Last Updated on December 31, 2023 by Matt Zavadil
Ever thought about starting a small business in a recession?
You might be thinking, “That’s crazy talk!”
But hear me out.
You’re on a rollercoaster, at the top of the peak.
But isn’t it also thrilling?
A recession can feel like that scary downward plunge – businesses falter, people tighten their belts and discretionary spending takes a nosedive.
Could it be that starting a small business in a recession has its own advantages? Think Uber or Airbnb; both born during recessions! Crazy right?
Intrigued? Well stick around because I’m going deep into how savvy entrepreneurs turn economic downturns into launch pads for success!
As well, I personally started a business during tough economic times. I haven’t looked back since & can offer you encouragement around the idea.
Here's the affiliate marketing training info I mentioned at the end of the above video. It's been instrumental in my online business learning journey and I know it'll help you too :) Check it out here and learn to earn in a recession.
Starting a Small Business in a Recession: Impact of Tough Times
The onset of an economic downturn or recession can send waves of uncertainty through all of us.
A key fact:
More than half of Fortune 500 companies launched during tough economic times, including HP, Costco, and LinkedIn. This demonstrates that tough times can indeed breed resilient businesses capable of weathering financial storms.
Economic uncertainties such as those brought about by a business recession, make decision-making tricky but not impossible.
With almost 250,000 tech workers laid off recently, there’s a notable shift towards entrepreneurial pursuits out of necessity rather than choice.
How about you?
Are you more interested in increasing your family’s cash flow due to economic uncertainty?
An Online Business Makes the Most Sense In a Recession
I started my online business back in 2008 when everyone worried about the mortgage crisis and the economy tanked.
Best decision I ever made.
I encourage you to think the same way today.
Given the low startup costs, establishing yourself online is an excellent path toward starting a small business in a recession.
The Power of Low Startup Costs
Traditional brick-and-mortar businesses require significant investment.
Your costs are substantially lower when starting an Internet business.
All you really need is domain hosting, email marketing tools, and perhaps some professional guidance or coaching.
This reduction in startup expenses means that reaching profitability could happen much faster than with other types of businesses.
Finding Profit Amid Economic Downturns
Recessions tend to push consumers towards more frugal habits but they still spend on necessities and value-for-money products or services.
An online business lets you tap into these changing consumer behaviors by offering affordable goods or solutions to their needs to earn more themselves.
For example, people may look to do business with companies they can feel trust in.
Or, they may want more do-it-yourself options to save money.
Or, they might favor buying online even more to save money on gas to the store.
You also have access to global markets.
It gives your internet-based enterprise potential resilience against recessional pressures.
Digital Marketing: Your Secret Weapon
Email marketing isn’t just cost-effective. It also has great ROI potential if done right. Platforms such as AWeber provide comprehensive analytics so you can refine campaigns based on what works best for your audience – no guessing required.
If you don’t have experience with email marketing, please know that as a former musician, I didn’t either.
But I found it’s as simple as typing out your thoughts like you’re sitting at a Starbucks with your customer.
Actionable tip for email: Write like you talk.
I learned it and you can too.
Paid ads through Google AdWords or social media platforms offer another powerful tool for driving traffic towards your site even amidst economic slumps— remember everyone’s online.
For example, you might get good at simple 15-second TikTok videos to generate leads and sales.
One cool thing I learned about Instagram, Facebook, or TikTok is that you don’t need to do any embarrassing dances. You can be yourself and generate leads and sales with these platforms.
Actionable tip for social media marketing: Create one video giving a tip from your favorite book, movie, or relative. Give the tip you got from somewhere else, one way you’ve used it in your life, and you’re done!
Investing in Knowledge
Don’t overlook the value of getting trained correctly.
Invest time and money into learning about running an online business.
High-end coaching programs can give you a crash course on everything from setting up your website to understanding how to set up sales funnels correctly.
These skills won’t just kick-start your business.
They’ll fuel its growth and help it weather economic storms.
Main Takeaway: Starting an online business during a recession can be a smart move because of low startup costs, and the ability to tap into changing consumer behaviors. Digital marketing tools like email campaigns and paid ads are cost-effective ways to drive traffic. Investing in learning about running an online business not only kick-starts your venture but also fuels its growth.
Starting a Small Business in a Recession: Find Your Niche
Finding your niche is essential when building a new online business.
Consider tying your business idea to the three main areas all humans desire help in:
Others feel the same financial pressure you do. Learn how to start a thriving online business. Then, consider adding a new income channel by teaching people how to do what you did.
Since COVID, insurance companies have increased rates. Do you know something about alternative medicine? Teach that so people don’t need as much insurance. Or, teach them how relegating themselves to cheap fast food only leads to higher costs due to illnesses.
Consider starting a small business in a recession and teaching others how to create better relationships. Financial pressure hurts many marriages. If you have expertise in this area, begin helping people understand the dynamics involved.
The way I got started, and my main income generator to this day, is via affiliate marketing.
Affiliate marketing is a way to sell products and services others have already invested 100s of thousands of dollars to test and bring into the market. You simply send good-fit prospects their way.
Do it right, and you might even become one of those making $1,000 per day online.
Main Takeaway: Starting a small business in a recession isn't necessarily risky - think Uber or Airbnb. You just need to understand your talents and skills, and tap into shifting consumer needs. Find your niche where bigger companies may falter, such as providing personalized services. Remember: recessions can open doors to unique opportunities.
Craft a Recession-Resilient Business Plan
A business plan is like your trusty compass in the unpredictable seas of recession. It helps you navigate through choppy waters and find your way to safe harbor.
Start With Solid Research
To create a business plan, you need thorough research.
Dive deep into understanding your target market’s needs and wants during this time.
Consider how these may have shifted due to the economic downturn.
Look at competitors who survived past recessions.
What strategies did they use?
Flexibility Is Key
Your business plan must be flexible enough to adapt as circumstances change, but firm enough not to get blown off course by every gust of wind.
The ability to pivot when necessary while staying true to your core mission will make sure you stay on track even amidst changes brought about by the recession.
This is another reason going online when starting a small business in a recession makes sense.
Create a Strong Value Proposition
In a tough economy, customers want more bang for their buck so ensure that your product or service offers exceptional value.
Highlight this in clear terms within your business plan; it’s not just about price—it’s about overall quality, customer experience, after-sales support etc., which together create compelling value proposition.
Starting a Small Business in a Recession: Marketing Strategies
I mentioned above that running your enterprise online makes the most sense when starting a small business in a recession.
Here marketing strategies to keep in mind.
Shift Your Focus Online
The first step is committing to the online method.
Have you noticed the recent trend to do everything on the Internet nowadays?
Heck, people even buys cars online today
But this isn’t just about creating an online presence.
It’s about making your business stand out in the crowd.
Starting a small business in a recession won’t help you if you don’t commit to mastering Internet marketing that directly leads to new cash flow.
Understand Your Customers’ Changing Needs
I can’t stress this enough:
Think carefully about the financial difficulties or changing needs your prospects face due to the recession.
Understanding these changes is crucial so you can tailor your offerings accordingly.
This will not only retain existing customers but also attract new ones who find value in what you offer.
Leverage Social Media Marketing
Social media provides cost-effective ways to engage with your audience on a personal level.
Quick social media tips include:
- Regular posting
- Interacting with followers
- Using hashtags wisely
- Sharing user-generated content
Explore Collaborative Opportunities
Last but not least, consider partnering up with other local businesses. Partnership marketing is a cost-effective way to reach a larger audience, and it can also help build community spirit during tough times.
While recessions pose challenges, they also open up new avenues for growth and innovation.
You can thrive using partnerships by getting interviewed on a top podcast, sharing your resource to a partner’s big email list, or going “live” on their Instagram account.
Don’t wait until your website or social channels get big.
Leverage the traffic your partners already have.
Starting a Small Business in a Recession: FAQs
Is it OK to start a business during a recession?
Yes, starting a business in a recession can be advantageous. With the right strategy and idea, you can capitalize on changing consumer behaviors and low competition.
What small businesses do well during recession?
Certain sectors like discount retail, repair services, accounting firms or tech companies that offer remote work solutions tend to thrive during economic downturns. Do you love travel? Maybe you can join one of the network marketing travel insurance companies that specialize in travel insurance plans. Or, go the route I did and recommend: Build an online business.
Is this year a bad time to start a business?
No specific year is inherently bad for launching businesses. Success hinges more on your idea’s market fit, execution plan and resilience amidst uncertainties than calendar years.
How can I profit from a recession?
To profit from recessions, focus on flexible strategies like reducing costs while maintaining quality of service. Also consider targeting disrupted markets with innovative products or services.
Final Thoughts About Starting Your New Business
So, you’re contemplating starting a small business in a recession. Scary word, recession. But remember: Airbnb and Uber both started during one!
Navigating economic uncertainty is challenging. Yet it’s also an opportunity to adapt your business model, innovate and thrive.
You’ve learned how to identify profitable ideas that can weather the storm of financial downturns. You now understand the importance of crafting resilient business plans – optimizing marketing budgets for maximum reach even when money is tight.
Wrapping up, starting a small business in a recession might feel like you’re climbing Mount Everest.
But always remember:
There’s tremendous opportunity to meet the needs of customers that need your help during their own trying times.
As an entrepreneur, you’ll also save during tax season by writing off business expenses.
Becoming a business owner means considering the best business ideas that match your skills and then taking massive action toward success.