Starting a new business is always challenging, but a recession adds an extra heap of uncertainty to the mix. Economic slumps bring difficulties, breakdowns and challenges that make starting a business seem like an impossible task.
However, with a realistic mindset, proper planning, and data driven strategies, you can overcome the challenges and realize your entrepreneurship dreams.
In this blog, we will outline some tips to help you start on your entrepreneurial journey despite the economic downturn.
What is a recession?
A recession is a period of economic decline characterized by a decrease in GDP, a rise in inflation, a rise in unemployment, and a general slowdown in economic activity.
Recession leads to a decline in free cash flow in the economy and consequently resulting in decreased consumer spending, investment, business activity, and employment opportunities. This can lead to a vicious cycle of declining economic activity, reduced tax revenues, and increased government spending.
Despite the challenges posed by a recession, it is still possible to start a successful business.
You can also check our blog on 5 Big Trends in the World of Business Model Designs
Tips to help you get started with Business Ideas despite looming recession
Here are some important tips to help you get started:
Identify a profitable business idea in recession
The first step to starting a successful business is to identify a profitable business idea. In a recession, it is important to identify business opportunities that are still viable despite the economic challenges.
The key here is to conduct thorough market research to identify gaps in the market that you can fill with your products or services. Consider your skills, experience, and interests when coming up with business ideas. Try to project the immediate future of industries and target industries that are more likely to see growth.
For instance, the healthcare and technology industries are still experiencing growth even in a recession. If you can identify a niche in these industries, you will have a higher probability of succeeding.
Create a custom Pricing Strategy
In recent years, pricing strategies have slowly become differentiators in even highly competitive markets. The lack of income during a recession creates a similar market condition. So, a custom yet competitive pricing strategy is the way to go for businesses starting at this time.
The custom pricing strategy we create at TRD Studios, takes into account the pricing competitor landscape, all sunk costs for the business and upcoming operational expenses to compute product pricing that not only offsets the expenses, but also helps the business maintain a healthy margin.
Check for feasibility of your idea
Checking the viability of an idea becomes more important than ever during an economic downturn. A feasibility and viability analysis of your idea can give you a realistic view of whether your business will be able to survive the recession and sustain for a longer period of time.
A feasibility study, like the ones done by TRD Studios, takes into consideration all the constraints of an economically strained market and projects the revenues you might earn. We have used extensive market research and predictive algorithms to create an automated financial feasibility study that helps even a novice user with a clear understanding of their projected growth curve.
This can, hence, be a very helpful financial tool for individuals looking to start their own company or invest into an existing business.
Develop a solid business plan
A solid business plan is crucial when starting a business, especially during a recession. A good business plan can not only help you project probable growth of your business and plan for exigencies, but also can be a crucial yardstick in your growth journey.
Your business plan should include a market analysis, a marketing plan, financial projections, and an operational plan. It should also have contingency plans in case of unexpected events such as a worsening recession. Your business plan should be realistic and based on accurate data. It should also be flexible enough to allow for adjustments as your business grows and the economy changes.
At TRD Studios, we root our business models in extensive research and come up with business plans that outline every aspect of the business to the smallest detail.
Keep your costs low
During a recession, it’s important to keep your costs low to maximize your profits. Look for ways to save money without compromising on quality. An important step for this can be identifying the wants vs needs of your business.
For instance, you can start your business from home instead of renting an office space. You can use AI tools to take care of important day to day tasks. Keeping your costs low will help you navigate the recession and remain profitable.
Build a strong online presence and focus on customer retention
In today’s digital age, having a strong online presence is crucial for any business, especially during a recession. A strong online presence can help you reach more customers and generate more sales. Build a website that is easy to navigate and optimized for search engines. It takes time and work to establish a strong internet presence, but it can be worthwhile in the long term.
During a recession, customer retention becomes more important than ever. It’s more expensive to acquire new customers than to retain existing ones.
Therefore, focus on providing excellent customer service and building strong relationships with your customers. Offer promotions and discounts to encourage repeat business. Pay attention to customer feedback and quickly resolve any issues promptly.