ARTICLE
1 December 2020

Why Even In A Recession, The Right Time To Start A Business Is Now

SI
SchoemanLaw Inc.

Contributor

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SchoemanLaw Inc Attorneys, Conveyancers and Notaries Public, based in Cape Town, is a boutique law firm offering its clients access to high quality online legal documents and agreements, together with a wide range of legal services. The firm has an innovative and entrepreneurial mind-set that distinguishes it from other law firms. We apply our first-hand understanding of the challenges facing entrepreneurs (regardless of their business size) to develop proven, practical solutions incorporating legal compliance, risk aversion and business sense. We achieve this by offering clients tailored, yet holistic support comprising of legal gap analysis, the construction of tailored legal solutions and the practical implementation thereof through training and automation.
It is no secret that most of the globe is in a dire recession following the rath of the Covid-19 pandemic. The world has seen mass retrenchments, liquidations and business rescue.
South Africa Coronavirus (COVID-19)

It is no secret that most of the globe is in a dire recession following the rath of the Covid-19 pandemic. The world has seen mass retrenchments, liquidations and business rescue. Anyone may say - you must be crazy to start a business now. Well, in my view, it is a matter of perspective.

Business is hard work, regardless of the climate. However, there are several advantages to the current environment. Three of these are vital advantages right now in my view.

Increased Access to People and Talent

Because of the scale of retrenchments and liquidations, many good people are in the job market. This presents an advantage to entrepreneurs  - that is employers. Therefore, the ability to access talent that is critical to early-stage growth that would otherwise be lured by larger salaries or more stable opportunities.

Furthermore, the opportunity to engage on less traditional terms, such as equity ownership, share options and performance bonuses; enables companies to hire well without proverbially "breaking the bank". This unlocks much needed human capital, of course, whilst observing the Minimum Wage requirements.

Great Time to Negotiate

Many key stakeholders, such as landlords and critical suppliers, are more attractive terms. This from a leasing perspective often includes a cash allowance for office renovations and more flexible lease terms.

All of this decreases the cost of starting a business and allows entrepreneurs to deploy precious capital resources into income-generating spending.

Technology and Innovation

Due to economic necessity and changes in buying patterns, consumers may be more willing to try new products and services or even technology and innovative (disruptive) solutions. Besides the environment could very well be ripe for customers to switch brands from their regular selection. This provides ample new opportunities for "getting to market" and to scale quickly. The environment for selling is, therefore, positive.

It, therefore, remains a personal decision, requiring sacrifice and commitment, but it can be done even in trying times. We, therefore, recommend that you seek advice from professionals such as those at SchoemanLaw to ensure that you have the correct contracts and structures in place to ensure success.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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