When is a good time to start a business?

An article published in USA Today on Apr 25, 2018 reported that nearly 8% of Americans looking for a job decided to start their own business in the first quarter of this year. The article quoting outplacement firm Challenger, Gray & Christmas, mentioned that the proportion was a dramatic rise from only 5% in the previous quarter. The only time that such a high proportion occurred was during the financial crisis in 2009.

It seems that to most people, the best time to start a business is in the midst of an economic boom when confidence is high. Furthermore, Challenger, Gray & Christmas felt that, with the tight labor market, failure in the venture simply meant that these entrepreneurs would simply go back to work for somebody else without great difficulty.

However starting a business in periods of high confidence is like investing in stocks when the stock market indexes are at or near their highs. Of course, those who are able to pick the right stocks will see their investments rise in value regardless of the direction the stock market go. Similarly, those starting up the right businesses will do likewise.

It is possible that the stock market and the economy will all rise further. On the other hand, they could be at their turning points. When that happens, for the majority of investors, the values in their investments follow the indexes in going south.

The question therefore is how to be in the minority of investors who do well regardless of the direction the economy is heading. The answer lies in doing your homework to prepare the startup for launch prior to taking the plunge. Those who do well tend to look closely at what they are investing in, whether stocks or a new startup.

In the case of a new startup, there are several things to consider in selecting a good area to start a business. One factor is whether you have any experience, knowledge and skills in the area of business you are entering. If you do, you have an edge.

If the startup you have in mind solves a problem that you personally had encountered, the chances are good.  If you faced such a problem, it is likely that others will also have similar experiences. Where the market fails to address the shortcomings is where the opportunities are. For instance, Uber and Airbnb are good examples of startups which fill market gaps.

The use of technology to put a new twist to the traditional way of selling goods or delivering services also offers good opportunities. For instance, personalized tutoring on the internet has become a lucrative business for those serving the Chinese market.

Another opportunity is turning a hobby into a business. Let’s say your hobby is collecting something of value. Through the years of experience in accumulating the collection that you now have, you can share your expertise and make a worthwhile business out of it.

It is useful to assess the business idea more thoroughly first. This is where tools like the startbizup App come in to help would be entrepreneurs evaluate their startup ideas.

Therefore the answer to the headline question is that there is no best time to start up a business. The best time to start a business is when you are ready. Good preparation is crucial for success whether in the stock market or a startup.