Recessions are hard to predict, as much as you can try and pinpoint when they would happen nothing is ever certain. Still, we can learn from past recessions, to notice factors and scenarios that might happen and make sure that we’re ready for them or even prevent them.
Of course, the companies at bigger risks are startups as they have to be able to stand through a crisis but at the same time, many startups actually get stronger through a crisis. A few examples of companies that have taken advantage of difficult situations are Google, Airbnb, Spotify, and a lot more.
Most crises take companies off guard and expose their weaknesses where a lot of startups can exploit them. And right now is not the exception, as social distancing has become the ‘new normal’ it’s helping companies that wouldn’t be growing otherwise to become a need for the population. Like home meal kits, on-demand food delivery, apps for video conference and calls, streaming services, are just a few. All this as people start learning new pains and needs that they have and need solving.
So, let’s say that as an entrepreneur this is your moment to shine, right? Maybe you have a great idea that would work perfectly through a crisis, but how do you know it’s the right time? Let me help you!
What’s your appeal?
Most startups that succeed during hard times is because they offer a benefit, hack, or appeal that changes an established format and makes it easier, cheap, or faster. Google made it easier to find search results or how AirBnB made traveling less expensive by letting you rent apartments instead of staying inexpensive hotels.
In every situation, startups that want to target an existing market and change the way it operates have to offer a benefit or hack that would make sense for users to change to rather than stay with the old format.
Is it cheaper?
While in a recession a lot of customers would like to reduce how much they expand. That’s why if they feel like your product is too expensive and not really necessary, they won’t doubt about stopping its use. So a model where there is a clear benefit and is less expensive will be able to stay and grow during a recession. This can be a change in what you offer during the crisis, like supplanting a subscription, lowering the entry cost or making it free. This change can be extremely attractive for new consumers or even new, and if they feel you're helping them through this crisis they’ll help you when we’re out of it.
Do you provide comfort to your customers?
During hard times full of uncertainty it’s normal for people to suffer stress, anxiety, and be overall uncomfortable. Of course, as humans, we look for ways to reduce this discomfort be it by comfort food, stress shopping, and a lot more. But there are a lot of products and services that offer comfort, like Spotify, where consumers have access to music anytime and anywhere, Audible, offers audiobooks about almost any genre. Both of these have a calming factor, where a consumer can distract themselves and relax. Does your product or service have this quality? Not all startups need to fill this category but if yours happens to do so, it could be a good sign that a crisis might be beneficial for your growth.
Do you make remote work or connections easier?
As social distancing grows, we’ve seen the rise of apps and services that make actions that used to be face to face, easier through distance. Be it video call or conference, buying or doing transactions. The capability of facilitating actions from the physical world to a digital one would be a plus that would help a lot of startups to grow. Just as the last one, if your business or idea has this, then it can certainly take advantage of the situation. Although not all crises are the same, this one has shown us how important digital concepts are for our society so if your product doesn't have one maybe it would be a good idea to think of a way to incorporate it as this trend seems like it's here to stay.
Prove your worth
During hard times a lot of investors won’t fund unproven ideas so it’s important that you can prove that your product can fit in the market with minimal capital. Make sure that you can start with your saved up money rather than depending on funds or expecting to raise millions immediately.
You don’t need to check all these categories to have an amazing startup idea. These trends or aspects will only help you know if it's the right time or helps your business thrive. As I said at the beginning, recessions can be hard and even harder to predict, we can only learn from past recessions and from what we can see in the world right now. It has always been said that recessions are the points where the biggest ideas are born so don’t be afraid to follow your dream and build your idea up!
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