With more bleak news on the economy from the fed today, it’s good to remember a point we’ve made before: the downturn can actually be a good thing for entrepreneurs. In fact, the Harvard Business Journal goes so far as to make the argument that most savvy entrepreneurs love a downturn because of the opportunities it affords. They make a good point: Clif Bar, Chipotle, Method, and Hanna Andersson—all hyper-successful businesses—launched in the midst of a recession or downturn. Says entrepreneur Eric Ryan who co-founded Method, a natural cleaning products business, during tough times:
“Starting a business in a recession is like vacationing in the off-season. It’s a little less crowded, and everything starts going on sale.”
Words to live by.
I’m skeptical that macro-economic factors, such as whether the U.S. is in a recession or in a growth stage, affects the survival rate of small businesses. At most, it is one of a million factors impacting survival rate. Sure, we can name any number of successful companies that launched in the midst of a recession or downturn. I can also name successful companies that were launched in an upturn. The only way to begin addressing this issue is to measure the field of all businesses that were launched during a recession (including both successful and failed businesses) and compare that to the field of all businesses launched during a period of economic growth. Even then, it would merely provide a correlation, not a fact. It’s anyone’s guess, but I believe that entrepreneurs should focus on more important issues at hand, and start their business regardless of the current economic conditions of the day.