Why is a tough trading period a good time to start a business?

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Many of the most successful companies were set up during financial crises, from Uber and Airbnb to Burger King.  While it may seem counter-intuitive, there’s good reason why starting a business during an economic downturn can increase your chances of success and longevity. After all, where there are challenges, there is also opportunity. Here are six reasons why the current economic climate caused by Covid-19 is ripe for ambitious entrepreneurs.

1. Develop nimbleness and agility. Having these characteristics in spades is key to having a successful business. Entrepreneurs who launch businesses during economic difficulty have business resilience built in from the outset – they have to establish habits that allow them to adapt to markets that swing from good to bad. This will enable them to navigate future bumps in the road with much more agility and creative problem-solving capability than leaders who have never experienced setbacks.

2. Establish good financial habits. Setting up in a buoyant market can create a false sense of security; setting up in tough conditions encourages you to adopt processes that must be learned out of necessity. From adopting differing methods of business development activity, mapping out various expansion strategies, or learning to be tight with cash flow, collections and T&Cs, your business is bound to benefit from your wariness and close eye on things.

3. Build a loyal team of top talent. During times of tough trading periods, your competitors are also facing challenging trading periods so are more likely to be billing less and making structural changes that include redundancies. This means that top talent is more likely to move and join a company during this period with an attractive offering with a new founder and innovative approach. This is a great time to think about adding a contract offering to your business since contract billers are a rare commodity during boom markets.

4. Capitalise on gaps in the market. In hard times, other businesses do what they can to cut costs and be more efficient, and they’re having to learn it the fast and hard way. Covid-19 has meant that the way you can interact with clients now is different and more long-distance, however maintaining or creating new relationships whilst your competitors’ distance themselves is guaranteed to add value to setting up. The unfortunate consequences of economic downturns such as redundancies also present opportunities for others via the natural gaps in service caused by these events. Competitor relationships are lost or, harder to maintain and as such windows of opportunity are created while they reorganise service levels alongside enforce restricted covenants.

5. A time of transformation. Covid-19 hasn’t just caused an economic crisis, it has completely transformed the working world. Established businesses are trying to figure out how to adapt to varying level of success but setting up now means you can build a streamlined business with this new norm in mind. For small businesses that have just launched, a huge benefit of Covid-19’s impact is the move to working from home – this means little infrastructure or travel costs in the beginning when margins may be tighter.

6. It’s all about relationships. In recruitment, the strength of your relationships with both candidates and clients is the true test of your ability to continue trading, no matter the market conditions. Ultimately if you’ve got strong relationships then the reality of setting up by yourself is that these relationships can follow where applicable. If you build a network of unshakeable relationships, you’re not dependent on a strong market and you can therefore take advantage of the other benefits that a tough trading period offers budding entrepreneurs.


If you’re an experienced recruitment professional and you think the time’s right for you to start your own business, send a brief overview of your background, expertise and vision to info@recruitmentvc.com to find out how Recruitment Entrepreneur can set you up for success.