Recession ahead ?
I’m one of many Entrepreneurs building their own small part of the UK Government’s new TechCity, effectively a Silicon Valley for Europe. The OECD has warned that the UK is on the brink of a double-dip recession, the Euro has been under threat for some time now and we hear doom and gloom stories every day. Unsurprisingly the question of how this will affect us comes up quite often in discussion. My immediate reaction was pretty negative, the usual thoughts about a recession limiting the availability of capital, dampening growth, reducing opportunities etc…
However, after a little research and thinking more deeply about this, I am convinced that it could be a boon provided we work out how to take advantage of it:
You’ll get your act together, you have less to play with so you’ll improve your game and consider your choices more carefully, focusing on clear revenue models and not experimentation. Anyone with an interest in your startup including your customers will help to make sure your business idea works as they need you more.
There are more opportunities as larger companies struggle with inefficient processes that are no longer economical, opportunities open up for new, low-cost, and efficient online services.
Customer’s are eager for ways to save money and spend a lot more time online looking for the best deal. Startups often deliver lower cost services to undercut the established players. Free, monetised indirectly is a common feature of disruption and hard to beat if you already have a legacy of technology to support and significant fixed costs.
There’s less competition as larger players focus on in-house cost cutting and redundancies instead of exploring new market opportunities. Reduced revenues make it harder to invest in innovation.
It’s easier to find good people, it halts the brain drain to other industries, people feel less secure in their jobs so are prepared to work for less or free to improve their skills, and more talent comes onto the market as work thins out.
Business costs reduce, office space, equipment, services, all get cheaper as your suppliers reduce their costs to keep your account. Offers, discounts and better terms all become the norm.
Finally, here’s a list of nine companies that started in a recession including IBM, Microsoft and Apple. Big enough for you? I rest my case.
