Is it the Right Time To Start a Business?

If you are in a salaried profession, starting a business may not be the most important thing on your mind as worries may surround you on a possible future layoff as a cost cutting initiative by your organization in a downturn. However, if you have a right kind of a business model, things might change for you and could actually be the right opportunity to jump right in.

Global slowdown brings along with it many changes in the consumer behavior. While starting a new business in these difficult times, one needs to understand that people are spending less, and more carefully too. A smart entrepreneur will look at opportunities that didn't exist till now and that he has an opportunity to think out-of-the-box.

Any business that helps customers save money and bring in more efficiency will be successful. Companies want to have a business model wherein they can save cost and improve their revenues and productivity.

For any startup there is a challenge to hire the right kind of people and any new company face a tough time attracting talent. However, a downturn means cheaper and better talent in the market to pick and choose from. A slower real estate market could make it easier and cheaper to set up an office in and around your customers. Also it is a real test for all those so called-entrepreneurs, who proliferate while the going is great and usually tend to fade away in tough times. True entrepreneurs will stay and others will fall out. This is when the men are separated from boys.

Whenever you plan to start a business, you must ask yourself this pretty simple question-does the idea have long term relevance? And if the answer is yes, jump onto it and grab it. It is a good time to start especially if your USP is providing low cost alternatives, since that's what buyers are looking for in today's situation which will provide you with competitive advantage and set you apart from the rest.

But only the best of the ideas manage to survive in a downturn and to think that there is no better time to start a business than in a recession would be foolhardy. Positives aside, the going is usually tough. For one, raising capital will be harder than before, even though fewer startups will be looking for funding.

When the economy was on a high there were chances that anyone with a decent plan could get funded. There was little time for a proper due diligence. That has changed drastically today. Nowadays Venture capitalists are much more cautious while investing. First, valuations are not as mindless as before and also competition between investors is lower. VCs might be able to pick and choose the kind of companies they want to get into. Investing is a lot more proactive now than opportunistic like before.

Revenues, and how early on they come in, are much more in focus now. So business models, which were based on long-term projections, could find it tough. Investors will look at people who break-even faster and use their capital well.

If you're going to start a business during a downturn, your business plan should be well suited for a downturn. The opportunity is not just for new startups but also for startups that were launched earlier. A downturn pushes entrepreneurs to be more innovative, resourceful and frugal than they may otherwise have been.

For some businesses that were planning to scale up, this might be a good opportunity to introspect.If you actually deliver value, cut cost and improve revenue for your clients, it will work. There is a huge opportunity to tap into the domestic market. For many years, most startups wanted to address the large global market, essentially because the domestic market was small. This is changing now.

There is an opportunity today for businesses to create products for the growing domestic market as the global demand remains dry. They can test their products here and then launch it internationally when the times changes and cheers up post-recession.