Can you start a business in times of crisis?
Did you know that most innovations took place in a short period of time in times of crisis? When the water is at our lips, we suddenly turn out to be very innovative. And a crisis demands answers to new questions. Situations suddenly arise that didn't exist before and require new solutions.
Can you just do something else because you have to?
A couple of years ago, I was sitting in a great restaurant of friends of a friend of mine in Portugal on a weekday. It was a beautiful place. The luxury and allure radiated from it, and maybe because the food was excellent and very affordable, all the tables were filled.
By the closing time, the owner joined us at the table, and I couldn't resist complimenting him on the beautiful place he had created with his wife. Modestly he started to say that it had not been easy in the beginning. Portugal had been in a crisis for years, and they had suffered from it too.
A few years ago, they were successful interior designers for owners of expensive villas. But from one day to the next, the demand started to drop. To make matters worse, within six months, they were out of work and even with a shed full of luxury furniture for which there was no demand any more.
Both loved to cook and enjoy food, and one evening, after four glasses of wine, the wife suggested to turn their furniture shed into a restaurant. The rest is history, and not a day goes by that the restaurant is not filled from noon until late at night.
How do you start a business when there is a crisis?
Starting a business during a crisis is easier than in times of abundance. That's because there's a demand for new services where there's still little competition. If you can answer that growing demand without much competition, starting a business is much easier.
A good example is video calls and webinars. Until the coronavirus, video calling and hosting a webinar was something for high tech companies. And for fun, of course. Video calling was not suitable for remote yoga lessons or education, for example. Until there was a total lockdown, then the yoga teachers had to.
The supply of professional services for video calling and webinars is limited, so the few companies that could offer it grew like crazy and could barely handle the demand.
The Red Ocean and Blue Ocean
The book red ocean and blue ocean explains that most companies swim in the red ocean. The competition is so fierce that the sea turns red. In the blue ocean, some companies have little or no competition because they are doing something new. Something for which there was small or no demand until they started offering it, or suddenly there was a need for it.
How do you become an entrepreneur during a crisis?
Entrepreneurs find answers to existing or new questions in the market. The difference between starting a business during a crisis is that you can no longer give answers to existing questions. If you are a baker and would like to open a bakery, you can answer an actual question. People like to walk to the shop and buy fresh bread.
Because of the coronavirus and the subsequent lockdown, there is no longer a demand for a shop. But the need for fresh bread remains. They are preferably delivered to the door. So what answer can the baker give to this new question?
I worked from the age of eleven until the age of sixteen at a driving shop that came to everyone's house in the village. Due to the increase of large supermarkets and delivery services, the function of the driving shop became superfluous. That's a pity because the shop also had a social role and it was handy if you forgot to buy something.
We have been in lockdown for ten days now, and I still haven't seen a new mobile shop. I would even like to buy my clothes there, but that fresh bread is also delicious when they bring it to the door.
Why is innovation normal during a crisis?
If your existence is threatened because you no longer have any income, you suddenly turn out to be innovative. Hours on the couch for Netflix are exchanged for coming up with new ideas. You know that if you stay seated, the hunger only gets worse.
A few poor students founded Airbnb. When after a few years they ran out of all their money and couldn't borrow anything from their father, aunt, grandfather, and neighbor, they had to think of something that would give them income. The platform itself didn't have five customers a year yet, so that wasn't the solution.
Obama took part in the American elections that year and one of the boys proposed to market Obama cornflakes. You're not making this up! Guys who had the plan to conquer the world with a revolutionary renting platform wanted Obama cornflakes on the market. It was a resounding success and gave them enough capital to last until the first serious investor came on board.
How can you start a business during the crisis if you can't do anything?
Entrepreneurship is not for everyone. Not even during a crisis. If you'd rather watch the Netflix series of 80 parts instead of thinking about how to answer new questions, you're already hopelessly lost, especially when the water is already up to your lips.
But if you are willing to use your grey brain cells, research what new needs arise and try to find solutions to them, successful entrepreneurship is almost a guarantee.
How to start a business during a crisis without investment capital?
Even if you have no investment capital, it is easy to start a business. The trick is if you need money to start your business, to improve your idea in such a way that you can start it without a capital injection. If you believe that you can only start your business if you get investment capital, then you have one of the problems below.
- You are not creative enough to come up with better ideas on how to start the same thing without capital.
- You're not creative enough to come up with another idea that doesn't need money until you've earned enough to finance your original idea yourself.
Why are some entrepreneurs successful during a crisis?
It's too easy to believe that you can only be successful during a crisis if your industry isn't affected by it. The most important characteristic of an entrepreneur is curiosity and the ability to innovate. That kind of entrepreneur always survives. That kind of entrepreneur is also able to change something or everything when things go wrong. They are resilient and don't give up until they see an opportunity to make use of it.
If you don't succeed in setting up a successful business during a crisis, ask yourself the following questions.
- Am I curious enough?
- Am I innovative enough?
- Can I handle setbacks well?
- Am I flexible enough in my approach to the end goal?
- Do I have enough knowledge to do what I want to do?
One time a no means that you only have a 1% chance to succeed as an entrepreneur during a crisis. Even without a crisis, the chance that you will succeed is small.
One time a yes means that you have to create four other yes's to force success. Until you can say yes five times to all the above questions, the most important question you can ask yourself is: "In what way am I preventing myself from being successful while blaming others and external factors for not succeeding?