I had just finished writing a blog post for a client which involved finding a positive angle on a rather negative article which highlighted the fact that many American employees are pretty disgruntled with loss of benefits, pay cuts and other austerity measures struggling employers have imposed.
The first thing I wondered on reading the article was, ‘what effect has this had on entrepreneurial activity?’
Some quick research and I uncovered statistics from the Kauffman Index of Entrepreneurial Activity indicating that the number of new businesses grew more during the recession of 2009 than in all the preceeding 14 years.
Which brings me to my question, “Are hard times good for us?’
Personally, I hate hard times. It’s no fun at all when the economy tanks, sales drop, budgets are cut and people begin making irrational decisions based on fear. But, on the other hand, necessity is the mother of invention. As Maria said in the ‘Sound of Music’, “When God closes a door, somehwere else He opens a window.”
It really does seem that hard times inspire people to find new ways of doing things. For instance, the whole Social Media phenomenon has taken on a far greater significance because of the recession. Instead of cutting down on marketing because of tighter budgets, organizations can actually increase their marketing while operating on very small budgets. In fact, Social Media can often be even more effective than traditional marketing and more immediate than traditional direct response advertising or mail. As far as marketing strategies go, it’s the ultimate direct response tool.
New businesses, new inventions, new technology all seem to abound when times are hard.
According to Kate O’Sullivan of CFO magazine, “American economic history brims with big-name companies that can trace their beginnings to a recession.
Coors was founded during the recession of 1873. Bill Hewlett and Dave Packard cobbled together the prototypical garage start-up at the end of the Great Depression.
Bill Gates, undeterred by stagflation, founded Microsoft in 1975. According to a recent report by the Ewing Marion Kauffman Foundation, an organization devoted to the study and promotion of entrepreneurship, more than half of the companies on the 2009 Fortune 500 list were founded during a recession or bear market, as were nearly half of the businesses on the 2008 Inc. 500 list of the fastest-growing companies in the United States.“
Hard times certainly seem to inspire us to be more creative, more persistant and more inclined to take calculated risks than when times are easy and things are running smoothly.
I believe that hard times separate people into two distinct camps:
- those who refuse to acknowledge that they can change circumstances and
- those who refuse to acknowledge circumstances
It’s the latter group that has the edge in a recession. Ability to think and visualize beyond what is immediately apparent is crucial in surviving any hard time. As is an innate belief in one’s ability to achieve and faith enough to stick with the plan long term in spite of the inevitable obstacles. This ‘blind optimism’ and bulldog persistance are key factors in entrepreneurial success and these traits appear to be stimulated in more people during hard times than at any other time.