Jim Donnelly is co-founder and CEO of Restore hyper-wellnessthat offers an extensive range of advanced health modalities.
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If you are one of the record number of people who started a new business last year, you may be feeling a little intimidated right now. Or maybe you were recently laid off or have been dreaming for years about giving up your paid job to start your own business. Now could be the time to put those entrepreneurial dreams aside until the recession is over. Absolutely not.
I’ve been an entrepreneur since I was 21. I was raised by another serial entrepreneur, and from my experience, I believe a recession is a great time to build your own business. Uber, Airbnb, and Square all started during the last recession, and they’re not an anomaly. Microsoft, Trader Joe’s, General Motors, Hewlett-Packard, Burger King and more are all born out of economic downturn.
There’s a reason why some of the best companies and entrepreneurs have bad times, but to successfully navigate a new business through an economic downturn, you need a different mindset than during a boom. Here’s what I’ve learned about how to succeed in a tough economic climate:
Table of Contents
1. A lack of options provides clarity.
Those are the days of skyrocketing valuations and easy capital raises about, leaving founders with fewer resources to build with. We will likely see a return of the bootstrap startup. While growth will look very different for these companies, that’s not necessarily a bad thing. I find that when entrepreneurs fail, it is often due to a lack of focus.
In a recession, fewer resources mean free distractions and a clearer path forward. In a recession, the lack of options makes for an easier kind of clarity. Certain marketing tactics and hiring may not be available to you right now, and that’s fine – you can focus much more on what will help you in the short term.
2. In a recession, the companies that succeed will be the most opportunistic.
Challenges will arise, but if you look for them and are alert, so will opportunities. These are for you to take. As a small business, you can respond to these opportunities faster than your larger competitors and established bureaucrats.
Cheaper rents, highly skilled talent suddenly available due to redundancies, an easing supply chain – these are just a few of the benefits. You know the industry landscape at its worst, which is better than guessing (or ignoring) that potential at the top and being ill-prepared for when it changes.
3. Your family tree is both your base and your parachute.
The previous generation of tech entrepreneurs had a lot of contempt for established companies and institutions; they were here to disrupt and destroy the old guard. I would encourage you to think about working for established companies in a more nuanced way. These are places to learn from the best, make sure you understand the systems you’re replacing, and build a personal family tree that gives you options to fall back on on your future entrepreneurial journey.
Between starting my first and second company, I spent years working for larger companies such as Coca-Cola, Citibank, Kraft and AT&T. These experiences have taught me so much about how the world’s most successful companies approach marketing and finance and have deeply informed elements of my entrepreneurial approach. That resume also meant that if I failed, I never had to worry about finding a new job.
4. You’re in a system that rewards trust and trying, so don’t be afraid to fail.
My father was a serial entrepreneur who went bankrupt twice. Yet he never lost his enthusiasm to jump headlong into the next project. I think he had the right attitude about failure and understood how the American system is built to encourage risk taking. He used to tell me, “You don’t go to debtors’ prison for failing business in the United States.” As long as you work hard, put your own money on the line, do what you promise and don’t break the law, you can try again another day.
5. It’s not just about following your passion.
I think the worst advice in the world is when someone tells you to follow your passion and that’s all they say. It is misleading, creates an unfair expectation of what it takes to be successful and also makes the business of entrepreneurship one that is ultimately selfish rather than worldly serving. A more honest version of “follow your passion” would be “strive for the intersection of what you care deeply about, what you’re good at, and what the world actually needs.”
6. Be the same person you are in bad times as you are in good times.
Bad times don’t last forever, but the way you act in those moments determines how people remember you and how willing they are to support you in the future. The hard work of being an entrepreneur is showing up as the same person through good times or bad, weathering difficulties with resilience and integrity, and keeping the big picture in mind when things work out.
7. Narrowed focus doesn’t mean less impact.
In recent years, there has been a lot of momentum behind companies and startups that give back and play a role in social causes. I think the abiding instinct is that when economic times are tough, those goals and initiatives are the first to be abandoned.
You can still impact your community by choosing to focus on the things that align with your company’s mission and capabilities. For a mission-based company, it comes from simply doing what your business does best. And you can ensure that your employees have the time and support to do the things they believe will help society and the people in their communities.
Times of economic hardship can lead to the creation of strong companies and successful entrepreneurs. However, managing a new company during a recession calls for a different mindset than during an era of economic expansion. By understanding factors such as how our system rewards trust and trying, I believe you can be better equipped to help your business not only survive, but thrive.
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