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General Motors was founded during the Panic of 1907. Meanwhile, CNN started its news broadcasts during the 1980s recession. Even Airbnb and Uber were launched during the global financial crisis of 2007-09.
The list goes on. But the big question here is: What did these businesses do differently?
Amidst an upside-down economy, these startup founders identified the silver lining. They saw an opening for new ideas and innovation and developed their game-changing offerings. Besides, they leveraged the opportunity to hire top professionals to support their long-term goals.
However, recognizing and seizing these opportunities can be challenging. The best way forward is to put together a detailed plan and stick with it.
Here is a 10-point checklist to successfully start a business during a downturn.
1. Establish your USP
Before you take the plunge, determine your business’s uniqueness.
Whether it’s handmade products, an outstanding shopping experience, or a social mission, defining the distinct qualities of your brand is crucial. This foundational step ensures customers understand your identity and choose you over the competition.
2. Start small
Manage your expectations and expenses in the dicey economy by starting as small as possible, then plan to expand when your business takes off. Consider opening in a smaller and less expensive location or, if possible, stay virtual by eschewing a physical office.
3. Assemble your dream team
As a first-time startup founder, you may think you can do everything yourself. However, with a looming recession, you will want to build a network of trusted colleagues that you can lean on to help manage all the moving parts of your business.
Build a team comprising people with complementary skills and expertise that can function autonomously and enable well-rounded decision-making.
4. Use a grassroots marketing approach
Invest time in grassroots efforts rather than putting money into expensive ads and other marketing collateral. Work towards generating word-of-mouth momentum by networking at business and industry conferences. Lastly, consider participating in local events, sponsoring community initiatives, or collaborating with local organizations to demonstrate your commitment to the community.
During downturns, consumers often become value-conscious and look for the best deals. As a result, you need to focus on creating value to engage with customers. Consider offering discounts and promotions or ensuring that your products or services are high-quality and meet customer needs.
6. Learn to run a tight ship
Maximizing efficiency is an essential skill for businesses aiming to navigate turbulent waters. This approach entails efficient resource management, cost-conscious decision-making, and a focus on effectively streamlining operations to weather economic challenges.
It may seem basic, but social media and email marketing can help you connect with a broad audience in cyberspace. In addition, using SEO effectively can help you build credibility and trust with audiences.
8. Grow slowly and steadily
You might have dreams of scaling your business to the max, but remember that downturns are marked by slow economic growth. Overextending yourself in such challenging times can leave you with cash flow troubles, especially if you still need to bolster your revenue.
Chalk out a plan for your startup to grow slowly and steadily. If you make a big profit in your first year, funnel that money back into your business without going overboard on expansion, hiring, or new product launches.
9. Commit to innovation
Continuous product improvement is crucial for long-term success in a declining economy.
Constantly work towards improving your offerings. Focus on consistently evaluating what works, anticipating market gaps, and strategically innovating to convert your customers into loyal fans.
10. Build a contingency plan
Have a contingency plan that outlines the strategies you’ll implement if less-than-desirable circumstances arise. It will help you effectively respond to and recover from unforeseen disruptions, minimize downtime, and protect your startup’s long-term viability.
The final word
Starting a business is daunting and can feel like an impossible dream during a downturn. However, if you follow the strategies mentioned earlier, you can weather the downturn and excel.
Want to know more about startups and what it takes to get started? Since 2006, Escalon has helped thousands of startups get off the ground with our back-office solutions for accounting, bookkeeping, taxes, HR, payroll, insurance, and recruiting — and we can help yours, too. Talk to an expert today.
This material has been prepared for informational purposes only. Escalon and its affiliates are not providing tax, legal or accounting advice in this article. If you would like to engage with Escalon, please contact ushere.
Kanika is an enthusiastic content writer who craves to push the boundaries and explore uncharted territories. With her exceptional writing skills and in-depth knowledge of business-to-business dynamics, she creates compelling narratives that help businesses achieve tangible ROI. When not hunched over the keyboard, you can find her sweating it out in the gym, or indulging in a marathon of adorable movies with her young son.