Now is a great time to start a business—as long as it can sell considerably more for less, argues Jack Welch
Amid the torrent of emails I've received lately from people feeling panicked, irate and/or depressed about the economy and their careers, it was a welcome surprise to be asked: Is now the right time to start a business? And it was a welcome opportunity for me to realise, well, yes, it could be a very good time to start a business. In fact, I can think of at least four compelling reasons why, but only if the business you're hoping to start passes one major test: it can sell more for less.
To be clear, I don't mean a little bit more for a little bit less. In these recessionary times, a new business doesn't stand much of a chance unless it provides a value proposition that's demonstrably superior to the market's current offerings. Not that long ago, you could still take a competitor's service or product, tweak it or slap on a new feature or two and persuade customers to buy it at a premium. But with everyone tightening the purse strings, the days of marginal up-selling are gone—and could be for some time to come.
But if you're an entrepreneur who has actually come up with a product or service that will significantly improve people's lives—at a significantly lower cost than the competition—here's why this might very well be the right time to forge ahead.
The one thing a start-up needs is to get out of the gate fast and compete effectively against established players. To do that, it needs smart, driven-to-win people, and those people happen to be more available right now than at any other time in recent memory. Obviously, layoffs are a terrible thing. But the fact is, new businesses live or die depending on how quickly they can bring together bright, flexible, hungry employees. The current climate, in which job scarcity is such that seasoned professionals and freshly minted MBAs are looking for work, facilitates that process.
The second reason is more ephemeral—the general urgency and lack of arrogance that most people are feeling these days. The economy's implosion has taken everybody down a notch. Former "Masters of the Universe" have discovered they're mere mortals, and people who thought it was all about them have discovered that if their companies don't succeed, they don't either. So not only has today's environment made it easier to hire good people, but it has also fostered among employees a new understanding of the importance of true teamwork and unrelenting productivity. Such a vibe, for lack of a better word, is every manager's hope, and every entrepreneur's dream.
The third reason concerns money—in a good way. Despite all the news about tight credit markets, financing for start-ups does exist, especially for those that have passed the more-for-less test. I'm not suggesting that today's entrepreneurs can expect the fairytale conditions of yesteryear, when money truly did seem to grow on trees. But many regional banks are eager to lend, and venture capital firms are always searching for breakthrough investment ideas. After all, start-ups are the lifeblood of their business.
Finally, starting a business now will position you especially well to enjoy the eventual economic recovery. Just think, if you start your business now, it will be staffed with smart, energised employees who have learned how to work together to keep costs low and innovation high. Your company will carry no legacy costs, nor will it bear the scars of layoffs and the low morale that accompanies them. You will, in other words, be poised to catch the earliest wave of the turnaround and ride it to the next level. How exciting.
Posted 8 April 2009 : Director.co.uk
