Starting A Business In Today’s COVID-19 World – Yay Or Nay?
While starting a business during the COVID-19 pandemic could be risky, it could also bring you benefits depending on your business ideas. In this article, we gathered some pros and cons you need to consider before you make your decision.
There’s a great amount of uncertainty for businesses right now – many are facing closure, in need of large bailouts or are in the process of conducting mass layoffs.
Businesses that are still operating will now have to pivot their business models, readdress budgets, and create new forecasts to ensure they maximise cash runaway and minimise burn rate.
But as millions of companies reassess their business models and strategies, few conversations have revolved around what it’s like to start a business in the current climate.
Maybe you’ve been planning to start a business for years, or you’ve just been retrenched and are looking for new opportunities or you’re pivoting your existing business in a new direction, well now might be the right time to figure out how to start a business.
After all, tech giants like Uber, Slack, WhatsApp, and Instagram were all created out of the last recession. A simple truth is: it’s never the right time to start a business, because pandemic or not, starting a business any time is tough.
Let’s take a closer look at the pros and cons of starting a business during this pandemic:
- Bottom line: starting a business now may not be a bad idea
1. Starting a business may be cheaper
Long periods of economic decline could mean that one could start a business on the cheap.
Due to the pandemic, a lot of things have become cheaper – dwindling office space usage might mean that entrepreneurs could get cheaper rent. Other costs incurred from office equipment and necessities will also likely cost less.
Be on the lookout as you might find discounts in other areas of your business as well. Facebook ad rates, for instance, have dropped in response to the pandemic – these are important tools to help small business owners reach a larger audience for less.
2. More talents in the market
Unfortunately, the pandemic has resulted in higher rates of unemployment. The Depart of Statistics’ chief statistician shared in June that Malaysia’s unemployment rate rose to 3.9% (610,000 jobless people) – the highest since June 2010 when the rate was 3.6%.
Though it seems gloomy, numbers like these could be good news for entrepreneurs planning to start a new business. Due to the higher number of capable and skillful people seeking employment, there’s a talent surplus in the market, which can only be a good thing for businesses who are just starting out that need to build a solid team.
With so many people currently underemployed or forced out of work, this could be the chance to bump into people who are thirsty for new business opportunities.
3. New issues create the need for new solutions
Recessions are disruptive to the economy, and force businesses to quickly pivot their offerings to changing consumers demands. In other words, businesses have no other choice but to adapt and grow with the change.
For example, The Great Recession had resulted in some push-back against excessive luxury goods but also inspired a minimalist trend from home décor to clothing.
The lesson here is that understanding market need is as important as knowing when to start a business. List down all the needs, problems and consumer trends that are a direct result of the economic downturn. Then identify the types of relief and solutions that your business can provide.
1. Economic fallout means raising capital may be difficult
Bootstrapping is possible but most new businesses will need some amount of capital to get off the ground and running. And securing traditional sources of funding when launching during a recession, may prove to be difficult as you may need to show a proven track record.
Many funds for SMEs and traditional lenders also require that the business be in existence for a year to consider your application.
Just bear in mind that credit requirements and overall qualifying criteria are usually stricter during a recession.
2. Expenses are being cut, not the other way around
The first thing that most businesses would do when a recession hits, is to reduce the company’s expenses. And it’s the right thing to do considering that even consumer spending would most likely fall too.
Just remember this reality while building your business, so you can manage your business.
Bottom line: starting a business now may not be a bad idea
Starting a business during a recession may seem super risky. But just remember to keep your costs lean and your target audience in mind. Most importantly, make sure your business plan is solid.
BONUS: If you’re a budding entrepreneur who is looking to start a business during the pandemic, here are a few tips on how to turn the obstacles of this pandemic into an opportunity:
1. Figure out why you’re going into this business
The big why is something you will need to address before any significant move in life. Think of why it is important to start a business now? Document your thoughts and come up with goals and milestones that you hope to achieve through your business. Start with the end in mind and you will get a better grasp of why the idea came about.
Maybe the big “why” is because you want to fulfill a passion in selling plants because your hope is to add more joy to your community through greenery and fulfill a need for consumers? Or maybe you have always dreamed of starting your own creative agency after a long-spanning career in advertising? Regardless of the nature of the goal, personal or to fulfill a need in society, jot all of it down before filtering them with specific categories.
The goals you have may also vary with the timeline: some may be short, and others may be longer. But beyond just figuring out your business goals, think of what makes your business different and unique. Research on business models, and finally, work on a business plan.
Actually setting up a company may not be the most time-consuming part of the entire process as it takes more effort to think of the basics of starting a business such as the business objective, business plan, resources, available funds, and the product or service.
Once all of that thinking is complete, you can start filling forms on the Companies Commission of Malaysia’s website.
2. Be very calculative because every penny matters
Just because you have a budget doesn’t mean you need to use a large amount of it right away.
One of the most valuable brands in today’s business world, the idea behind Apple started in the humble garage of one of its co-founders, Steve Jobs, in Cupertino, California.
He, alongside Steve Wozniak, and Ronald Wayne developed the first Apple computer in 1976 in the garage of Jobs’ parents’ house. Later the Apple I was sold as a motherboard to a local store for RM2073. The rest, as they say, is history.
Willing to work or sell for cheap does not necessarily have to equate to a bad thing. Sometimes it can work in your favour too, and make you stand out against competitors. For example, if you’re a personal trainer, you could offer your services for a cheaper price, and slowly educate and bring more awareness to fitness exercises like pilates or yoga. But of course, your services have to be tip top! Customers won’t mind spending more for good service.
3. Does your business serve a particular need?
Most famous businesses started out because its founder felt the need to address a certain need.
Grab, for instance, was conceived from a different point than their ride-hailing competitors at the time, Uber and Didi Chuxing – both focused on providing better matching of supply and demand for rides, but Grab wanted to improve rider safety.
The platform allowed passengers to share the progress of their rides, in real-time, with someone else as a safety precaution. Today, the RM58 billion (according to CB Insights)startup is servicing people in eight countries across the region.
Eric S. Yuan, Founder and CEO of Zoom, first envisioned the company as a freshman in college in Chin. He felt there was a better solution to connecting with his long-distance girlfriend (and now wife), especially as he detested the regular ten-hour train ride needed to visit her.
That story became the basis for Zoom. Yuan sensed the need to create a video communications solution that could help him connect with others seamlessly and virtually.
We hope you found this article informative and helpful!