Navigating Turbulent Waters: Starting a Business in Uncertain Times

Strategic Steps to Launching Your Start Up in a Challenging Economy
He's almost 30 years old, and he still shares a van with his brother. You need to get real."

About John and Bert

John and Bert Jacobs grew up as the youngest of six children in Boston and were inspired by their mother, who always asked them a question at the dinner table that would change their mentality and inspire them forever.
"Tell me something good that happened today".
The focus on the positive created a life long sense of optimism in the two brothers and after a seven week road trip from California to Boston led them to the idea of starting a business together.

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When they returned home, the brothers moved back in with their parents and started driving from one town to another selling a range of T-shirts using the brand name "Jacob's Gallery" in college dorms and at street fairs around Boston.

Was it successful?

"Not even close!"

They tried and failed hundreds of times and resorted to sleeping and touting their designs in a beaten up camper van, with obvious consequences on their relationships.

Down to their last $78, they decided to hold one last party before giving up.

They discussed a design they had come up with that reminded them of their mum's teaching

"But what if there was someone who was always happy no matter what was happening?"

So John drew that person, who ended up looking like a bohemian guy with a beret and sunglasses and a big smile. The design was the hit of the party.
One comment on the wall next to the happy-face design captured why: "This guy's got life figured out."

So the brothers shortened that phrase to "Life Is Good," printed out 48 T-shirts, and brought them to a street fair in 1994 in Cambridge, Massachusetts.
Today, Life Is Good, which now has many products other than T-shirts has about 160 employees, is doing $100 million in sales, sells in about 4,500 stores, and donates 10% of its annual profits to helping improve children's lives.

Starting a small business

Starting a small business is challenging in any environment, but it's even more difficult when the economy tightens, especially when global factors, AI and conflicts influences global trade so quickly. Even minor changes have global repercussions within minutes, not weeks.

In today's turbulent economic landscape, businesses face unprecedented challenges and uncertainties. The global economy has been marred by recessions, market volatility, and the unpredictable aftermath of events like the COVID-19 pandemic.

I’d like to explore what challenges new entrepreneurs encounter when considering starting a services business in adverse economic conditions, particularly where uncertainty affects demand, what happens to competition, dealing with financial constraints, client acquisition and retention.

If you are thinking of becoming an entrepreneur in 2024, let’s start with three good reasons to do so and then we’ll deep dive into all the factors you need to consider.

  • Most large corporations reduce their investments in innovation when their indicators suggest a prolonged economic downturn. Liquidity is critical for them along with protecting their balance sheets so large corporations tend to layoff staff and cut back on “non core” activities. This is a perfect time to introduce a new, better, cheaper, faster service (or products) which very quickly give you a foothold in a large market. Drunk Elephant is a perfect example of a kitchen table startup that grew from nothing to carve out a niche in premium skincare before being bought by Shiseido for $845m.

  • As businesses shrink and others change their plans, you’ll discover that there’s a lot less competition for your markets although funding, growth and sales depends on the market you’re in.

  • There’s research that suggests that a significant level of customers you gain by being more flexible on offers, pricing and service through economic hard times are more likely to be loyal when the economy turns around.

Before you dive in though, there are three key questions that you’ll need to answer to satisfy spooked investors and volatile markets:
  • What comprehensive strategies can you develop to address economic uncertainty and mitigate its impact on your services business?
  • How can you use service, process or solution innovation to stay ahead of competitors and leverage technology effectively to do so?
  • In what ways can you enhance client acquisition and retention strategies to build long-lasting relationships in challenging economic times?

Are services startups more vulnerable in hard times?

Both the 2008 financial crisis and Covid in 2020 highlighted the need for adaptability because consumers tend to reduce discretionary spending and prioritize essential goods and services. Businesses also become cautious, delaying investments and cost-cutting measures.

During both these periods, global markets saw a significant drop in consumer spending and a decline in business investments. As a result, services businesses experienced reduced demand, emphasizing the need for adaptability in such turbulent economic climates.
Demand for services becomes erratic as businesses reduce their consulting expenses, affecting the demand for consulting services. Conversely, during recovery phases, there may be an uptick in demand for tax consultancy as companies seek to optimize their financial strategies.

The COVID-19 pandemic serves as an apt example, where travel restrictions and lockdowns affected real estate agencies, while the demand for online tax services surged. Navigating market fluctuations requires agility and strategic planning. In challenging economic periods, competition among services businesses escalates as firms vie for a limited pool of clients which highlights the importance of crafting unique value propositions and innovative strategies to stand out. 
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Startup Airbnb

Startup Airbnb's early days is revealing. Facing financial constraints, its founders initially funded the company by renting out their own apartment. This bootstrapping approach allowed them to survive in challenging times.

Subsequently, they secured loans and attracted investors, eventually transforming Airbnb into a global success story. This demonstrates that resourcefulness, coupled with strategic financial choices, can help services businesses thrive amid financial challenges.
Managing finances on a day by day basis is critical for survival - you need to know your cash projections and bottom line down to the penny.

The mantra becomes one of knowing every morning how much cash you need to put into the business, how to price to meet your operating costs and make enough margin to survive.

Trying to manage your overheads also becomes a challenge as some things such as rent, furniture, and materials could be obtained for a discount but the Covid-19 pandemic taught us that the pandemic-related supply-chain issues, an inflated real estate market, lockdown rules, and social distancing requirements made it very difficult for small business owners, especially those in the hospitality industry.

When looking for financing for your new business, look deeper at the options available based on your business plan.

Ask professionals and/or friends you trust to review your plan to ensure you don’t miss anything or that your assumptions aren’t inaccurate. (If you’re using an accountant, get an estimate first so you aren't blindsided by a large bill).
Important: Ensure you have a backup plan for your business and personal finances if you fail to hit your initial revenue projections. I would strongly recommend you have cash reserves for at least 12 months for your crucial payments such as rent/mortgage, insurance premiums, utility bills, and food as well as your family / home commitments.
In addition to the conventional financing approaches, consider the following alternatives:
  • Credit unions - Credit unions can offer personalized service, advice and accessible small business loans, usually at lower interest rates and fees compared to commercial banks.
  • Friends who own their own business
  • Starting with personal financing and credit lines
  • Reaching out to friends and family
  • Applying for a business loan
  • Catching the attention of an angel investor
  • Pitching your startup to venture capitalists
  • Hosting a crowdfunding campaign
  • Joining a startup incubator
  • Seeking out government grants and subsidies
  • Applying for microlending
  • Collecting pledges from peer-to-peer lending
  • A loan officer at the bank where you do business

Learn the Art of Making

Smart Marketing

When developing your go to market proposition when the economy is starting to nosedive, you stand a better chance of succeeding by thinking niche and narrowing your original customer base to come up with smaller segments so you can market more strategically.

For example, if you’re in the business of garden pesticides, can you offer a professional service selling only organic, insect and bird friendly solutions where you can provide a treatment and maintenance service in specific affluent areas? In addition, you can broaden your services range by offering insect friendly plants, organic gardening services and produce.

Other ideas to differentiate your new business and become growth focused (subject to your budget ) are to:

  • Expand your market share by selling online, ensuring you provide a high level of customer service and making the customer experience better than anyone else

  • Use email marketing instead of wasting money on print advertising.

  • Commission research to get ideas from other successful entrepreneurs in different industries and markets

  • Optimize your website for Google’s search engines using keyword rich content, customer reviews, backlinks from authoritative sites so that you continuously and consistently move up the search rankings for your products and services.

  • Drive low cost marketing activity such as podcasts or webinars and make these accessible via your website.

  • Where it makes financial and operational sense, develop a high impact but low cost customer loyalty program that not only offers bonuses and discounts, VIP events, advance sale events and thank you events.


Make a point of consistently reviewing and ranking your closest competitors in terms of their product and services ranges, their marketing and growth techniques and promotional activity.

• Do they have seasonal themes and different promotional activities?

• Are they price sensitive?

• Do they have similar or different go to market models and where do they excel?

• What’s their customer experience like and what types of reviews do they receive?

11 Steps for professionals wishing to start new services businesses in tough economic times:

1. Market Research: Thoroughly analyze market conditions, identifying niches or underserved areas where your services can provide unique value.
2. Diversification: Consider offering a range of services to diversify your revenue streams and reduce dependency on a single service.
3. Cost Control: Implement stringent cost-control measures from the outset to ensure efficient resource allocation.
4. Contingency Planning: Develop contingency plans for various economic scenarios, enabling swift adaptation when conditions change.
5. Networking: Build strong industry connections and partnerships to access resources, expertise, and potential clients. Get to know other people in your community who can refer customers and help build your business. Start by finding a local business networking group, reach out to your chamber of commerce and also your professional association where you can meet your peers and exchange ideas.
6. Value Proposition: Craft a compelling value proposition that resonates with clients' specific needs in challenging times.
7. Plan big but start small: Protect your cash and manage your expectations starting slowly and build your email list, customer base, reputation and customer loyalty then expand when you feel you can manage more business without overcommitting your working capital.
8. Client Engagement: Prioritize exceptional client service, actively seeking feedback to continually improve your offerings.
9. Customization: Tailor services to individual client needs, demonstrating flexibility and a genuine commitment to solving their challenges.
10. Client Retention Programs: Establish loyalty programs, discounts, or referral incentives to retain and expand your client base.
11. Continuous Learning: Stay updated on industry trends, emerging technologies, and changing client preferences to remain a trusted advisor.
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The takeaways

If researched and planned properly, you can reduce the risks and successfully start a new services business during times of economic uncertainty.

Get input on your business plan before you seek financing and simultaneously create your personal financial plan to ensure you can meet your personal financial commitments.

Depending on what type of services and products you’re selling, focus your marketing strategy on search engine optimization and/or social media to drive relevant traffic to your digital and offline business.

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