The economy has shifted drastically, and aspiring entrepreneurs need business ideas more than ever..
As creators of the Run With It podcast, my co-host Chris Justin and I ask successful entrepreneurs to share their untapped business ideas. Listeners are encouraged to start them up. Previous guests have started businesses from scratch, sold a business for $170 million, made $100,000 per day, retired before 40...the list goes on and on. Suffice to say, they’ve been extremely successful in starting businesses, and know how to avoid the pitfalls that can kill new ideas. It is a real privilege to look into how their minds work. I've written this post to help you think like them so you can do like they've done.
What did the average person do when the coronavirus pandemic entered the global consciousness? They thought “I need toilet paper, hand sanitizer and clorox wipes!” and rand to the grocery store to raid the shelves. In the midst of all this panic someone else needed to ask “What can I do to get people the stuff they need?” The activists, the philanthropists and the entrepreneurs were taking action to help. If you want to think like an entrepreneur then you need to have the mindset of an entrepreneur.
We wanted to explore exactly how great entrepreneurs think and act in a recession and so we hosted a Recession Proof Startup Saturday Livestream on March 28, 2020, as the global quarantine to prevent the spread of COVID-19 was just beginning, as the market had dropped an incredible 25% from it’s all time high within just over a month. After spending time with this handful of impressive founders and entrepreneurs, I can say confidently that now is a great time to start a business. I’d bet that nearly every successful entrepreneur will agree that, far from avoiding business and risk, you’ll actually want and need to start business, to expand a business, and to be as aggressive as you can during times of recession. As Warren Buffet famously said:
“Be fearful when others are greedy and greedy when others are fearful.”
Here are 5 gems that I’ve picked out from our conversations to help you understand why the time to start your business is now.
You can watch the Recession Proof Startup Saturday Event or listen to each session individually here:
Podcast Audio (edited):
Okay, let's get into it...
1. In a recession, the economy isn't worse, it's different
“Never miss out on an opportunity like a good recession.” —Jack Welch
When the stock market turns negative we tend to feel negative. Hence, we want to use the term “depression” to describe an economic slow down. However, every economic shift, whether it appears positive or negative, presents new positive economic opportunities. Many people focus on what they need to do to survive and miss out a more powerful perspective—a perspective from which you can achieve, create business opportunities and generate wealth.
Let’s widen our view and zoom out of the narrow focus on needs and survival. You can start a good businesses in a bad economy. In an economic recession, old economic opportunities are disappearing while new ones arise.
In Session 2 of Recession Proof Startup Saturday we talk with Sam Davidson, co-founder of Batch, a gift and retail company whose unique offerings allow customers and companies to experience a taste of iconic cities. Sam gives a great example of how things might shift toward different opportunities during quarantine when tens of millions of people now don't have a commute. Sam notes that there are countless people who are now potentially getting several hours a day back into their schedule without a commute. He then goes on to highlight how services like Zoom and Netflix are going through the roof in terms of growth. See, the opportunities are not less, they are just different and you should be prepared and well-positioned for the newest opportunities.
Remember, there are going to be other opportunities that haven’t even been discovered. Be the first to jump on them and you can win big.
It is also fascinating and powerful to see how the level of needs people have, according to Maslow’s Hierarchy, may shift during a recession. Josh Elizetxe points this out in Session 4 of Recession Proof Startup Saturday. Josh is the young and ambitious founder of SNOW, a direct to consumer leader in oral care and oral cosmetics with over 1 million fans and customers in 160 countries. In the 1940s Abraham Maslow introduced his theory of the human hierarchy of needs, with physiological needs like food and shelter as foundational in a pyramid of needs where more aspirational needs like self-actualization are at the top. Josh Elizetxe highlights that needs like food, shelter, and security—at the bottom of the pyramid—are going to matter more in an uncertain time. And he bets that businesses serving people in those three realms will have had some of the biggest months they've had in a long time amidst the COVID-19 pandemic.
Security is found in many ways, not least among them through purchases. Items like hand sanitizer, Clorox wipes and toilet paper had come to represent security to individuals initially facing the COVID-19 epidemic. A herd mentality increases those cravings for security. It's like on Black Friday when everyone's buying a TV but nobody needs a TV. It may seem irrational but it’s very important to watch what’s going on and follow trends instead of fighting them.
Maslow's Heirarchy of Needs
The higher levels of Maslow's hierarchy will have their time and place in business. At the top of the hierarchy are self-actualization, esteem, love, and belonging. Josh notes that selling esteem and self-actualization do very well when the economy is doing very well. Josh urges us to be resourceful and come up with new things that meet people where they are within the specific times and circumstances that are taking place.
2. In a recession, people are creating new habits, and that’s the opportunity for your business to become one of their new habits.
“People are going through a change and there's a chance to get in their minds and change something up for them.” —Eathan Janney
When change happens, people naturally adjust by changing their pattern of behavior and thought patterns to accommodate the new change. For anyone who has a child, for example, they’ll recall an incredible shift in how they need to think and what they need to do. Old habits, like wanting to hang out with friends on weekends, turn into new habits, like hoping to catch a tiny bit of netflix before falling asleep, and hoping you do not wake the baby.
When the economy shifts dramatically, so do people's habits, and that’s the opportunity for your business to become one of their new habits. As my friend and co-host Chris Justin said, “people don't often change their ways of living in a wholesale fashion like this, and when people do, that is an opportunity to influence them—to gain market share with a new idea.”
Jump in and create new habits for others. People will want and need to create new ways of doing things. They will be in the process of changing their spending patterns, changing their saving patterns, changing when and how they spend their time, and more. You can utilize this opportunity to place your ideas in their thought patterns and position your brand in their mind. Wanna change the world? Here’s your chance to plant the seeds of change within people's minds, and more importantly, change what they do.
3. New behavior patterns create new opportunities.
“The difference between those who succeed and fail: Not taking advantage of opportunities” —Eric Thomas
Lululemon founder, Chip Wilson created a billion dollar company that started by making yoga pants in 1998. Back then the size of the yoga industry was relatively small but Chip foresaw the growth trend and it had paid off big time. In addition to introducing new habits into people’s lives, you want to predict and follow the new habits they are falling into.
The global marketplace is changing more rapidly than ever before. Uncontrollable circumstances are forcing people to change their patterns of behavior and that is opening up new opportunities. When people change what they do, you need to jump on the trends and capitalize on them.
Change is inevitable, especially at present. Individuals like you and businesses like yours need to stay ahead of the inevitable change. However, before you start thinking about what product will be and what marketplace you would want to enter, start thinking about the behavior patterns of people during the recession.
In Session 4 of Recession Proof Startup Saturday, Anthony Mink, gave a great example of the change happening right in front of him. He’s noticed that during quarantine people have moved out of the gym and into the park. Everyone has their exercise bands, they've got their kettlebells. Is there a business that will support this change? Can you anticipate how to serve this all-new marketplace of outdoor exercise?
Mink believes the first step to coming up with any type of monetizable business is looking towards people's behaviors and saying “How can I position myself in front of a behavior change that's coming?” Mink highlights that it’s all about noticing the change, staying ahead of it and utilizing that knowledge to your advantage.
4. Now more than ever in history anyone can start a business with global impact.
“Every single social and global issue of our day is a business opportunity in disguise"
With the rise of the internet, nearly anyone can market products and services globally. This is another great reason to start growing a business in a recession. Nowadays, what you need to do to get started on and grow a business can often be done from the comfort of your home. You can have your first sale within days or even hours of having an idea. You can test new products, services and marketing strategies quickly and easily online.
Can you capitalize on digital trends in communication to bring a product to the global market fast? All over the world, people have gained extra free hours at home and have resorted to online resources for shopping, information, entertainment, and more. For example, a lot of people are becoming more comfortable using Zoom. During the global quarantine, Zoom usage skyrocketed from 10 million daily meeting participants to 300 million in a matter of months.
Here’s an idea we discussed in Session 2 of Recession Proof Startup Saturday. Our guests were Sam Davidson (already mentioned), as well as Matt Verlinich, who's helped launch TechShop Pittsburgh, Protohaven makerspace, created Clear Ice Rocks, and now works with early stage hardware companies at Innovation Works.
Here's the idea we discussed with Sam and Matt... What if you had a nightly service where you have shipped everyone ingredients so they could set up their iPad or Laptop and cook with a great chef in a group call? You could find a sweet old Nona (or you are the Nona) that instructs live Zoom participants exactly how to prepare her finest creations. Add an admin to answer any questions and manage hiccups. Bring some joy to people’s homes and use this time where habits are flexible to get into people's minds. Now you’ve capitalized on quarantine to create a whole new genre of cooking show. Just provide a great service and show consumers you care to serve them. A time of need is a time to earn trust, and your business can be a lifesaver.
Seizing opportunity in crisis and recession is not about taking advantage of people’s vulnerability or advertising your business in insensitive ways. As our entrepreneur guest Sam Davidson notes “There's a lot of trust right now that could be earned but then also a lot of that can be burned.” So make sure your not exploiting or annoying anyone, but definitely take the opportunity to serve people when they are in need and they will appreciate it.
5. Expenses are less expensive.
"Do not save what is left after spending, but spend what is left after saving." —Warren Buffet
In Session 1 of Recession Proof Startup Saturday featured Peter Corbett and Dave Kosciusko. Peter bootstrapped a digital agency, grew it to 100 employees and sold it to retired before 40, now helping others on their entrepreneurial journey and helping families of the sick and dying through hospice. Dave owns multiple cell phone repair stores in Rhode Island. They buy and sell electronics for repair and resale on eBay and he also has a digital product teaching others how to profit from reselling phones the way he does.
Peter and Dave helped us understand how smart folks can turn the unavoidble fact of bankruptcy and business failure into something positive.
It’s an unfortunate reality, but companies are going bankrupt. The American Bankruptcy Institute reported 26% more Chapter 11 filings in April 2020 than in April 2019.
When a business decides to call it quits, it’s usually quite clear that it must be done. Since the decision has already been made and the business needs to be liquidated, they are going to look for others to take assets off their hands quickly and at a great price.
If you set your mind to launching or growing a business right now you can set yourself to come back and even do well after a downturn. It takes little bit of faith to make investments in starting a business during a recessionary period, but consider this: You can actually seize the opportunity to save on the costs of starting that business because everything has slowed down. For example, you could buy a bunch of restaurant equipment really cheap from a failed restaurant and get ready to start your own restaurant when things start to clear up. Invest where others are drawing their purse strings back. Rise up while others are just trying to keep their business afloat. If you have a stale business it’s also a great opportunity to restart and refresh.
6. Big themes of saving money and making money are easy to focus on. (bonus reason!)
“I become wealthy to the degree that I help other people become even more wealthy.”
On the topic of saving money...
In Session 4 of Recession Proof Startup Saturday Anthony Sarandrea offered his insights from the research he did about past recessions. Anothny is an entrepreneur, keynote speaker, and philanthropist who built a profitable portfolio of websites ranging from commerce to content blogs, without ever raising outside funds. He's also featured in an Episode of Run With It where he talks about his passion for helping people succeed financially.
Anthony says “If you're looking to start a business and you think that we're going to go into a recession look at the 2008 bubble burst." The biggest companies that made it through were those that allow customers to either save money or have an opportunity to make money. eBay did both and did great in the recession. eBay allows you to save money but you can also get rid of your stuff on eBay and make money. Craigslist, OfferUp, letgo, Airbnb, and Uber all allow you to make money on one end and provide convenience and savings on another end. Those types of businesses are important now. Anthony says "You don't necessarily have to go on trying to create a multi-billion dollar two-sided marketplace but you should certainly think through how you how you can leverage saving or earning power into your business."
There you have it. 6 wonderful reasons to start a business in a recession. Take a listen to or watch the Recession Proof Startup Saturday session and you’ll find many more reasons that now is the time to start a business.
Not only that, Check out the full catalog of Run With It Podcast Episodes where you can hear top entrepreneur guests share great business ideas that you can run with.
Follow through on any of the ideas outlined in this post or on the podcast and reach out to us at firstname.lastname@example.org.
If you make impressive progress we'll connect you with one of our entrepreneur guest for a free mentorship session. Remember, "The Secret to Getting Ahead is Getting Started!"
This article has been authored by me, Eathan Janney. I'm a coach that help's entrepreneurs make the money, have the career and acieve the dreams that they deserve. If you need help in getting started or getting farther with your business check out this free download on my Four Pillars of Growth and Achievement and conquer your day and your destiny under any circumstances.