Top 4 Reasons to Start a Business During an Economic Crisis in Sri Lanka

Economic downturns, or even the current COVID-19 volatility, are challenging times. Uncertainty, job losses, and a direct knock-on cash flow can put firms in a precarious financial position. There is a silver lining, though.

Businesses are rethinking their business strategies, revising their budgets, and establishing fresh forecasts to reduce their burn rate and increase their cash runway. To be sure, they’re making it and finding ways to grow, but now may be the finest time to start a business.

It is possible to take advantage of a weaker economy and avoid many of the challenges that are currently affecting firms by using a lean planning method. When starting a business during a recession, here are eight things you should bear in mind.

1. Find solutions to new issues.

When times are tough, new issues arise. There is a current need or pain that people are experiencing and that often does not have an immediate remedy. Understand how consumers now deal with this issue and who gives the best current solution to assist outline why they will switch to you.

Instead, work on making the case for your company, product, or service as a better and more innovative alternative. Make the case for why your solution is better than the alternatives, even if they’re less expensive, faster, or more reliable. It’s possible that the easiest way to get started with a new business idea is to start with remote, delivery, or as-a-service variations of products or services that haven’t yet successfully flipped.

2. Improved Quality at a Lower Cost with Quicker Delivery

Starting, you’re probably working out of your house and employing only a few people. This means that you’ve got very little overhead to deal with. Because of that, you’re in a terrific position to provide customers with an affordable option and gain their loyalty. During an economic downturn, businesses and consumers alike are seeking ways to save money, which may provide you the opportunity to offer your solution.

Your clients will stick around if you’re able to help them save money and provide better service or a faster turnaround time. As one of the reasons they were able to withstand the crisis, you can now create a relationship with them and make them ambassadors for your business. Your clients will be more inclined to accept price increases or additional services as the economy improves because of how you supported them earlier.

3. More room for the rivalry to flourish.

There has never been a better opportunity to enter the market if you’ve always wanted to start a business but were afraid of the competition. During a crisis, both large and small firms are striving to adapt and survive in diverse ways, making your competitors and the market exposed to a new entrant. ‘ In the same way that you may use your lean position and begin by working from home, you have a better chance of surviving the economic downturn.

Asking prospects how they feel X firm is providing them during this crisis may be the best thing you can do to take on the current competition aggressively. and “What would you have them do differently if you were in charge?” Answers to these questions can help you avoid the pitfalls of the incumbents and give a better solution for current clients currently in the market.

4. Low-cost materials and supplies

In a recession, corporations are more than likely selling off their products, assets, and equipment for a considerably lower price than they would otherwise. As a new business, this can save you money on things like office rent and software as well as initial outlays for things like laptops and printers. When beginning a business from home, this may only have a limited impact, but it might still be advantageous if significant overhead expenditures have previously prohibited you from doing so.

Find vendors, business partners, and suppliers that need to sell inventory or sign up new customers at a lower rate. You may be able to save money upfront and perhaps negotiate long-term payment arrangements that will last whenever the economy starts to recover as a result of this.

Other reasons to start a business during a recession include these.

5. more flexible Credit choices

You should be looking at more traditional credit choices as firms look for relief options like the Paycheck Protection Program and SBA Economic Injury Disaster Loans to offset the loss and enhance cash flow. Credit card interest rates may have been lowered by banks and other financial institutions as a result of the recent financial crisis. For those just starting in business, this means lower interest rates and bigger credit limits on business loans and credit cards.

When applying for a loan, keep in mind that most lenders require a business plan that includes financial documentation and estimates. In addition to bolstering your application, this shows that you have a long-term perspective and will be able to efficiently manage your finances.

If you’re looking for something a little more robust, you can always check out LivePlan, which has a lot of free business planning services. An online business planning software called LivePlan lets you draw out your plan without the need for complicated spreadsheets because of its usage of automated financial information. A simple budget adjustment and several predictions can make your strategy investor-ready without the need for further creative knowledge or effort on your behalf.

6. The ability to invest in the stock market

Investment in startups and small enterprises don’t often go away during a financial crisis. Often, angel investors are on the lookout for intriguing opportunities that allow them to move money out of the stock market and into a potentially profitable enterprise. Even if startups are inherently hazardous, this provides them with more protection and prospects for you and your business to secure further capital as well.

When making a presentation to investors, the most important thing to remember is to have a complete executive summary on hand for them to study. Focus on how your business will function in an economic downturn, as well as how you’re leveraging the earlier suggestions in this article to reduce expenses, improve service, and so on.

You must be able to establish your market position, competitive advantage, and any evidence that your target market is truly looking for an alternative option. Having a financial strategy that shows how your company will function after the crisis shows that you have given long-term consideration to various scenarios is also important. Assuring investors that this isn’t merely a short-term money-making opportunity during a low market can help your business appear less risky.

7. There is less rivalry in the market as a result.

More competition is generated by a thriving economy. More and more people are beginning or expanding their enterprises, and established businesses are thriving as well. During a crisis, all of that appears to vanish, but it makes way for those who are willing to take a chance.

One of the main advantages of launching a business during a downturn is that you will have less competition entering the market. With no new competitors to contend with, you’re free to focus on thwarting the existing rivals. Although this is a consideration, for the time being, you should use this advantage to get your business ready for increased competition as the market evolves and grows more favorable to you.

Prepare for long-term success by following these eight steps:

For your business to succeed, you must balance the short-term benefits of launching during a crisis with long-term post-crisis preparation. However, it isn’t as difficult as you may think, mostly since you’re creating a firm during a time of financial hardship. The use of lean planning tools and regular strategy adjustments based on performance, the market, and customer behavior is one way to make sure that your business stays on the cutting edge.

Businesses thrive when customers aren’t as likely to overspend on impulse purchases. You’re establishing your brand as a reliable source of trust and stability in a world where so much is in flux. You may be confident that your long-term planning approaches will be informed by your short-term experience and habits if you start your firm now.