If you've been sitting on an idea for a business these past few months, now could be a good opportunity to get started.
The number of people filing business applications, or applying for an Employer Identification Number (EIN) with the IRS, just saw a slight uptick. Applications for business rose 1% for the week that ended May 16 when compared with a similar period in 2019, according to figures from the Census Bureau. This increase followed eight straight weeks of year-over-year declines during the coronavirus lockdowns nationwide.
The increase in pace suggests to Tom Sullivan, vice president of small business policy at the U.S. Chamber of Commerce, that some people are becoming entrepreneurs out of necessity. "Being someone in the business advocacy community, it's not necessarily the chin you want to lead with, that people are starting new businesses or they'll starve," he says.
Still, there are reasons to be optimistic. Many now successful businesses — including Uber, Airbnb, and Venmo — launched during the last recession. And whether someone is drawn to entrepreneurship by necessity or choice, the current economy offers some positive ingredients for start-up success, Sullivan says.
"Some people would say this is a tough time to be capitalizing on a new business," Sullivan says. "But the beauty of entrepreneurs is what they do fixes problems. And what an incredible time to be an entrepreneur because, holy crap, do we have problems."
Video by Jason Armesto
Here are three tips for getting your business started during uncertain times.
"Right now is a great time to start a business, because there's a lot of opportunities in the market to provide products and services that people are looking for," says Lewis Goldstein, president of Blue Wind Marketing. He helps entrepreneurs attract more customers and increase their profitability.
The pandemic and likely economic recession do make for a more challenging environment, so it's especially important to consider what products and services are in demand right now, Goldstein says, like food delivery, fitness, financial services, pharmaceutical, or e-commerce start-ups.
Once you have a great, timely, and relevant idea, consider the following key questions:
- Who are your customers? In addition to deciding whether your product or service is targeted to consumers or businesses, ask yourself: "What sort of customer would bring a lot of joy?" Goldstein recommends. "If you work with someone, a type of customer, that you really don't like, it's going to be a huge headache."
- Where do those customers spend their time? Immerse yourself into the social media platforms or online forums where your customers are so you can better understand their needs and wants.
- What's the best product for your customers? With a good understanding of who your customers are and what they need, you can fine-tune the product or service you intend to offer. That includes honing in on your pricing, defining what makes you different, and a unique selling proposition like a guarantee, bonus, premium or exclusive element, Goldstein says.
Becoming an entrepreneur is about "finding meaning, finding purpose, and providing a service you feel good about and your customer feels good about," Goldstein adds. "It's really important not to be in business just to make money."
While stay-at-home measures are easing in all 50 states, you still may be spending more time at home in the coming months. Use this time to connect with people you already know in the business community, says Sullivan.
"One piece of today's environment that is a very positive ingredient to start-ups is access to your mentor community," he says. "We are at a total level playing field when it comes to access, and it's really, really amazing when you think about it."
While entrepreneurs must have a "creative genius to fix or solve a problem and meet a need," they also benefit by having other people to bounce ideas off of, Sullivan says. Each time you do, it helps to narrow in or target your focus, especially if you're a solo entrepreneur, he adds.
Video by Mariam Abdallah
In addition to people in your immediate network, Sullivan recommends reaching out to your local Chamber of Commerce and small business development centers.
Similarly, Goldstein says it's important to find a community of other business owners. "You're not an island; it's very easy to stay at home and feel like you have to do this all on your own," he says. "Find like-minded people who are encouraging and want to lift you up. That way you'll have the motivation and inspiration to work day after day to make a real business."
"This is a great time to build a foundation for your business," says Goldstein, and one necessary step is to test your product or service with potential customers. Given some of the uncertainties now, he recommends starting with "a minimal budget" so as to minimize any downside risk.
"You want to test to a small group first before you invest a lot of money into it," he says. "That way, you can pour a lot of gasoline on the fire and then scale it as quickly as you want."
Focus your efforts on investments that you'll benefit most from own the road, Goldstein says. That includes building connections with people on LinkedIn or through Facebook Groups, buying a domain name and investing in a well-designed website, creating a professional profile that reflects your brand, and doing market research.
If you're trying to start a business on a limited budget, consider one of the oldest forms of doing business: bartering. Goldstein recommends leveraging your network — and trading your services for someone else's — to get your business off the ground.
"In a recession, I believe that creativity comes out in different colors," Goldstein says. "Be patient, be persistent, innovate, and realize most of all it doesn't happen overnight."
More from Grow: