Advantages of starting a business during a pandemic

What experience and experts reveal

You may be surprised to hear that a pandemic or downturn actually offers some advantages to new business owners. But that’s what experience and experts show us. A recent New York Times article explains why. “Downturns or challenging times are seen as good times to start a business for two reasons,” said Rashmi Menon, entrepreneur in residence at the University of Michigan’s Zell Lurie Institute for Entrepreneurial Studies. “One is, there is less competition for resources. The second reason is that whatever changes we face, positive or negative, bring up new customer needs. And customer needs are at the core of any business.”

Past downturns have produced some high-profile American companies: Airbnb, Disney, General Motors, Hewlett-Packard, Microsoft, Uber, and Venmo, to name a few. For some, the timing allowed them to grab larger market-share because of minimal competition. High unemployment rates also meant greater access to top talent. For other companies, the beneficial borrowing environment during a downturn offered better access to capital than they would have otherwise had.

In fact, now is an easier and more affordable time to get funding for starting a business. Benefits can include lower interest rates for borrowing start-up capital, cheaper equipment as businesses sell off inventory, and lower lease rates as landlords scramble to fill empty spaces.

The coronavirus stimulus bill signed into law in March 2020 creates even more opportunities. Until December 31, 2020, it’s possible to tap into 401(k) and IRA retirement accounts earlier and without penalty, and to take a larger loan from such accounts than was previously allowed. What does this mean in terms of dollars and cents? IRA and 401(k) account owners can now take loans of up to $100,000 (compared to the previous limit of $50,00) from their accounts. And a penalty-free early distribution of up to $100,000 is available to those under age 59½. Check out this article for more details.

Of course, starting a business always requires a balancing of risks and rewards. And that’s where franchises make especially attractive options. They offer the benefits of a tried and tested business backed by an experienced team. Instead of starting alone and from scratch, franchisees get training, support, and the collective power to negotiate the best terms from vendors and others.

There are many lucrative opportunities in franchising right now. To hear about them, schedule a free 15-minute call with me. As always, there are no obligations, costs, or strings attached.