Always a Good Time to Start a New Business - Tips for Today's Start-ups

There’s never a bad time to start a good new business.

That’s right.  Never.

Imagine, for example, that the entire city where you were planning to put your business burned right to the ground.  Disaster of biblical scale, to be certain, but does that make it a bad time to start a business?  Amadeo Giannini didn’t think so.  In fact, it made him.  He put a plank over two barrels and started lending money when all the big banks in San Francisco were licking their wounds and digging out of the fire that destroyed the city in 1906.  By the time normalcy returned, Giannini was a success, and the business he built in those few months grew and grew.

Eventually, it became known as the Bank of America.  Perhaps you’ve heard of it.

Along with my partners, I started Goldstar in the grip of the recession of 2001 and 2002, during the period that tech investors still call the Nuclear Winter.  The only things getting funded were so-called “B to B plays” and consumer internet was dead, all of which was bad enough. Then 9/11 brought a new level of fear and uncertainty to the economy and society.

This recession is worse, but the fundamentals for entrepreneurs are the same.  If you’re thinking of starting a business but are hesitating because the overall economy is poor, here are some thoughts for you:

First, a bad economy creates opportunities and thins competition. 

Lucky you!  A recession this size is a Hurricane-scale disruptor to an economy.  That means some of the ways things used to work have been completely changed or even washed away.  Those were the businesses who could only survive when times were good because what they were doing didn’t make that much sense anymore.  One strategy is to replace them with something better.  In our case, we married personalized emails to event tickets that would otherwise go unsold in a way that almost immediately made more manual and in-person forms of ticket discounting totally obsolete.  And since Venture Capitalists weren’t throwing gobs of money at dozens of new competitors every day, we had the field to ourselves.

Second, even in a bad economy, there’s plenty of room for “special.” 

A really hot economy does have one thing going for it: it makes it much easier for “lousy” to stay in business.  “So-so” and “Meh” also manage to survive and even grow when the economic machine is going full.  Personally, as a consumer, I’m not a big fan of “lousy” “so-so” and “meh,” so when the machine slows and we get less of those, I love it when good entrepreneurs replace it with “special.”  That’s not the same thing, by the way, as “a little better than so-so.” It’s special.   Something that does a new, important and interesting thing for a customer who cares about that thing.  There is always room for that.  At Goldstar, we brought a new idea to the world: a way to go out to live entertainment a whole lot more, with a better buying experience, a better price, better customer service, and a whole lot of great new event ideas.  It worked.  The lesson: there’s always plenty of room for ‘special.’ 

Third, a good plan and great hustle beats a great plan and good hustle. 

I just said it was important to be special, and that’s true, but special doesn’t come only from the business concept.  It comes mostly from business execution.  Goldstar was the first company in the world as far as we know to send an email to customers after events for their feedback (in our case, it was the day after the show they had bought).  We also set up automatic reminders for people who had bought tickets more than a week or two beforehand, in case the details of the night had slipped their minds.  And we made a point of replying to every customer email within 30 minutes, and usually did so in less than 15 minutes (and still do, by the way).  None of these things if written into a business plan would dazzle potential investors, but when actually done in real life, they make a big impact on your business. 

Fourth, don’t be TOO careful. 

Years ago, my daredevil brother was teaching me to jet ski.  Every time I began to topple over, I’d take my hand off the throttle because my instinct was to be more cautious when things went wobbly.  He kept telling me that the thing to do when the jet ski starts to tip over is to give it even more gas, because that extra power straightens the jet ski up.  If I could go back in time to the first two or three years of Goldstar’s history, I’d take my brother’s jet ski advice and “throttle up.”  We knew we were on to something, but we were somewhat more cautious than we needed to be when it came to investing in staff, marketing, and expansion.  We knew it was working, and we probably could have gotten where we got in the first five years in just two or three.  Well, you live and learn, but don’t let a bad economy spook you if you get something good going. 

A bad economy is a bit like the weather: before you go out in it, you should prepare appropriately, but you can’t let it stop you from doing what you want to do.  Many of the world’s greatest entrepreneurs started their businesses in hard economic times, and I can name hundreds of companies that didn’t survive the booms.  If you’ve got a way of making people’s lives better and you’re committed to working hard, your chances in a severe recession are at least as good, and perhaps better, than they’d be when every lazy and mediocre person who ever wanted to get rich quick is out there trying to cash in.