessions, we saw businesses that continued to invest in innovation and marketing not only survive the recession but emerge from it even more potent than their weakened competitors.
The weakest businesses will succumb first during economic stress, and the stronger ones survive.
There is nothing new in this.
Your strategy must enable your new business to cope with rough times initially and grow stronger as the upswing happens.
Is 2020 the right time to start a business?
A downturn or recession can provide some surprising gifts such as :
- Fewer competitors when weaker businesses fail
- Less marketing noise as defensive businesses reduce their efforts to cut costs
- More talented people may be available for hire
- Government financial incentives may be available
- Lower interest rates
8 Things to help you decide.
- Evaluate your business opportunity carefully and consider all the facets, not just macroeconomics.
- Make sure you can survive during the poor economic cycle comfortably.
- Carefully examine your personal and home budget requirements to make sure your business cash flow can support you.
- Work out your Business Model first.
- 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 better than expected growth
- 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 is a good or bad time to start your business so it’s down to how you evaluate a business idea.
Whenever you choose to start a business your evaluation must consider all the risks and rewards objectively. Avoid sensational news items.
Remember, to consider your personal financial circumstances when you write the business plan to ensure you don’t put yourself or your family into difficulties.
Starting a business in 2020.
Is this a bad time to start a business? The answer like always, depends upon the business idea.
There is no such thing as a good time or a bad time to start a business as such.
If you are thinking about starting a business, buying a business or franchise, then 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 some of the hidden causes of business failures that can be avoided.
Owning a business could turn out to be one of the most rewarding things that you do in life. Many business owners would never return to being an employee.
Take our Business Readiness Test for some more insight into what it takes to be a successful business owner.
Get a balanced view as we are unbiased.
Here is some other information to explore if you are considering owning a business.
Thinking of owning a business would you be successful
Money-mindset for success
Your motivation for owning a business
Remember to Listen Before You Leap!
The Should I Own A Business Podcast