I would like to start this article with a question to the reader, based on a message a friend has on his Messenger: In times of crisis, are you one of those who cry or who sells scarves?
In a time called crisis like the one we are experiencing today, many people speak and write about this topic. Some of the opinions these people give are positive and others are negative. I decided that I wanted to contribute my grain of sand and I will give my point of view.
From this moment I am going to summarize what I think about the economic crises (or crises of other kinds) and the creation of a company. There is no bad time to create a company or venture and in this I am blunt. However, there may be times when it is easier to start a business. For certain people (and business ideas) it will surely be easier to create companies in prosperous times and for others, even if it sounds laughable at first, it will be easier to create them in turbulent times. Now I will explain the reason for these statements.
Every day when we get out of bed and do it just like the other 6 billion people who inhabit this planet, we have countless opportunities to explore.
This can be as simple as having the chance to meet a new person, or how about meeting the woman (or man) of your dreams. You will also be able to identify a need that exists in a market and to which you have found a solution. And how many more opportunities do you see every day but do not realize this, all thanks to getting out of bed and being alive.
Times of crisis are not unrelated to this situation. With crisis or without crisis there are always opportunities. Now, it is up to us if we want to take advantage of the opportunities that are presented to us or if we prefer to ignore them and let them pass. I return to the idea of selling scarves. This is an illustrative phrase more than anything else, but it means that in crises we can get ahead or we can resign ourselves. If you do not want to resign, sell scarves, sell your idea, create your business.
Now, there are those who take advantage of times of crisis to do evil or at least to carry out unethical actions. Currently there is an example of this and it is in the crisis of the AH1N1 Flu, where the fear of contracting it has created black markets where masks and medicines like Tamiflu are sold above the usual prices. This may not be illegal, but it is unethical. My call is to take advantage of opportunities, but always thinking that as a result of their work, added value must be generated in society and that it does not become an undesirable undertaking.
The market in times of crisis
There are products that do not behave the same in good times as in times of crisis. Many of these products are considered sumptuous. For example, it will be more difficult to sell a luxury vehicle in times of crisis since people probably have less money to pay for this type of purchase. Of course, if the crisis is a war, surely these vehicles will have a good commercial opportunity if they are armored.
On the other hand, the goods that cover basic needs such as milk, eggs and soap, will surely not be greatly affected by the crisis. Your egg consumption will be more or less the same at any time. Even if you are having a great financial time, your egg consumption is unlikely to increase.
Given the above, when you create a company in times of crisis, you must analyze what type of good or service it is going to sell. It is possible that you may conclude that your product will not do well in times of crisis and that it is prudent to wait until the financial climate improves to start with this. On the contrary, you can conclude that your product is not affected by the crisis or that it even helps you and that there is no better time to enter the market than now, with or without crisis.
Time of crisis to make fortunes
If you have had any contact with the stock market, you will surely have heard that the key to success lies in buying low and selling high. That is, buy when the shares cost little and then sell them at a higher price. Your profit will be the difference between the purchase price and the sale price. So why is it that in times of crisis, when share prices drop, people sell them? It seems illogical.
The truth is that the stock market behaves in a very human way, reacting to our fears and fears. When the word crisis is heard through the media (which also continually bombards us with this news) and the shares decrease in price, many people sell them so as not to lose more money. On the other hand, there are large investors who buy these shares at very low prices. They know that the stocks they buy may continue to drop in price, that they will not recover in a long time, and even that the company will go bankrupt and the stock will lose all value. However, this is a controlled risk that these investors know and with which they are willing to live, since if they get their "move", they will have great returns.These investors are often known as speculators.
If you talk to an economist, he will tell you about the business cycle. There will be periods of growth and boom, as well as slowdowns in the economy. How long and pronounced these cycles are depends largely on the macroeconomic policies of the countries. This is what these speculators are betting on, since they know that despite the economic problems, they are part of a cycle and will eventually recover.
A great example is the purchase of shares in large banks like the Citi in the United States. The share price of this bank just 2 years ago was above US $ 55.00 which was a great price. In March of this year, the same share came to be worth less than $ 1.00 for the first time in its history, losing virtually all of its value (more information on the behavior of the Citigroup Inc. share). After such a price drop, many shareholders sold to at least regain a minimal portion of their value. Those who bought in this crisis are risking it so that in the future (I am talking about years) this action will recover its value. This is a risky game, as the stock could further reduce its value and the Bank could declare bankruptcy.However, if the economy recovers and Citi comes out ahead, the gains for these shareholders will surely be exorbitant.
Continue or stop
The Citi example was to show you a broader perspective of the business world, with one of the most important Banks on the planet. Surely the size of your company will be a tiny part of what the Citi is, but this example is still valid.
With all that I have stated, I want to say that there is no perfect answer for whether or not to create a company in times of crisis. I think that there are many other variables to consider and that the crisis alone cannot be the determinant of this. I repeat, every moment is a good time to start a business, but the reasons you have for saying yes or no depend on your situation.
In times of crisis, many companies report having problems, being on the verge of bankruptcy and executing actions that protect them from disappearing, as is the case of requesting protection through restructuring laws (in Colombia, Law 550 and in the United States). United Chapter 11, just to mention two). In these situations you see all kinds of companies, from small companies to large corporations. It can be said that all companies are susceptible to these problems, but not all overcome them. This is due, among other things, to good management, strong products, etc., but mainly to the fact that the economy continues and not all companies can disappear. So if your fear of starting a business is linked to these risks, saying that this fear is very valid,I recommend that you look around and realize that despite the crisis, the economy continues to function and both individuals and companies continue to consume goods and services. It is possible that your venture will not succeed in times of crisis, but the crisis is only one of the factors that defines the direction of the venture.
As a last tip, remember that the economy is cyclical and will eventually run into a crisis. Your company has to be prepared, from the financial and organizational point of view, to face crises. This is topic for another article, but I'll leave it for you to think about. And remember that every crisis brings opportunities, you just have to know how to find them.
