10 reasons why NOW, during a pandemic, is the best time to Start a New Business
In the midst of all this uncertainty and turmoil, ingenuity continues to thrive, with entrepreneurs in the US starting new ventures at the fastest rate in over a decade. 3.2 million Americans have filed for a business application in 2020, up from 2.7 million at the same point in 2019.
RIGHT NOW is the best time to start a new business. Unfortunately, many potential founders are fearful. This is not anecdotal. Between 1978 and 2012, the number of new companies declined by nearly 44 percent, according to the Kauffman Foundation. Research tells us that the top two reasons for not starting a new venture are: (1) I don’t have the money; and (2) I don’t know how. Two excuses that are no longer material, as I prove below.
Yet despite this rise in fear, and based on the most recent data, people have been most definitely getting their startup on in this Pandemic. Through the week ending Oct.3, 2020 business applications were up a record 40% YoY. This is an all-time high, and best of all, these applications include many “high propensity” businesses, which are linked to firm creation and staff employment, The Economist reports. This result reversed 2 previous trends: (1) High propensity” applications fell off the cliff after the last recession; and (2) New-business creation has been on a downward slide for decades.
So even at this moment of intense uncertainty, entrepreneurs are rushing to form new businesses more than ever. The number of applications for US business tax identification numbers was up 93.6%. So even after the pandemic closed hundreds of thousands of businesses across America, applications for new US businesses are rising at the fastest rate since 2007. Why? A mix of necessity and opportunity.
Here are my top 10 reasons why now is the best time to start a business:
- There’s plenty of room in the market. More businesses were lost during the first three months of the pandemic than normally close in an entire year, with millions of businesses around the globe permanently shutting their doors. COVID-19 has accelerated the process of transformation, creating opportunities for new ventures to embrace a new future.
- The pandemic has introduced new needs in the market. From a widespread need for reusable masks to better video conferencing options to at-home fitness solutions, COVID-19 has created thousands of new unmet market needs. And these needs and problems are opportunities entrepreneurs can address.
- Crisis breeds opportunity. General Motors. EA. Burger King. Trader Joes. Microsoft. Uber. Square. Airbnb. Some of the largest and most successful global companies were started during times of economic crisis.
- Many have more free time than ever before. Chances are, the commute to your home office is a whole lot shorter than your commute to work. If working from home has freed up time in your schedule, use it to start a side hustle outside of regular office hours.
- Early adopters are all online. Face it, we are all stuck at home. Which means so are your new venture’s future customers. Use this to engage in customer conservations to explore the assumptions your business relies upon.
The above pandemic-based factors combine with trends that make starting a startup even easier in 2020, including;
- Costs are at all-time low. Capital is no longer a barrier to entry. While the cost to launch a jewelry store online in 1998 was greater than a million, today, using online platforms, you can launch a jewelry store with exponentially better features, for less than $500.
- Infrastructure exists. During the dot.com boom there was no Facebook, Linkedin, Payal or even Google. So entrepreneurs had to do everything manually from scratch. Today, the internet’s infrastructure is robust and contains almost all the tools a new venture needs.
- The path to success is known and proven: Design Thinking. Disciplined Entrepreneurship & the 100 Steps 2 Startup program are all well-known paths to building a billion dollar business. These paths were built following the road made clear over the last two decades by the likes of Google, eBay, Apple, Facebook, Twitter, Tinder, Uber, and thousands of other fast growth startups.
- Geography no longer matters. Once upon a time your customer base was limited to those who could attend your store or order from a catalog. But the internet changes all that and geography is no longer a constraining factor for 21st Century Entrepreneurship.
- What choice do you have? Employment is precarious. Government support only goes so far. In the end, we must all be responsible for ourselves and for generating the means to care for our loved ones. Necessity may be the mother of invention, but Entrepreneurship Empowers Everyone!
So, looking back at those top two reasons for not starting a new venture, we can see that you don’t need huge capital and you don’t have to know how. You’ll figure it out along the way. The most successful businesses start by looking at the customer, identifying an unmet market need and launching a minimum viable product. You’ll iterate many times based on customer feedback but there’s no excuse not to start now. If you have an idea and would like to know if it’s worth pursuing, I invite you to take the free quiz below.
Onwards and upwards.