Identifying Innovative Business Ideas in a Volatile Economy
Recessions are often a time when potential entrepreneurs are hesitant to pursue a business idea. For some, this is a time best spent to keep finances on a tight leash and to build cash reserves. However, trying times does not always equal to unsuccessful business pursuits. Some companies may fall, but others unexpectedly rise.
One company that thrived during a recession is Uber, a ride-sharing app that launched back in 2009. Back in 2007 to 2009, the U.S. fell into what is called The Great Recession. GDP fell to 4.3% and unemployment reached 10%.
This did not stop Uber founders, Travis Kalanick and Garrett Camp, from launching Uber—a business idea they thought of after having difficulties getting a ride while they were in Paris. Fast forward to almost a decade later and the company reported that the app was used to book more than 10 billion trips since it was founded back in June 2018.
Entrepreneurship is still worth pushing for, even in a time of economic difficulties. This article gives some insight on how to find the next innovative business idea.
Take a look at what is lacking in the local community
One Entrepreneur.com article mentions that it is best to have a product that is a must-have rather than offer something that is just nice to have. Business owners are often problem-solvers and the company is more likely to be profitable if they work towards solving a consumer problem.
One example is Groupon, an e-commerce marketplace that connects subscribers with local merchants. It is an example of another business that was founded during the 2008 recession. Their main goal was to help revitalize local startups and boost cash flow when banks were reluctant to lend businesses money.
The idea was to promote the products of local businesses by offering a deal per day that will only go into effect once the offer has gotten a set amount of purchases. Groupon’s founders were not set on making a lot of money with this model but years later, they are now valued at $547 million.
This shows that having an innovation mindset is one key to success and starting small can make a big impact. From serving local entrepreneurs, Groupon’s services and offers went worldwide.
Being immersed in one community gives would-be entrepreneurs a pulse of the current local economy and what the people may need. Keep looking for what is lacking in the community. Then if it solves the problems of the consumers, there is a higher chance for a business to grow from there.
Use experiences as inspiration
CEO of Energent Media, Jennifer Spencer, once said that “finding a greater purpose in your work can make all the difference for your entrepreneurial efforts.”
While a thriving business stems from the ability to solve consumer needs, an idea will not miraculously turn into a business plan if the owner is not passionate about it.
A survey conducted by Cox Business shows that more than half of the respondents, all business owners, founded their ventures because they were inspired by the opportunity to build something from scratch. Money was not a motivating factor and only 8% of respondents saw the financial opportunities as a plus.
Dane Strangler, a fellow at Bipartisan Policy Centre, states that the longest-lasting companies were started during economic downturns as they are tougher and nimbler. He calls it a “trial by fire” because these companies have to “scrape and scrimp” to achieve success.
This is why personal experiences can help push entrepreneurs further. Since these ideas were born from something that they personally found lacking in the market, they are more likely to back up and push this initiative forward.
Starting a business during a recession is possible as it is a time when gaps are created in the market and people are looking for innovation and a way to solve their problems. Other than assessing business models that are recession-proof, entrepreneurs who can identify what the market needs can get a head start in the industry.
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