Are Recessions a great time to start a company? Costs are low (every vendor is thrilled to have a new business), and if you can get people to buy when money is tight, you’ve really proved you have a desirable product. When the economy rushes back, you ride the wave.
When the economy is good and the product fits the market, sales are easy. If you choose a market that’s already large and growing, there are niche opportunities. Sure, when the economy turns south, if you haven’t built a sustainable company with solid financials, things may become difficult, but an unsustainable company is always secretly in trouble. It’s great to have at least some of the uncontrollable variables in your favour; starting up is hard enough and unlikely enough as it is.
This brings us to say the right question isn’t: “Can a great startup be started now,” the question is “Should I launch this startup, right now, to solve this problem, for this market. ”
Let’s take a look at these interesting questions below to determine the answer to the question.
Why is this the right team to tackle this problem? The answer isn’t “because we thought of it, and one of us can write code.” For example, suppose you have a new way to do online payments. If you don’t have experience with fraud detection and banking systems, you’re not the right team, because those things are both specialized and difficult.
A good answer is a previous experience in the industry, including easy sales contacts and insight into the language, life, and challenges of that industry (although this is also a trap). Another good answer is a previous success by the team at startups, or at executing complex projects together.
Why is this question important? Because if this opportunity is as excellent as you think it is, you’ll have ten competitors five years from now, and many of them will be smart, well-funded, and carry insights and advantages of their own. If there’s a better team that can be assembled, some of them will have that team. If you don’t, you’ll be at a significant disadvantage.
Why is your solution the right way to tackle the problem? There are many possible solutions, each with trade-offs on speed-to-market, risk-of-implementation, difficulty-of-implementation, and choices in the target audience, price point, and go-to-market methodology. Why is yours the right one? This probably means capitalizing on the unique experience or abilities of the founding team, choose trade-offs in things like language/framework, algorithms, UX design, and delivery platform that the team is particularly strong at and thus can create quickly and with low risk.
If you can’t answer these Whys in a compelling manner, perhaps your product and marketing insights haven’t yet been encoded into the form of a business. Or perhaps this is yet another case of a genuinely great idea that just can’t be made into a business. At least, not now, not by your current team, or not this way.
That’s OK! It just means there’s more preliminary work to be done. Better to know that now than to get too far down the path of a dead-end, so you can pick a better path and be much more likely to succeed.