I get asked this question a lot. Is it smart to take a chance and open up a new business in the middle of a pandemic? The answer depends on a few factors. Here are some questions to help you find the answer, as well as some ideas on what might work!
1. What’s your business idea?
It’s really easy for people to tell you that you should or shouldn’t start a new business, but it really depends on your idea. The lockdowns have really wrecked havoc on some industries. Restaurants, hair stylists, catering companies, any service that needs in-person visits to thrive, are the ones that are most affected by this. But, it doesn’t mean you shouldn’t open a restaurant, or that you shouldn’t open a bridal shop. It just means that you should have a plan in place that can weather the current storm by offering services that can still be accessed by people at home. And even then, that might not be enough to survive.
2. What’s thriving right now?
Have a look around you. What businesses are still thriving? Who’s doing well, and who isn’t? Which one of your pals still has a job, and a living wage? Chances are, those industries are safer. While there will always be future threats from automation, climate change, and economic swings, if you want to create a business that will be around for a while, you’ll want to choose a field that’s pandemic, and recession-proof, inasmuch as possible. Of course, that’s a very practical way of looking at things. But, if you have some ideas that could be applied to an industry that isn’t as vulnerable as others, then that’s absolutely the smart thing to do.
Also, people are at home right now. Do you have a business idea that could take advantage of that? Great! But, keep in mind that your business should be able to adjust when people aren’t home-bound anymore. And, industries can shift over time. Look at how tele-medicine is shifting the medical world. Do yourself a favour and take a higher-level view of things. Take a good look at the industry you want to go into, and then look at what’s happening in other industries. Sometimes, we get too close to our ideas and we fail to see what could go wrong.
3. What’s your financial life like?
Are you in decent financial shape? It’s ok if you’ve got debt. But, can you pay your rent for the next six months to a year, without needing any other income while your business ramps up? If not, then you might want to re-think the idea. Starting a business can be expensive, even if it’s got low overhead. You’re still looking at costs for marketing, licensing, legal, and accounting fees. Incorporation isn’t cheap, either.
Being in good financial health is especially important during COVID because we don’t know what the economy will look like, especially if inflation goes up, or if the markets crash. Even if you have a solid business idea, it could still take months to make enough to pay your bills each month. If you’re working a job right now, maybe start the business on the side. Prove the concept, and then go out on your own once you have a nominal amount set aside in case things don’t work out. The last thing you want to do, especially in this economy, is put yourself in a worse financial situation than before.
One more thing to consider: do you have dependents? This is a really big and important question because I’ve seen far too many people run off with their ideas when it wasn’t a smart thing to do. Don’t ever gamble away your family’s future. If you have dependents, take a good hard look at whether or not going into business would mean financial disaster, in the event that your business isn’t raking in the cash like you’d planned. All it takes is one root canal.
4. Become a consultant
As a consultant, you’re operating a business. If you really want to go out on your own, but you’re not financially ready to pioneer a new product or service, becoming a consultant is one way to get your feet wet. Despite COVID, there are a ton of contracts out there for white collar workers. You can find consulting work in anything from project management, to coding, to specialized fields like accounting, and finance. One word of advice though, always get a lawyer to review your contracts. This will give you peace of mind, and you’ll be able to trust that you’re in a fair working engagement.
5. Go virtual!
Virtual is king right now. If you can come up with an idea to make money virtually, then even better! Digital media is growing at such a fast pace right now. Livestreaming, online coursework, online entertainment, online gambling, digital games, the list goes on and on. And there’s still a lot of growth in this space. The bonus here is that we have the tools at our disposal today to bring new ideas to life, for relatively little money.
The challenge, for anything online, is always: standing out. There’s such a deluge of options out there, that unless you’re also highly skilled in marketing, there’s a good chance your good idea might fall flat. This is why I still advise people with good ideas for a virtual product or service to have enough money saved up to pay for marketing services early on. There’s nothing more discouraging than having a great idea, but nobody paying attention to it.
It IS possible.
It can feel totally discouraging right now, especially if you, like many others, have lost your job. Maybe you’re thinking that opening up a business will give you more control over your own destiny. Sure, that’s possible, but it’s also much, much riskier than just finding another job, or upgrading your work skills.
Personally, I created a new company during COVID, and I have zero regrets! In fact, I’m thrilled that I did it. But, there were also a lot of factors at play that made it easier for me to do so, and to navigate the ups and downs without starving or worrying about my bills. Whatever you do, play it smart. The pandemic has brought us a gift: it has given us time to think, and to plan. Plan it right, and you can absolutely start a new business, and thrive.