Starting a Business During COVID
Is the middle of a Pandemic a good time to start a business? Many people think it is. Although a study by the National Bureau of Economic Research indicates that 100,000 small businesses have permanently closed their doors, the increase in new U.S. new business applications has hit a 13-year high.
Right now just might be the opportune time to become an entrepreneur. One in five business startups in 2020 said that pre-Pandemic, they had no plans to start a business. Another 27% in the survey were laid off from full-time jobs, and 51% identified a unique business opportunity and decided to make the leap. Recessions are times of great need, and moments of crisis inspire innovation. If you see an opportunity, this may be a great time to strike out on your own.
This article presents some questions and information to help you decide if this is your time to convert uncertainty into opportunity.
1. Determine your Why!
The first step is to think about WHY you want to start a business. Of course you want to make money, but there has to be a driving force (other than money) that animates you to take the leap. Are you passionate about providing a particular product or service? Do you want to make a difference in your community? Or, after being laid off, are you ready to be your own boss? Your “WHY” is extremely important because it is that which will keep you strong during the ups and downs of entrepreneurship. Knowing your WHY helps you set clear goals for your business.
2. Fill a Market Need!
In 2020 the world changed, and consumer habits shifted dramatically. Knowing this, you need to consider how your product or service fits into the Pandemic lifestyle. Among the industries that are thriving right now are cleaning and delivery services, fitness equipment, and home improvement. Think about your time in quarantine or ways that the pandemic has affected how you live. What problem have you encountered that you know is common to many others? Figure out solutions that others would buy. Create a business that fills a need and that would be profitable.
3. Focus on digital marketing!
Opportunities to meet in customers in person have been hampered by the need to social distance. To get your business message out, focus on reaching people via digital platforms. If you need help with the technology, there are plenty of people who might be able to get you started. From technology people who have been laid off, to high school and college students – find someone who can help. An effective digital marketing strategy can strengthen your new business. Communicate often and with empathy. During these times people want to know that your services or product can help them. Make the most of your digital marketing by communicating on a regular basis. Communicating regularly increases the chance that customers will find you when they need you. Local platforms such as Nextdoor are ideal places to get your message out. And when you have provided a product or service, make sure to ask customers to post their endorsements online. This new form of “word of mouth advertising” is powerful yet inexpensive making it a perfect fit for a new business.
4. Leverage your network
Use this time to leverage your personal and professional networks to market your new business. Use your social networks to the fullest. Post photos of your products and services on Instagram. If it’s appropriate for the product or service you provide, add fun and creative content on Facebook and Twitter. Contact your connections on LinkedIn to emphasize the professionalism of your business. Create videos, vlogs, and other useful or entertaining content to attract clients through your network. Give your contacts the chance to promote you to others.
5. Create a recession-proof business plan
Adapting your business model to the current climate is critical for the success of the business. Watch your expenses. Avoid overspending. Have a six-month to one year cushion of savings in case sales do not materialize as anticipated. Due to the Pandemic, there are several funding sources available through your local, state, and federal government. Find out how to tap these resources and be sure to review payment terms if there are loans involved. Make sure that the source of funding is legitimate! Review all vendor or supplier agreements and negotiate payment terms to manage cash flow. Finally, one of the best ways to recession-proof your business is to diversify. Start small, then broaden your offerings over time and keep a running list of expansion ideas.
Starting a business at any time poses challenges, but NOW is the opportune time to explore the market. Access to financial assistance along with a growing number of available workers makes starting a new business in 2021 something to consider.
And remember: to ensure that your business has the best chance to succeed, it’s always good to consult your attorney.