Problems always create the best entrepreneurial opportunities, and 2020 is full of challenges. It is indeed the best time for entrepreneurs to start a new business on a blank slate
Bigger market challenges provide a larger scope for new businesses to rise and succeed with their solutions to those gigantic problems. As per a study conducted in 2009 by the Ewing Marion Kauffman Foundation, 57% of the Fortune 500 companies were founded during the worst market recession periods.
Closer to the present, the COVID-19 crisis is now providing similar entrepreneurial and development opportunities. While it has already weakened competition – a large number of firms have closed down due to irreparable losses, this could be the best time for new enterprises and ideas to be launched in the market with the lowest expectations and the highest level of ideas.
With no draining layoffs, no legacy costs, and no bank calling to cut the credit line – this is the right time for entrepreneurs to focus on building a new service or product.
The world of startups is never risk-free with no guaranteed success formula, but four pillars make it fail-proof: a great idea, enough funding, an outstanding team, and a loyal customer base.
Great ideas either focus on solving a real, significant problem or provide ease to daily life. 2020 has brought in new issues – providing solutions to these issues at competitive prices is what will translate into successful entrepreneurial opportunities. There are massive problems like job loss, shutdown in retail and hospitality and food industry, travel restrictions, remote working issues, cybersecurity concerns, etc. A successful startup idea would be the one that can fill up such voids.
Hiring during recession
One of the biggest bottlenecks for startups is finding the right employees with the required skills and attitudes at affordable salaries. Post-pandemic enterprises will have easy access to an abundant pool of talent due to large-scale job loss. Outstanding employees got spoiled by poaching offers from competitors – increasing the frequency of job-hopping and exponentially high salaries.
In 2020 it will be much easier to retain employees and compete for talent. The current pandemic situation has forced millions of hard-working, qualified, and skilled employees out of jobs. Some of them might be even capable of coming up with a startup themselves, while others can start working for one.
The last five years, experts say, was a fake environment for fundraising, with easy venture capital available to all who wanted it. Those abundant times are over, and only great ideas will drive venture capitalists and investors to invest. The 2020 funding environment will only favor outstanding founders with incredible ideas. Mediocre startups with common ideas will suffer, but the ones with great problem-solving products will get funding quickly. This paradigm will have interesting fallout – a steep rise in the quality of entrepreneurship. In addition, The temporary shortage of capital will foster the culture of wits and frugality, adding to the advantages for these new firms in the long run.
Building a customer base
The economic crisis has forced companies to cut down on their marketing budget, giving more chances for the startups to shine. The businesses need to focus on the current issues and develop a product or service to create something valuable. This is the preliminary stage for most startups, and the macroeconomic environment doesn’t really matter so much. But, the limited marketing budget of other prominent players helps the startups to have a clearer vision about their target audience and how to approach them.
Also, falling advertising prices are making it increasingly more affordable for startups to advertise on bigger platforms. With marketing budgets falling so drastically, startups can afford the low-priced ad inventory, especially in the case of the digital channels.
Entrepreneurship is a tough game – resources are always limited, and competition is all-time high – no matter whenever it is started. During this economic crisis, few factors might be, in fact, really favorable – proving it to be the perfect time to start, especially as everyone else is scared to join the race.