Strategies to be Adopted by Startups in Recessionary Times

Recession is the proverbial bugbear for businesses. While some sectors and businesses are impacted more than the others, depending on the source of the crisis as well as the deep reserves that a business would possess, the inter- dependencies between industries, geographies and even policy measures typically produce an all-round economic distress.

Although technically-A speaking, two consecutive quarters of declining GDP define a recession, the phenomenon is broadly represented by a significant decline in economic activity spread across the economy which lasts more than a few months. And more often not, barring some niche business activities, the smaller the business, the harder it is hit in a recession. As demand shrinks, cash flows dry up, retrenchments and closures become routine marked by a disproportionate loss of jobs in the small business segment.

However, even amidst this widespread air of economic despondency, a few silver linings do show up on the horizon. All is not lost even if you have suffered the buffeting from the winds of a recession. Or, if you are a newbie wanting to start out, a recession should never be the primary deterrent holding you back.

New opportunities in Recession

First and foremost, you must remember that even the worst of recessions throw up pleasant and even counter-intuitive surprises and opportunities. For instance, research has shown that the life expectancy of Americans had actually increased during the great depression of the 1930s.[1] Similarly, Air BnB was forged out of the crucibles of the housing bubble during the 2008 recession. Further, did you know that the widely popular encrypted messaging service WhatsApp was founded in 2009? Or Uber, the ride hailing app-based service was founded the same year right in the midst of the raging crisis? Such examples are aplenty. Likewise, Covid has spawned an assortment of new-age businesses and start-ups – a food for your thought.

Fitting into demand supply gap