How to Start a Business in a Time of Crisis?
Published on: 26.06.2020
When talking about ways to eliminate growth crises in young firms, Guenter Faltin says in his book Brains versus Capital that each growth stage creates its own crisis. With this fact in mind, young and aspiring entrepreneurs probably wonder how to start a business that can grow while already being in a global crisis.
Based on experiences from previous financial recensions, most people support the idea that every crisis creates a wide range of opportunities for startups that can drive successful business outcomes.
Back in May, the New York Times published an article asking if the pandemic was/is the right time to start a business. According to the cases mentioned in the article, the health crisis can be the proper moment to start a business for those that have the right idea. The coronavirus pandemic forced many businesses of different sizes all over the world to shut down or implement survival strategies to manage changes. On the other hand, some saw an opportunity for business.
Based on the NYT article, the advantages that those people noticed during the crisis include reduced competition for resources, more available talent, low-interest rates for loans, affordable equipment, and important shifts in customer needs.
Whether it is a useful highly-needed service or a product it’s essential to notice key changes to customer demand. Many existing companies shifted their focus according to customer demand and managed to remain agile.
This is exactly what new startups are doing. They are focusing on the shifts that the pandemic created in people’s needs. What was successful before the health crisis, now might not be the same. Good health care and wellbeing remain a key factor. For example, people will buy more products and services on personal and house hygiene and sanitation. Hand wash, mobile sanitation for houses, and commercial spaces have seen a rise in demand. Moreover, people are becoming more practical in their choices. Those who have a shop or restaurant are looking for ways to keep up with safety protocols. Hence, they switch to furniture that easy to clean or arrange to conform to social distancing rules.
This is what Faltin highlights in his book: “Encountering a problem, considering a variety of routes and choosing the most practical – this type of mental agility can be taught.”
Back to startups born in times of crisis, the Europas Awards just announced the winners of the 2020 edition of innovative startups. Previous winners of this award include Spotify, Soundcloud, Babylon Health, etc. The winning startups come from categories that are closely related to the pandemic response such as agriculture and food, climate/green tech, education, public/civic, health, mobility, social innovation, sustainability, and many more. These are tech startups, yet it does not mean that high-tech has to be the main driver when launching a startup.
“Innovative startups are needed but this doesn’t mean they have to be hi-tech. Relying exclusively on hi-tech is like investing all of your country’s athletic resources in a single sport, overlooking the fact that you could perhaps earn medals more easily in other areas because there’s less competition there,” Brains versus Capital points out.
This is important to understand because problems and their solutions differ from one country to another. As professor Faltin says in his book: “Entrepreneurship offers you the opportunity to work with unconventional ideas and perspectives, and then through them to participate successfully in economic life. A “culture of entrepreneurship” purposely includes artists, mavericks, and people with a sense of social commitment, who in the past saw little opportunity to participate actively in the economic realm. Our society needs entrepreneurial initiatives that not only tease out new needs but which respond to existing problems with economic, social, and also artistic imagination.”
If you like this mindset, you can take the free entrepreneurial training at the Entrepreneurship Campus. The training includes two courses, one based on Brains versus Capital book, that helps aspiring entrepreneurs gain the necessary skills and build a mindset to recognize and develop ideas and projects. The second course focuses on sustainable entrepreneurship.
If you feel challenged by the training, you can join the Citizen Entrepreneurship Competition in the youth or adult category and give yourself the chance to get started with entrepreneurship.
Source: Brains versus Capital