Decreasing sales, a weakened balance sheet, shrinking cash flow reserves, a dwindling valuation, and, god forbid, closure. Unfortunately, these are some of the often inescapable eventualities that even well-performing businesses will have to deal with during periods of economic downturn. So what does this mean for up and coming entrepreneurs?
The first question that naturally comes to mind is: Should I even start a business in a rocky climate? It turns out that the answer to that question is a clear yes according to Sara Moreira.
Sara, an Assistant Professor in the Department of Strategy at Northwestern’s Kellogg School of Management, ran some numbers to try and uncover “a link between the size of a business over its entire lifetime and the economic conditions it faces when starting out.” What she found out was that, in spite of the fact that companies that launch during an economic downturn start smaller compared to companies that have started out during better times, entrepreneurs should not hold back on launching their own businesses.
In fact, her findings suggested that “the magnitude of the difference needs to be way bigger to justify postponing a year’s worth of income,” she says. “It’s hard to say that a potential business entrant should just wait out a recession based on this difference.”
Sara’s work unquestionably signals hope for entrepreneurs currently navigating the early stages of their startup journeys. After all, if starting a business in the midst of an economic crisis is still feasible – nay, advisable – how bad can it be for young startups? It won’t be easy, but with the right guidance, determination, tools, and support, startups ought to be well prepared and ready to weather the storm and emerge victorious.
And that is exactly what we are going to be doing over the course of the next 6 months. In conjunction with the launch of Cycle 4 of the Touch Innovation Program (TIP), we will be sharing tips, tricks, as well as real-world case studies each week from leading executives, investors, and fellow entrepreneurs to help you prepare each facet of your business for any development.
TIP’s 4th Cycle will be held under the theme of Crisis Management. It will select up to 6 high-potential entrepreneurs as “touch Innovators” and offer them access to space, which will serve as a working space for meetings, product or service launches, and workshops. The activities will include training programs, mentorship, technical workshops, B2B matchmaking, and meetups to name a few.
Applications are still open. To access more information on eligibility and apply to the program, please click here.