Starting up a new business is tough at the best of times but we now have to cope with pandemic restrictions, and an economy that is badly damaged.
Yet, surprisingly, the spirit of entrepreneurship lives on, especially in New Zealand. More than 3,000 new businesses have been listed on the Companies Register since April.
The most popular newly-registered businesses were in professional fields, technical or scientific services, construction, retail and real estate.
History has shown that a crisis, while having a major impact on the world economies and communities, has also thrown up opportunities for entrepreneurs and their new businesses.
It triggers innovation and new ideas to overcome the problem of a crisis.
Traditional businesses also pivot to find new avenues to explore, regaining their entrepreneurial spirit. We are already seeing this with COVID-19 and new and traditional business fighting to survive in a tough world by coming up with new ideas and directions.
“More than 3,000 new businesses have been listed on the Companies Register since April”
It took time before the entrepreneurs got oriented to the new situation, and governments started helping them out but the momentum is gaining.
Entrepreneurs will be a critical driver of our economic recovery, according to Dr Tadhg Ryan-Charleton, Lecturer in Entrepreneurship and Strategic Management at Otago University. He says: “We will rely on new businesses for innovative ways to meet societal needs, to replace imports that no longer exist, to create new jobs for New Zealanders and to help get our Treasury moving again.”
Dr Ryan-Charleton believes, the incentives and supports to pursue new ventures will be much greater than the pre-COVID-19 world. Good news for entrepreneurs. Just as the new breed of entrepreneur is emerging from the crisis, customers are becoming accustomed to new forms of doing business and trying to adjust their lifestyles, such as online ordering for home delivery. Likewise, employees and employers are becoming accustomed to working from home and video meetings, rather than face-to-face. This has seen businesses either spring up or pivot to cater for the “new” customers.
But while there are opportunities, there is obviously a negative side for new businesses - as there are for all business in this more constrained realm. The World Economic Forum warns that, as sources of finance dry up, more than 40% of new ventures will fall into the so-called “red zone”, with only enough cash for three months or less of normal operations.
The Forum notes that since the beginning of the crisis, more than 70% of start-ups have had to terminate contracts of full-time employees.
“The way entrepreneurial business models and approaches are affected by the pandemic will have an impact on how entrepreneurship is perceived as a job choice in the future,” says the Forum.
While this seems daunting, entrepreneurs have always been hardy souls, turning an idea into a good business, despite the often few ups and many downs. With COVID-19, it is lightly to be even tougher but, as before, it may see innovative, imaginative ideas become a mega businesses. Remember, Bill Gates and Steve Job started in garage with just their imagination and determination.
Tips for starting new businesses in the new world:
- It’s vital to reduce everything that isn’t critical and keep the business to a minimum of expenses.
- Retaining customers is paramount and look at ways of supporting customers in this tough environment, such as providing them with payment deferrals or instalments.
- Identifying alternate sources of financing, such as crowdfunding, government assistance, etc. Be transparent with your investors and work with them to overcome the financial restraints of the present situation.
- Marketing and business development are even more important with the present communication clamour of the pandemic. Ensure your marketing has adapted to the new situation, i.e. look for more online opportunities. We are becoming more accustomed to being digital now.
- Keep a close eye on your cash flow, daily if necessary, so that you are flexible to the almost daily changes to our world.
- It’s even more important to strengthen your network of contacts. We are living in “bubbles” but it doesn’t mean we have to go back into our caves and forget about those who can help us and we can help to prosper.
- Be optimistic. We will emerge from this crisis and it’s important you plan for the economic future, even if it is slow to gain momentum/
This article provides information rather than financial product or other advice. The content of this article, including any information contained in it, has been prepared without taking into account your objectives, financial situation or needs. You should consider the appropriateness of the information, taking these matters into account, before you act on any information. In particular, you should review the product disclosure statement for any product that the information relates to it before acquiring the product.
Information is current as at the date the article is written as specified within it but is subject to change. Steadfast Group Ltd and Steadfast Network Brokers make no representation as to the accuracy or completeness of the information. Various third parties have contributed to the production of this content. All information is subject to copyright and may not be reproduced without the prior written consent of Steadfast Group Limited.