Opportunity of a Lifetime: Act Now
What do Entrepreneurs and U.S. President Barack Obama have in common?
They all believe that time of crisis can be “great opportunity”.
Of course, it’s not an easy task to discover opportunities in the midst of one of the greatest crises in human history. But that ability is what separates entrepreneurs from the crowd. They were able to find ways to make it through again and again:
Andrew Carnegie launched his first steel mill during the Panic of 1873, the start of a long depression. He took advantage of low costs to build an industrial giant that made him the world’s richest man.
So why entrepreneurs and startups can thrive in tough times and others not?
Paul Graham, the famous venture capitalist, says, “If we’ve learned one thing from funding so many startups, it’s that they succeed or fail based on the qualities of the founders. Which means that what matters is who you are, not when you do it.” Moreover, “If you’re the right sort of person, you’ll win even in a bad economy. And if you’re not, a good economy won’t save you.”
Based on what Paul said, it seems that the state of the economy is not a major factor in startups survival. Not only that, bad times actually give entrepreneurs some advantages over big institutions.
Others are Fearful
Fear makes people shortsighted. A lot of businesses have been thinking a lot about cost saving and survival strategies which will weaken and damage their long term prospects.
In contrast, P&G increased their marketing budgets and tried new advertising media (Radio) during the Great Depression. A strategy that successfully turned the company into one of the industry leaders and largest corporations in the world.
“As a rock climber, the one thing you learn is that those who panic, die on the mountain.” One of my favorite authors, Jim Collins, believes that, in order to succeed, companies cannot stay in the status quo. They have to ask themselves what they are going to do to turn this into a defining moment in their history. Their goal is not to survive; it is to prevail.
Moreover, entrepreneurs will face less competition. Competitors may go out of business. It’s the best time to increase market share. Using your creativity and imagination, you can also “make it big” during economic crisis.
Advantages of being Small
Chaos always brings opportunity. Don Dodge thinks that “startups have the advantage of being small and nimble. [They] can make changes quickly, find new ways to save customers money, and fill needs faster than big companies”.
While people are worried in bad economy, they are willing to try new things, including startups, to save money. Which company doesn’t want to save a few bucks in times like these? Because small startups often make products and services cheaper, they should be better positioned to prosper in a recession than big companies.
Another key is to stay in the game as long as possible because the economy will get better eventually. In order to that, entrepreneurs have to operate their companies as cheaply as possible. According to Paul Graham, “The immediate cause of death in a startup is always running out of money“. Startups need to spend less or sell more so that they have enough cash to carry them through the winter.
At the same time, it is important to let your customers know that you will work with them to create value, not only to give them a lower price.
Economic meltdown is bad for most big corporations but small startups can actually take advantage of the situation. After massive layoffs, many workers will become freelancers. They have to lower their prices in this tight competition. Entrepreneurs can then use their services at a lower cost.
Besides, many resources, like office space, equipments, ad spaces, that a new startup needs will be available at lower prices. In addition to the low cost of open source software and SEM, entrepreneurs should be able to jump start their businesses in a less expensive way.
If we look at the history, some companies used difficult times to acquire their troops of talent.
After World War II, all the [US] government labs were shutting down, and engineers were streaming out. Hewlett-Packard was actually going through a layoff. But at the same time, Bill Hewlett and Dave Packard said the greatest opportunity they ever got wasn’t technology; it was the opportunity to hire those engineers.
Experienced engineers may get layoff. Talented fresh graduates may not able to get a job. Like a good investor, you should invest when times are bad. Your partners and workers are your hedge against the difficult time ahead.
Like Robert Schuller said, “Tough times never last, but tough people do.”
Many great companies were born at a time when everyone thought the world was falling apart. Recession is the best time for startups. It could be an opportunity for a paradigm shift in our future.
After all, opportunity does favor the prepared mind. Invest in the best assets of yours: your abilities.
We have to remember that recessions always end. In the book, “Built to Last“, 15 of the 18 featured companies had went through the Depression, and all of the 18 are still standalone companies today.
If you have a good idea, act now!