Exercise
Tap all the highlighted words in the transcript below to see their definition. ⇩“In the middle of difficulty lies opportunity.” – Albert Einstein
These days, it seems like we’re in the middle of a lot of difficulty . . . so, where’s the opportunity?
For some entrepreneurs, it comes in the form of a recession.
Read on to learn more!
What is a recession?
A recession is a period of low economic activity. It’s usually due to decreased spending: As people spend less, businesses begin to lose money. Recessions can happen for many reasons, like COVID-19, for example.
The current situation
Because of the pandemic, the World Bank predicts the global economy will decrease by 5.2%. It hasn’t been that bad since the end of World War II.
Despite this, new businesses are still being started. In the last week of May, more than 67,000 applications were submitted for new companies in the US—21% higher than the same week in 2019!
But wait: Isn’t it a terrible time to set up a business?
The right start
Believe it or not, recessions can offer several benefits to startups.
Just look at FedEx, Uber, Airbnb, Disney, and Microsoft. They all began in times of economic downturn!
So, what are these advantages?
Weaker competition
In a healthy economy, more established and profitable companies are hard to compete with. But during a recession, most of those companies are struggling. With weaker opponents, new businesses have a better chance of survival.
More credit
To encourage people to spend money during a recession, banks and credit card companies often lower their interest rates. As a result, entrepreneurs with new businesses may be able to get more credit with lower fees.
New markets
When recessions happen because of a global event or major crisis—like a pandemic, for example—it’s a great time to explore new markets. Think of all the businesses that now sell safety products like masks and hand sanitizer. They saw a need for certain products and got to work!
Strength through creativity
Entrepreneurs who start a business during a recession have to be creative with their ideas, operations, and funds right from the beginning—just for the company to survive. After the recession, as the business grows, this creativity will have made them more resilient than others!
A good idea?
Starting a business during a recession has advantages. Would you go for it?
Recession Comprehension
Hi Andrea,
Thank you for this good text. I think that We have the destiny we deserve. Our destiny is in line with our endeavors and our merits. The recession is a hindrance, but it does not prevent entrepreneurship.
Entrepreneurship can only mean “learning a new language”, cultivating a new hobby, or redefining behavior. (And not just earning money)
Yeah, it’s perfect, the crises period always are hard moment for many companies but also the best moment for others! Be attempted at this time makes the difference! Tks for the article!
It’s a very interesting idea thank you so much!
I lived in a similar situation 20 years ago. We were in a startup with a new company and a hard competitor had immediately accused our business of dumping. It was a really challenge to keep head above water. But we realized that our creativity increased a lot when the money decreased and people also worked much more each other together. I always remembered this period as a fantastic experience!
Thanks for this lesson of encouragement!
Thanks Andrea for take your time to share your opinions about the economy recession and how can we take advantage of it.