Jim Donnelly is Co-founder and CEO of Restore Hyper Wellness, which delivers an extensive array of cutting-edge health modalities.
If you’re one of the record number of people who started a new business last year, you might feel a bit intimidated right now. Or maybe you were recently laid off or have nursed dreams of leaving your salaried job to start your own company for years. This might feel like the time to shelve those dreams of entrepreneurism until the downturn passes. Absolutely not.
I’ve been an entrepreneur since I was 21. I was raised by another serial entrepreneur, and from my experience, I believe a recession is a great time to build your own business. Uber, Airbnb and Square all began during the last recession, and they’re not an anomaly. Microsoft, Trader Joe’s, General Motors, Hewlett-Packard, Burger King and more were all born out of economic downturns.
There’s a reason bad times bear some of the best businesses and entrepreneurs, but to successfully navigate a new business through an economic downturn, you’ll need a different mindset than during a boom time. Here’s what I’ve learned about how to succeed during a tough economic climate:
1. A lack of options provides clarity.
The days of sky-high valuations and easy capital raises are over, leaving founders with less resources with which to build. We’ll likely see a return of the bootstrapped startup. While growth will look a lot different for these companies, that’s not necessarily a bad thing. I find that when entrepreneurs fail, it’s often due to a lack of focus.
In a downturn, fewer resources mean free distractions and a clearer path forward. In a downturn, the lack of options creates an easier sort of clarity. Certain marketing tactics and hires may not be available to you right now, and that’s okay—you’ll be able to focus much more on what will move the needle for you in the short-term.
2. In a downturn, the businesses that succeed will be the most opportunistic.
Challenges will arise, but if you’re looking for and alert to them, so will opportunities. These are yours to take. As a small business, you’ll be able to respond to these opportunities faster than your bigger competitors and bureaucratic incumbents.
Cheaper rents, highly skilled talent suddenly available due to lay-offs, an easing supply chain—these are just a few advantages. You know the industry landscape at its worst, which is better than guessing (or ignoring) that potential at the top and being ill-prepared for when it changes.
3. Your pedigree is both your foundation and your parachute.
The previous generation of tech entrepreneurs had a lot of disdain for established companies and institutions; they were here to disrupt and destroy the old guard. I’d encourage you to think of working for established companies in a more nuanced way. These are places to learn from the best, ensure you understand the systems you’re replacing and build up a personal pedigree that will give you options to fall back on during your future entrepreneurial journey.
In between starting my first and second companies, I spent years working at larger companies like Coca-Cola, Citibank, Kraft and AT&T. These experiences taught me so much about how the most successful companies in the world approach marketing and finance and have deeply informed elements of my entrepreneurial approach. That resume also meant that if I failed, I didn’t ever have to worry about finding a new job.
4. You’re in a system that rewards confidence and trying, so don’t be afraid to fail.
My dad was a serial entrepreneur who declared bankruptcy twice. Still, he never lost his enthusiasm for diving headlong into the next project. I think he had the right attitude toward failure and understood how the American system is built to incentivize risk-taking. He always told me, “You don’t go to debtor’s prison for failing in business in the United States.” As long as you work hard, risk your own money, do what you promise and don’t break the law, you can try again another day.
5. It’s not just about following your passion.
I think the worst advice in the world is when someone says to follow your passion and that’s all they say. It’s misleading, sets an unfair expectation for what success takes and also makes the cause of entrepreneurship one that’s ultimately self-serving rather than world-serving. A more honest version of “follow your passion” would be: “pursue the intersection of what you care deeply about, what you’re good at doing and what the world actually needs.”
6. Be the same person you are in bad times as you are in good.
No bad times last forever, but the way you act in those moments will define how people remember you and how willing they are to support you in the future. The hard work of being an entrepreneur is showing up as the same person in good times or bad, pushing through difficulties with resilience and integrity and keeping the big picture in mind when things succeed.
7. Narrowed focus doesn’t mean less impact.
Over the past few years, there’s been a lot of momentum behind companies and startups giving back and taking a role in social causes. I think the abiding instinct is that when economic times are hard, those causes and initiatives are the first to be abandoned.
You can still impact your community by choosing to focus on the things that align with your company’s mission and capabilities. For a mission-based company, that comes by simply doing what your company does best. And you can make sure your employees have the time and support to do the things they believe will help society and the people in their community.
Times of economic hardship can lead to the creation of strong businesses and successful entrepreneurs. However, managing a new company through a recession calls for a different mentality than it would during an era of economic expansion. By understanding factors like how our system rewards confidence and trying, I believe you can be better equipped for your business to not only survive but thrive.