Many people believe that the COVID-19 pandemic has brought on an extremely unfriendly environment in which to start a new business. However, there are always opportunities for people with fresh, creative ideas and solid plans for making them work.
Today’s difficult business climate means that only the strongest companies will survive. Some sectors of the economy are experiencing severe cutbacks, like restaurants and non-essential businesses like gyms that also have a high potential for spreading the virus. Surprisingly, there are sectors where the pandemic is actually creating opportunities.
Frank De-Levi explains how you can start a new business during COVID-19 and gives some ideas for businesses that may be recession-proof.
Statistics to Know
While the business environment is strained, there has been a renaissance in the number of new businesses that are being created. New filings for employer identification numbers are up from 2.7 million in 2019 to 3.2 million in 2020.
Unfortunately for these new businesses, small business revenue was down by 21 percent from January to mid-September. Entrepreneurs realize that their probability of success is lower than in the past, but a significant number of people are still starting new businesses.
Find Your Niche
The first thing you should do when planning a new business in the time of COVID is deciding which specific niche you want to fill. You may examine your local business climate and notice that there is a significant need for a product or service that is not being met.
For example, Frank De-Levi owns a home healthcare business called HomeAssist Home Health Services. Since elderly people and those who have been hospitalized need care at the same rates or even higher rates than before the pandemic hit, there was a clear and demonstrated need in the community for their business.
You should also think about businesses and services that have been in high demand during the pandemic. For example, home and business disinfection services have grown exponentially, even as at-home cleaning businesses have suffered due to quarantines.
Another area in which there is room for growth is in manufacturing the goods that everyone needs to be safe during the pandemic. Companies that got an early start on hand sanitizers and face masks have made a tidy profit. There is still room in the market for these products since stores are having trouble keeping them on the shelves.
Today, it is difficult to get investment funds for a new business. Banks are less likely to lend to unproven companies. Your first source of funding is likely to be your friends and family, as well as any personal savings you have accumulated. Your friends and family may be short on cash like you, but you should cultivate relationships with those who may be able to help you start your business.
If you are starting a business with a great deal of growth opportunity, especially in the tech sector, you may be able to take advantage of incubator programs or receive angel funding. The average small business operator should not rely on these funding sources, since they require a proven idea and a specific niche.
One thing that Frank De-Levi cautions against is hiring too many of your friends to work in the business. Investors may want a controlling stake in the business, but you will want to make sure that your workforce is mostly professional. People who work for their friends sometimes don’t work as hard, and they may be a drag on the success of your company.
Setting Up a Recession-Proof Business
There are many types of businesses that are known as “recession-proof.” While none of these ideas are guaranteed to succeed, they can provide a good road map toward choosing your field of focus.
Accounting services are one of the most recession-proof businesses. Small businesses need the help provided by accountants more than ever in these difficult times. Companies may also have to outsource their accounting departments due to budget cuts. A smart business owner can step in and take on these responsibilities.
Businesses may also be struggling with the tax implications of the Paycheck Protection Program and other government programs. A talented accountant or tax preparer can be a huge help in this situation.
A debt collection business is also a good idea during the pandemic. Sadly, many people are finding it extremely difficult to make ends meet, leading to missed payments and accounts going to collections. This business can also be run out of your home.
Auto repair services are recession-proof since people will repair their old cars rather than buying new ones. Gathering a great staff and providing your customers with a different level of service than your competitors will drive new business your way.
Getting into staging homes is a good idea. A home stager sets up a home that is being sold, making it look good and making it appeal to buyers. Interior decorators may find that they can step into this business easily.
The Ongoing Effects of COVID
As the disease slowly runs its course thanks to vaccines, the effect of COVID on the economy will lessen. When you start your business under extreme conditions, you will be seasoned and find that you can do a better job under regular conditions. While there is a high failure rate for new businesses right now, believe in yourself and in your idea and you may achieve success.