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5 Reasons to Start a Business During Economic Downturns

Introduction

COVID-19 caused the whole world to rethink how we work. Companies needed to optimize their resources in ways most people never consider.  Companies thought that remote work could not be done only to discover higher levels of productivity.  Others realized that their levels of employment could no longer support the company’s strategic goals. As a result, the future of the employee changed. While change is inevitable, we need to identify risks and opportunities and create plans to support your growth and career management.  

Some of the most popular companies developed due to people getting laid off or companies failed to recognize an idea’s potential. The entrepreneur path opens up by force or by identifying an opportunity. There are several reasons why people should consider starting a business even though the world is in a massive meltdown.  

Diversify Income Streams

Holding a job and starting a side business allows you to have multiple incomes should one disappear. When you have numerous revenue streams, and you lose one, you have an opportunity to determine if it is worth investing more resources to strengthening other streams versus replacing the lost stream.  At least with multiple sources, you can weather the storm better.  A side benefit of multiple income streams, mainly passive streams, is you do not have to devote as much time to them as a full-time job.

Your Current Job Situation is not Stable

Companies are not sure what the future holds with COVID-19. Uncertainty is prevalent with everyone, where customers are not sure they can access certain goods or services. Also, government regulations and restrictions can stifle growth.  For example, stay-at-home restrictions decimated some industries such as movie theaters and sports.  If you work in an in-person business, the probability is high that you will experience fewer hours, wage reductions, or layoffs.

Opportunities Present Themselves

Many start-ups result from people getting displaced. When someone works fulltime and cannot take the time to work on the business, a layoff becomes the catalyst for going forward with a start-up venture.

There is no Way to Time Anything

Nobody knows what is happening tomorrow, next week, or next month. There is no right answer to when a good time to start a business. If you wait for the ideal time to start, it may never come. Or you think you know what the right time is and you are not right. You will learn quickly about starting and running a business is you never have perfect information.    

Match Your Value With Your Output

As a salary earner, your value is the negotiated value set between you and the organization. At the same time, you gain more experience and solve complex problems; your returned value is no longer equitable. Yet, your salary rarely matches your newer level of output. Also, the salary caps the amount of money you receive regardless of the time spent working. If you solved a complex problem, you get paid whether you solved it in one day or ten days. 

You can ask for a raise or promotion. The company may give you one. They may not correct the inequality due to many reasons outside of your control, such as lack of financial stability, office politics, and challenging HR policies. You hold two options: accept the new deal or get another job elsewhere.    

When you enter the entrepreneurial path, you increase the likelihood of matching your income relative to productivity. Assuming your pricing model reflects the market and can control costs, you can better negotiate your price. If a customer is unwilling to match your pricing, you can get another customer.  It is far easier to gain new customers than it is getting a new job in most cases.

Conclusion

While COVID-19 turned the world upside down, there are excellent reasons for starting a business.  Whether it is for diversifying income streams or pure need after a layoff, the pandemic is not a reason to shy away from starting a business.

What business do you want to start?  I would love to hear it!  Share in the comments below, and thank you for reading!

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