Starting a Business During a Recession At risk you not only risk time and money, but you have to contend with economic conditions that are beyond your control. The fear of being negatively affected by a recession can stop many aspiring entrepreneurs from starting a business. While this may be a wise decision for most, some potential business owners may benefit from starting a business during an economic downturn.
Recessions are hard on everyone. When some business Thrive during a recession, many struggle to keep sales coming in and doors open. However, there are businesses that have not only thrived during past recessions but have become some of the most successful companies in the world. In this article, we will list some super successful companies started in the recession.
A large company which you would not expect to have such humble origins is Microsoft. Founded by Bill Gates and Paul Allen during the oil embargo recession of 1975, Microsoft began as a small computer software company. However, their genius not only led to the development of a globally famous programming software but also eventually became The third largest company in the world.
Just a year after going public, Microsoft generated enough revenue to secure Bill Gates’ then-position as the world’s youngest billionaire. Although Microsoft has experienced its fair share of setbacks since then, it remains one of the most successful and famous companies of all time.
Another highly innovative company is Airbnb, founded by Brian Chesky, Nathan Blecherczyk, and Joe Gebbia. During the 2007 recession. Airbnb is unique in that the company it was founded on has thrived in times of economic hardship.
Airbnb is an app where regular everyday people can rent out a room for guests passing through their home – be it tourists, students or people on business trips. Using Airbnb, anyone can earn money with just the app and an empty house. This idea gained a lot of traction during the Depression because it made it easier for struggling Americans to work “side hustles.”
Although the recession of 2008 has passed, Airbnb is largely successful. In 2021, Airbnb created About $6 billion Needless to say the revenue, its adaptability and convenience will keep it on top for years.
Another successful company started during the recession is the well-known grocery chain, Trader Joe’s. Initially called “Pronto Market”, Trader Joe’s was founded by Joe Coulombe in 1958 during another economic depression. However, the first official Trader Joe’s as we know it today was established in 1967 after the original convenience-style chain stores in Coulomb proved unsuccessful.
When Trader Joe’s first opened in Pasadena, California, the tiki theme was rampant and Coulombe knew to take advantage of the growing trend. Trader Joe’s employees wore grass skirts, and Coulombe stocked shelves with items people couldn’t find anywhere else.
Being creative with the company’s design and stock has proven to be a worthwhile endeavor. Trader Joe’s quickly became a hit and is still popular today. Trader Joe’s continues to innovate by constantly adding affordable, new items to its shelves. Today, Trader Joe’s is about it $13 billion annually.
Uber is a ride-sharing app that has changed the way the world gets around. The company, ironically, started during a recession that affected the American automotive industry in many ways. In 2009 and 2010, General Motors, America’s largest automobile manufacturer, underwent a government-sponsored Chapter 11 bankruptcy. The company was forced to restructure its leadership as well as shut down unprofitable brands such as Saturn, Saab and Pontiac.
A lack of confidence in American-made cars, coupled with a lack of consumer income to buy new cars, led Uber to enter the market. The company was launched with the hope of creating a more cost-effective way to get closer to individuals. Uber beta launched in 2010 in San Francisco and went official in 2011. By 2019 the company was a household name, public, and now generates more than $15 billion in annual sales.
GE (General Electric)
You probably wouldn’t expect a 150-year-old company to have roots in an economic crisis. However, General Electric was founded along the way 1876 by genius Thomas Edison, inventor of the light bulb. GE was founded smack in the middle of a 6 year long recession.
Thanks to Edison’s incredible invention, electricity became increasingly available to everyday Americans. GE began by selling household appliances such as light bulbs, electric stoves, and early X-ray machines. By 1920, GE was largely responsible for the commercialization of electricity and the reason many Americans had access to it in homes.
GE also produced military equipment during World War II, leading to the development of the first J-47 jet engine. In the 1970s, they contributed to the invention of medical imaging and laser technology. GE’s flexibility and innovative mindset is what sets them apart from lesser companies today.
Revlon, a hugely successful multinational cosmetics company, was founded in 1932 during the Great Depression. The company was founded by Jewish American inventors Charles and Joseph Revson. The bright red lipstick sported by famous Hollywood actresses at the time inspired the Revson brothers and thus introduced a new type of nail enamel of higher quality than could be seen in other stores.
By 1937, Revlon was rapidly introducing new products, learning to keep up with the growing cosmetics industry. You might wonder how a cosmetic company – primarily selling luxury items – gained so much popularity during the recession when consumer budgets were tight.
In times of economic crisis, consumers will cut back on services but, surprisingly, often will Continue to splurge on small comforts And luxury is attributed to the interesting social phenomenon that many people respond to financial stress by buying themselves “little treats” to keep their spirits up.
It was Revlon’s ability to navigate a volatile economic climate that ultimately led to its ultimate success. Today, Revlon manufactures Over $2 billion a year and is recognized as a leading cosmetic brand worldwide.
Hewlett-Packard, an electronics company known as HP, was founded in 1939 by entrepreneurs David Packard and Bill Hewett on the edge of the Great Depression. HP was founded in a single-car garage with the intention of making electronics more widely accessible to average-income Americans.
When Hewlett-Packard was created, the current technology was large, bulky, expensive and primarily for commercial or corporate use. Additionally, the Internet had not yet been invented, and small electronic devices were largely unheard of. Hewlett-Packard saw this as a weakness in the industry and capitalized on it. This led to their ultimate fame and success.
Today, Hewlett-Packard continues to introduce new and innovative products year after year. They have developed multiple types of software and electronics such as laptops, desktop computers, printers and more.
That’s right – one of the most popular and beloved fast-food companies in the world was also founded during the Depression. Burger King, founded by James W. McLamore and David Edgerton, began as “Insta-Burger King”. Since its origins in 1954, it has, despite several setbacks, become the convenient fast-food staple we all know and love.
Electronic Arts (EA)
World-renowned video game company Electronic Arts was founded in 1982 during a brief American recession. The company’s founder, Tripp Hawkins, wanted to create unique video games using the in-house game studio. Hawkins left a stable, long-term position at Apple to pursue his dream. Although it seemed like a rash decision at the time, the risk proved worth it in the long run.
Today, Electronic Arts is a pioneer in the gaming industry, producing approx $7 billion annually. EA is responsible for many impressive and popular games, including The Sims, FIFA, Dragon Age, Battlefield, Plants vs. Zombies and more.
Slack, the well-known software company that provides team collaboration software for Slack businesses, started in 2009. The company was originally launched as a gaming company but took off during the Great Recession. After the switch, Slack saw its valuation spike to $1 billion. Once the recession ended, the company went public in 2019. The company now has annual revenues of over $900 million.
There are several though Difficulty starting a business in a recession, also has endless possibilities. If you are well prepared, determined, have the right product and understand your market, your business can succeed despite the economic climate.
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