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5 Reasons The Economy Can't Stop Startup Companies

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Jose Vasquez

Economic conditions might persuade or dissuade you from starting a company, but in the long run the economic conditions matter little for the dedicated entrepreneur.

It might seem counterintuitive, but a down economy can't stop the launch and progression of startup companies. If you're an entrepreneur considering starting a company in a poor economic climate, you can't let the numbers deter you.

As a serial entrepreneur and CEO of a firm that's helped dozens of companies get noticed, I've seen startups in many different economic climates become successful. In fact, my Cleveland marketing firm Quez Media got its first start in 2008 during the worst economic recession in recent United States history. But even setting aside the anecdotal evidence, U.S. economic data indicates that even though fewer businesses started in 2009 (immediately after the worst impact of the recession), those companies are doing no worse statistically than startup companies of surrounding years.

The objective conclusion from this data indicates that poor economic conditions tend to make entrepreneurs more reluctant to start a company--even though they shouldn't.

So what's the reasoning behind this evaluation? Certainly the national and global economies can affect the performances of established national and international businesses, but this influence doesn't necessarily apply to the inception or development of startups. After carefully analyzing the information and drawing from my own experiences as an entrepreneur, I've determined five major reasons why the economy can't touch the performance of startups:


1. Economic fluctuations are temporary. No matter how good or bad the economy looks, the effects are only temporary. Even though some of the worst recessions in U.S. history have lasted five or 10 years, the effects diminish with time. Everything balances out in the end, so the longer you plan to be around, the less significance economic trends have.


2. People always have needs. No matter what kind of economic conditions are affecting the marketplace, people are always going to have specific needs. The economy can affect what needs people have, but as long as you're providing for relevant needs of your target audience, no economic condition can keep people from buying your product or service.


3. Great ideas aren't affected by economic conditions. Good investors don't make decisions based on what's hot in the economy. They make decisions based on what has long-term value. If your idea is one that can weather the times, investors will be interested in your company no matter what the economic conditions are like. If you have an idea that's truly valuable, and not just based on a market trend, recessions will pose no problem to you.


4. Startup companies are nimble. One of the greatest elements of a startup company is its agility. You're going to start out small, with few resources and few products. This means you can grow your company and make decisions based on the newest information and the latest trends. Essentially, your adaptability will respond to any economic conditions that might otherwise significantly affect your growth.


5. The end goal is long-term growth. Even if cash is tight for a few months, your ultimate goal should be steady, long-term growth--something that no economic conditions can completely destroy. If a temporary economic shift is enough to shake your startup's fundamental structure, odds are you wouldn't have made it in the long run even under ideal economic conditions.

Keep these factors in mind if you're struggling to make a major company decision because of the economic climate. No matter what happens in the stock market or what kind of predictions economists are making, good ideas will get funded and great companies will grow.

Jose Vasquez (@JAV2) is the founder of Quez Media Marketing and author of Build. Brand. Blast. Jose graduated from Goldman Sachs' 10,000 Small Businesses program. Goldman Sachs is a partner of the What Is Working: Small Businesses section.