This article originally appeared in July's edition of IT Pro 20/20, available here. To sign up to receive each new issue in your inbox, click here.
With the world sliding into a deep economic downturn and little certainty as to what the future holds in the short-to-medium term, you might think now is a particularly bad time to launch a new business. But despite all this, some companies are thriving right now – food delivery apps and ecommerce, for example.
For some budding business founders, now may actually be the perfect time to take the plunge – but it’s important not to ignore the potential pitfalls either.
Why wait?
Some people may argue there’s never a good time to take a chance. Others would say there’s never a bad time to do so. As such, if you’re deciding whether to launch your new venture right now, you’ll quite rightly want to consider timing very seriously. Given there is always something happening, it can be hard to time things well, according to Emma Maslen, a high growth executive and professional business trainer and coach.
“Remember six to nine months ago we were all talking about the disaster looming due to Brexit,” she adds.
Isabelle O’Keefe, principle of Sure Valley Ventures, a Venture Capital Fund that invests in early stage software companies is equally bullish, adding: “I don’t think it is good advice to hold off starting a tech startup. The nature of startups is to solve a problem with a tech solution that is scalable and can address large markets, so challenging times present opportunities for tech entrepreneurs.”
“Access to capital has also not dried up, as investors have rushed to assure founders that they are still investing, albeit a bit [more slowly]. A lot of venture capital funds have recently raised hundreds of millions, and have a lot of dry powder that they want to put to work.”
A tough business climate
The high street is really suffering right now and the news is filled with stories about job cuts in some sectors. However, it's important to note that this news is about existing businesses, not new ones. Neeta Patel, CEO of the Centre for Entrepreneurs, tells IT Pro: “History has shown that businesses started during a recession or during a tough business climate have gone on to become very successful. I think any time is a good time to start a business, tech or otherwise, as long as you have identified a big enough opportunity, have a truly innovative and scalable product or service, and are willing to take risks.”
In fact, substantial upheavals in the fabric of society and established economic practices, such as we are facing currently, often create new business opportunities. In the UK, the future of the economy seems to be swinging back in favour of local businesses, while demand for better internet connectivity and more delivery services (to name just two tech-focused trends) is higher than ever. As such, finding and exploiting a niche now could prove a wise move in the future.
That niche doesn’t have to be in a totally new market, either, as Maslen explains: “In the last few months, I have seen startups in traditional markets like recruitment reinvent themselves to come out of the COVID period stronger and more profitable than before.”
Looking for good advice
Some of the advice for budding tech entrepreneurs is the same now as at any other time – if your idea fits the parameters of solving a big problem innovatively and with the ability to scale, then this could be as good a time as any. “Don't wait until your idea or technology is fully developed. Launch, learn, change and reiterate,” says Patel. “If you wait too long, someone else will do it before you.”
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Pure confidence isn’t enough though, and O’Keefe recommends would-be tech entrepreneurs ask themselves the following three questions: “Have I identified a problem or a new customer need that has emerged as a result of the crisis? What are the current alternatives for solving this need and can I create something substantially better? And am I the right person to solve this problem, and if not, can I hire others or find a co-founder to help me?”
Maslen sums up by saying: “This period is teaching people that the old ways need to change, which for those who can innovate, presents a unique opportunity to ride the next economic wave.”
