Business opportunities in recession
We are in a period of winter for many small businesses. The economic recession is undeniable, and it’s compounded by the psychology of the current disconnected, remote climate. But in order to thrive in business, you must be made for winter. You must know how to spot and seize small business opportunities that will allow you to grow, no matter the economy.
The most successful people do well in winter. And many of the most successful companies on earth were born in recession: Disney, IBM, Chevron, FedEx, Whole Foods, Microsoft, Apple – the list goes on.
Winter will not be forever. Now is the time for small business owners to be creative and innovative and to set themselves up for success when the sun shines again.
Learning how to judge types of business opportunities is your most powerful weapon against getting involved in a bad and costly business decision. How does one distinguish between worthwhile leads and too-risky ones?
Whether you are considering online business opportunities or brick-and-mortar ventures, you must commit to thinking outside the box while remaining intentional in your approach. By building a strategy centered on your business vision that prioritizes your customers, you’ll discover new ways to take your business to the next level.
Types of small business opportunities
You’ll find new small business opportunities in three ways: finding new markets, tapping existing ones or forming a joint venture.
Finding a new market
Entrepreneur Jim Poss, creator of the Big Belly trash compacting machine, met an unmet need in Boston. In 2003, Poss noticed the city’s trash pickup processes left the city polluted with uncollected debris. Poss investigated the problem and learned that the garbage trucks servicing Boston and other cities left a damaging environmental footprint.
Rather than taking a traditional approach, Poss turned the problem upside down. He found that the real problem was not the trucks – it was the frequency of their trash collection. Poss then developed an environmentally-friendly trash compactor to replace the city’s trash cans, thus decreasing the frequency of trash collection. Poss was able to fill an unmet need and build a new market niche.
Purchasing an existing business
AOL Inc. created a business opportunity in 2011 by acquiring The Huffington Post (now HuffPost), a lifestyle website founded in 2005. Instead of attempting to capture HuffPost’s market out from under HuffPost, AOL opted to purchase its competitor’s company, thus subsuming HuffPost’s market into expanded AOL operations. The transaction created a larger company that now provides the local, national and global coverage fans expected from HuffPost, augmented with additional AOL content.
Jay Abraham, a marketer, executive and business coach, says that during an economic winter, there are likely to be even more small business opportunities to purchase existing companies. Many of your competitors will be reactive and paralyzed – which is an opportunity for you to purchase their assets and acquire market share.
Forming a joint venture
Jay also recommends joint ventures and other types of partnerships during a recession. The market is always more receptive to collaborations, endorsements, profit-sharing deals and more. Contact other companies, influencers or media that have access to the market you want, and strike a deal.
A global survey reviewed 253 companies that had used joint ventures to create business opportunities. More than 80% of respondents said the joint venture arrangement had produced outcomes exceeding expectations. Another survey of joint venture participants showed that their return on equity increased by 6% in five years because of the venture. Whether you participate in a joint venture or another type of small business opportunity, taking care to thoroughly vet your leads will increase the chances of a positive outcome.
How to identify small business opportunities
How you identify small business opportunities depends on your industry and where you are in your business lifecycle.
Understand relevant regulatory requirements and restrictions
Most states define “business opportunities” using general criteria surrounding licensee-buyer relationships in the sale of a product or service. At the federal level, the Federal Trade Commission (FTC) regulates franchises and other types of business opportunities, including distributorships, “jack robber” ventures, dealerships, trademarks, multi-level marketing and business coops. Understanding the laws ahead of time will save you wasted time and effort.
Make sure your business idea meets a need
Do your market research to pinpoint the problem your product will solve for consumers. To make sure you’re adding real, lasting value to your customers’ lives, ask yourself: Does this market exist? And if so, who is supplying this market? Make sure your location works from a clientele and distribution perspective, and that your price point fits the market you’re targeting.
In an economic recession, customer needs change – and therefore small business opportunities change as well. Many people will have less disposable income, and may begin to limit purchases to only their essential needs. Entrepreneur and business master Roland Fraser recommends repositioning your product based on these new needs. For example, you can position your product as a substitute for more expensive goods, as an essential good or as a treat.
Expand your network
As you work to find small business opportunities, focus on expanding your network. The world is your oyster here. Even in socially distanced times, you can leverage technology and digital strategies to make connections and get your name out there. Consider everyone you meet as a potential business connection, and have an engaging elevator pitch prepared to introduce yourself and your product.
Research your industry
Look before you leap and evaluate your industry: Is it shrinking or growing? What trends are impacting the industry? Who are the suppliers, buyers and distributors? Are customers distracted by substitute products? Are there online business opportunities in your industry? Are there barriers to entry? Taking the time to understand your landing pad before takeoff will help prevent a potentially devastating loss of resources.
Understand your product’s impact
Part of being a responsible entrepreneur means being sensitive to the impact your product will have on society and the environment. When considering how to enter a market, use the SEERS acronym (Social, Environmental, Economic Responsibility and Sustainability) to evaluate the product.
Remember to acknowledge the reality of the times, as entrepreneur and investor Ryan Deiss says. Your marketing must engage with the conversation your audience is already having. While you don’t need to focus on the negative, your tone needs to reflect that we are dealing with a somber time.
Look to existing businesses
Jay Abraham says that partnerships and connections can be the difference between profitability and failure during economic winters. Collaborate with providers of related products that are more essential or that are associated with your product. Survey your market landscape to find inefficiencies whose solutions could be viable business ideas. You might consider franchising or licensing your (or someone else’s) product for a shared profit. Whatever your strategy, listening to other businesses’ customers is an invaluable source of information for refining your product and operations.
Prioritize self improvement
Research confirms what leadership development experts already know: True leaders create business opportunities by working on themselves as individuals and professionals. As you tune into your passions, you become more attuned to your environment and to unmet needs in the market. Improve yourself to uncover business opportunities in everyday life.
Take the first step toward discovering new small business opportunities with Tony Robbins’ 7 Forces of Business Mastery. This content series is packed with information to guide you in finding quality business ventures.
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