Entrepreneurship and COVID-19

Oct 12, 2020 by Roger Scherping

At ProjectionSmart we posted a blog on May 5 in which we quoted Mark Cuban as saying that this is the perfect time to start a business. Cuban said that lack of capital is not an issue because you should be bootstrapping anyway, and you should start with just a small step. You theoretically have more time on your hands now, so you could use that extra time to take a small step toward starting your dream business.

Well, on the Business 2 Community website last month, Joseph Chukwube wrote an interesting article called “COVID-19: New Entrepreneurs Finding Motivation Amidst Misfortune.”* Chubwube reported that despite the worst global economy since the Great Recession of 2008, starting new businesses is exactly what people have done.

Azlo, a banking platform for freelancers and small businesses owners, noticed that 81% of entrepreneurs started a new business between April and June, at the peak of COVID-19.

Contrary to what you might think, only 22% of those entrepreneurs were laid off, so for the majority of the entrepreneurs this was not a survival tactics. In fact, 40% of them were actually motivated by COVID-19.

Chukwube posits that “perhaps entrepreneurship is one of these things that benefit from shocks and disorder. After all, the US experienced a similar uptick in entrepreneurship at the peak of the financial crisis eleven years ago. In 2009, there were 550,000 new businesses, against all odds. That economic depression gave us the business giants Uber, Airbnb, and Square.”

If people are not starting new businesses in reaction to a layoff, then why are they doing so now? He came up with these reasons why people are starting business because of – not despite – COVID-19.

  - Today’s entrepreneurs are helping consumers navigate and adapt to the new normal. Entrepreneurship is all about solving problems, and now we have more problems to be solved and more needs to be met.

  - The reduction in allowable activities gives people more time to start a new business.

  - People desire a side hustle. Some people want to start a business to supplement their income from employment. In fact, COVID-19 is getting credit for giving the Gig Economy a tremendous boost.

  - Trial by fire. Starting a business that survives through these difficult economic times could go on to be a much more resilient company because the entrepreneur is forced to be more focused, frugal, and flexible.


Chukwube offers these pointers to today’s entrepreneurs:

“1. By all means, try to survive, but play to thrive. Think long-term always.
  2. Don’t be obsessed with high profits. Just keep the cash flow steady. If you don’t hit your revenue targets, then cut costs.
  3. Optimize supply chain management.
  4. Remain creative. Every crisis brings opportunities.”

So maybe a pandemic actually is the best time to start a business. Does that sound right to you? Do you have extra time on your hands? Do you need a side hustle? Have you always wanted to start a business? If so, do it. Remember that ProjectionSmart is here to help. We have our Startup financial tool, the simplest way to know if your business concept makes sense financially, and the Proof Plan, the simplest way to write a business plan.

Let us know if we can help.

Roger


* Read the entire article here https://www.business2community.com/business-intelligence/covid-19-new-entrepreneurs-finding-motivation-amidst-misfortune-02344679

 

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