Why is Economic Recession Good for Startups


Weaker Competition:

Many big companies are struggling with laying off employees, cutting off secondary product/service, rebuilding management structure, asking for cash investment…..but definitely not going to release new product or better service very soon. Well, this is your chance to sneak into their market.

Lower Cost:

When people get unemployed, even students from great schools and managers from big companies are considering to work for small startups with discounted salary, which rarely happened in the past. Stuff like office, server, food are also cheaper than before.

Better Plan:

While VC is holding back their offers carefully in the recession, it’s more difficult to get fund with a lousy business plan, especially those without a clear revenue model or healthy cash flow. While your business plan is revised again and again but still get cold-shoulder from VCs, it’s more likely to survive in the real business environment.

Fairer Chance:

Well, we all say 9 out of 10 startups are going to fail within 12 months. It’s true that small company has high risk of failure, but after Lehman Brother fell apart, Merrill Lynch got sold, and auto industry monsters kept crying for help, it’s pretty clear that no company is safe in this world, and size definitely can’t determine the fate of a company. I’m sure people will tend to have a fairer attitude towards small companies.

Tighter Pocket:

I have a friend getting >10,000 dollars a month as revenue from his online business. Pretty good for startups, isn’t it? But what makes me sad is, he spend 10 times more money every month, 90% of which is for senior management’s salary, while the job of those seniors is just flying for coffee meeting once a month. It’s never too late to watch every penny in your pocket, dude, no matter it’s recession or not.

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