How successful entrepreneurs launch a startup during a recession
New business applications are highest since 2008, reports the wall street journal. Is it crazy to start a business during the COVID-19 pandemic? I say it’s great, and at least 1.1 million Americans who have recently applied for EINs agree with me. In my time as Fractional finance director, I have seen the good, the bad and the ugly of entrepreneurship. While an economic downturn brings great uncertainty, it also offers the opportunity for a rapidly changing environment. Uber, Airbnb, Microsoft, Slack, FedEx, Disney, and Venmo have all launched during recessions. The difficult environment creates innovative opportunities.
How to capitalize on the opportunity while managing the risk and uncertainty of COVID?
Here’s what I’ve seen successful entrepreneurs do:
Tell everyone your idea.
Who to seek advice from? Business mentors? Advisors? Friends and family? I say tell everyone about your business. Talk to your Uber driver, AirBnb host, hairdresser, coworkers, or even your boss! Here’s why: The doors will open for you when people know about your dream. You will find valuable links in the most surprising places – for example, my first recommendation came from a colleague whom I had not seen for 5 years. The most important factor in a startup’s success is its network of resources, so start building your own.
Accept criticism with Recognition.
Everyone has an opinion to share, and there are values in each of them. That friend who laughs at your WordPress site might have a good point. Your partner may tell you to spend more time with your family, and that’s important. By gratefully accepting reviews, you’ll learn more about your consumers and build stronger relationships.
Expressing your gratitude can be a difficult skill. Do you remember a time when you came back to a friend and they got angry or defensive? How likely are you to give them feedback again? Successful business owners sincerely thank others for their comments and consider their ideas. This is the first step towards building an innovative team.
Accepting criticism does not mean you will act on it. Consider your options, choose your strategy, and keep moving forward. When I started CFOshare my UX friend told me the website had too many words, my SEO consultant told me we needed more words and my responsible partner told me that the site Web wasn’t even important to a service business. This kind of contradiction could paralyze someone in indecision.
Keep in mind that old-fashioned business advice doesn’t necessarily apply during a pandemic. “The three most important things in business are: location, location, location.” It was pre-Internet advice, and these elders are still there to give advice – beware!
Think for yourself, go over the tips and don’t be the deer in the headlights – choose your strategy and keep moving forward.
Plan and pivot.
Make big plans and be impatient to abandon them. The goal of planning is not to get things 100% correct – the goal of planning is to identify when conditions change so that you can change course appropriately. Take the example of a friend of mine, Ted, who started an IoT product business. He started marketing directly to consumers through Facebook and Instagram, but he was not generating sales. Rather than spending more money on a failed strategy, he pivoted and started prospecting for business customers to purchase the sensor components for his IoT device.
I helped Ted build his original business plan. When considering changing his sales strategy, Ted sought my help in determining if he could afford to hire sales staff and the long shutdown cycles required by business customers. We updated his business pro forma found the lasting sales linchpin. Ted proceeded to the pivot, found success, and boosted his business to $ 10 million in sales. That’s the power of planning – it gave Ted the confidence to change his strategy.
Ask for help.
No one succeeds in business alone. Start building your support network – this could be a co-founder, mentor, entrepreneur, employee, or investor. More likely, you will have all of the above. It will be a key resource for you at best and worst-case scenario.
Enjoy the adventure.
What makes it an adventure? Almost nothing goes as planned, and you come out stronger on the other side. Keep this in mind when you are lying awake at night worrying about sales or struggling to close a round. You are an entrepreneur and you are special because you took the risk.
LJ Suzuki is the founder of CFOShare.org.