Tuesday, November 11, 2008

So...Is It a Good Time to Start a Business, Or Not?

Coasting through the blogosphere, you can find a lot of opinions from venture capitalists, developers, entrepreneurs, and columnists about whether or not this is a good time to start a business.

Some reading I've been doing:


Do it...now
Don't Panic, Profit
OK, Entrepreneur
Seize the Day
It's A Good Time To Start a Business
Is It a Good Time? Yes!


Angel Investor Ron Conway



I looked for about half an hour, which I am sure is not a thorough scan, but I couldn't really find anyone telling me I should not start a business right now.

This is good news to me.

I think that the overwhelming sentiment is that it is a fine time to build a business, but a really bad time to raise capital. Credit crunch and all. And it's a bad time to have a business plan that doesn't project any sort of cashflow for a while. These are probably good things. Slowdowns in the economy are often title as 'corrections'. Stock prices get 'corrected' which is a nice word for common sense-based pricing of assets based on legitimate valuations and bringing PE ratios back in line with reality. Basically, if Google is really only worth $350 a share, but is trading at $450, a correction will see it trading at $350 when it's through. Similarly, corrections weed out companies that have no business existing. If you have an idea that is 'sexy web 2.0' but can't tell someone with a straight face how you are going to deposit checks in the bank, or at least generate something that you can monetize (i.e. user data), then you aren't getting any help. During 'bubbles', this might not be the case.

There are the obvious things that you can do in this economy - build things to help people save money/time. Categories I can think of:

1) job seeker resources
2) ideas to make shin
3) crowdsourcing facilitation - help businesses harness the collective intelligence to improve your situation
4) job retraining
5) price-finder type things
6) college-related stuff (lots of people go back to school in a downturn)

There are always opportunities for good ideas developed by hard workers who have strong networks, and obviously, not all ideas require funding at first - some never do. The key is not to have an idea that will get you cash-flow positive in the first week, but to have an idea that is well thought out and planned so that you have a way to get cash at some point. I think that the idea I am working on now definitely falls under that category, so I am feeling decent about things as of now.

I can't honestly imagine what people did before the Internet. The enabling technologies like blogs, social networking sites, and remote work tools have made everyone powerful. We are all starting about 7 notches higher than you would even fifteen years ago. You just have to act now. Before you had to act, but first you had to build your network in person, gather data in person, and work with each other in person. Now you can work with anyone anywhere, using knowledge you have gathered from folks all over the world, using your web of contacts that you have built both in person and electronically through the years. Wow - it's definitely a good time to start a business.
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