Starting a Business during Recession

Starting a Business during Recession

If you are thinking that starting a business during a recession is a bad idea, you will need to change that thinking.

Smart entrepreneurs make more money during recession. They take advantage of recession to make millions of cash doing what others are afraid to do.

If you have done your studies thoroughly, you should know that most of the top successful businesses today started during a recession. It was during the 1975 recession that Microsoft started.

Even Burger King started during the 1954 recession. So, what is now your excuse? Smart entrepreneurs see recession as an opportunity while the non-smart ones see it as a time to give excuses why they shouldn’t start any business.

The fact is, we live in an economic world. All over the world, people live in economic cycles. There will be times of plenty as well as times of few.

A recession is not a palatable time in the life of citizens. The period is characterized by terrible economic happenings such as huge job losses, assets lose value and companies pack up.

I am sure we all pray not to see a recession in our lifetime, well sorry to disappoint you, if you live long enough, you will see more than two.

Sometimes, a recession affects our dreams and ambitions, especially our dream and ambition to start a business. Usually, during a recession, survival rather than expansion is on our mind.

But that does not mean that you cannot start a business during a recession. Others have done it and you can do it too. That is not, also, to say that starting a business during recession is an easy undertaking.

However, it can be done. Starting a business during recession may not work exactly as starting a business in a time of economic plenty.

There are certain things to bear in mind while starting a business during a recession.

What Businesses Will do Well in a Recession?

Recessions are lean years and are characterized by low consumer spending. So, if you are starting a business during a recession, you will do well to start a business that characteristically does well in a recession.

The effect of this is that it would reduce your frustration and also increase your chance of success with starting a business.

Some of the businesses that do well in a recession are repair services, accounting services, resume writing services, food sales business etc. These businesses have a high chance of surviving a recession.

The Advantages

Recession period may not be all that bad for starting a new business. Starting a business during a recession also confers some advantages that should not be ignored. Some of the advantages that can be enjoyed when starting a business during recession are;

  1. A Robust Labour Market

Starting a business during a recession gives you access to a more qualified workforce. This is because recessions are characterized by a high rate of job losses which pushes more qualified people into the labour market. This makes the labour market more robust with people of diverse and required experience for the new business.

  1. Lower Cost of Borrowing

A recession is characterized by low consumer spending. People lean more to hoarding rather than spending.

To help resuscitate the economy, central banks and financial authorities usually lower interest rates in order to encourage borrowing from among the population thereby increasing consumer spending.

If you are starting a business during a recession, you can take advantage of the lowered interest rates to borrow money for your business at a cheaper cost.

  1. Lowered Expense

Due to poor consumer spending during a recession, businesses in certain sectors of the economy do not do well, especially those in the non-necessities sector.

As a means of survival, people and businesses sell or auction their goods and properties to raise funds. This offers an opportunity for people starting a business to be able to purchase needed equipment at a lower cost.

  1. Cheaper Labour

Because most people are out of jobs during a recession, it offers an opportunity to employ highly qualified people for the business at a lower cost of what it would have been if not for the recession. These are usually people who are highly experienced and qualified but were laid off as a result of the recession.

  1. Expect Lesser Competition

Not too many people conceive the idea of starting a business during a recession. This confers an advantage on the man and woman who dares to start.

One the advantage it confers is lesser competition. People usually think of starting a business during times of economic boom and plenty. Do not blame them, everyone enjoys the euphoria of an economic boom.

But during a recession, we all withdraw into our shell. Because the majority of us withdraw into our economic shell during a recession, this provides an advantage of lesser competition for those who dare to start a business during recession.

  1. A Lean Budget would go a Long Way

As economic recessions cause a crash in the price of assets, starting a business on a lean budget would go a long way in the setting up of the business. It will not be a welcome idea to sink your full savings into a business idea you are not certain will last the test of time.

A lean budget would help you test the market and build a lean business that can easily scale up when there is a correction in your country’s economy.


If you have a dream to start a business, do not let a recession deter you from pursuing that dream. Starting a business during recession will not be easy, but if you work hard at it and stay persistence, you will surely come out with a successful company with a good number of employees.

If you are out of job or maybe you just lost your job, it is time to put your knowledge and expertise into great use by starting a business.

Who knows, while the economy recovers, you will be dealing with a growth in revenue and maybe that would be the foundation for the next mega corporation.

Do not let the dark economic clouds deter you, start that business today!

Also read: How Government Policies Frustrates SMEs

Francis Nwokike

Francis Nwokike is the Founder and Chief Editor of The Total Entrepreneurs. A Social Entrepreneur and experienced Disaster Manager. He loves researching and discussing business trends and providing startups with valuable insights into running a profitable business. He created TTE to share ideas and tips to help entrepreneurs run and grow their businesses.

1 Response

  1. Kareena says:

    It was good to know about the strategy that you have mentioned here about setting up a business in a time when many of the costs are reduced and hiring of labor can be extended with low wage offers.

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