Are entrepreneurs more optimistic by nature?

If anyone can turn the recession into an advantage - you lot can.

As the UK slipped into a period of recession, our colleagues at Smarta shared a bunch of reasons why now is a great time to be your own boss. But we’re not the only ones who think that.

Evan Davis is an economist, journalist, and presenter for the BBC. He has presented Dragons' Den since 2005 and is the host of business conversation show ‘The Bottom Line’ on Radio 4. In an episode specifically focused on business decisions made during a recession, Evan interviewed four entrepreneurs about the opportunities they can see right now, in the current economic climate - and some that they seized when the economy previously took a dip.

Evan opened the show by saying:

“We wanted to focus on those intrepid entrepreneurs, who instead of running to cover, are planning to venture into the storm, setting up new ventures in challenging circumstances.

They are surely either optimistic by nature, or opportunistic in their business acumen; able to see upsides when others only see the down.”

Sarah said:

“We had a small investment in 10 cocktail bars in central London. We were not open, didn't know what to expect, didn't know what would come - just like everybody else. We'd taken on lots of debt. And then the doors were allowed to open and people came over that summer. People wanted to drink, they wanted to eat, they wanted to go out.

[I said] I think we're entering a period that is unprecedented, and full of opportunity. So why don't we double down in this industry, go large and create the leading group of bars in the UK? And that's what we went out to do with nightcap PLC, which we then floated.”

Cappucine said:

“If you're solving a real problem, then the problem doesn't disappear for customers [in a recession].

So if you solve that problem, you're going to find traction. The customers are more demanding of course, but if you're able to prove that there is demand for your product during a recession, that's going to also show that after the recession, it's gonna succeed.”

Ultimately, Cappuccine and her business partner hope to scale Swizzle nationally. But in the meantime, they’re being extremely careful with cashflow. 

Cappuccine’s cashflow caution was echoed by the other entrepreneurs on Evan’s programme, who advised that in order to turn the recession into an advantage, small businesses need to be able to show investors that they survived because they were very good at managing their company finances.

Team Transmit and our colleagues at Smarta have plenty of evidence to support Akhar's view, given that a significant number of Start Up Loans customers and members of the Smarta community are running their own business as a side-line or as part of a portfolio.

If you’re in the same position, you may be interested in these articles:

How to run a business outside of business hours

New to freelancing? Here’s how to manage your money like a pro

Can you start a side hustle business on Universal Credit?

Akar also shared some advice for businesses that have been trading for a little while already. He said:

“I think any kind of crisis presents you with this learning opportunity, because all of sudden all these inefficiencies, all the things which were previously broken, they start surfacing.

[In the] COVID-19 crisis, we saw the supply chain disruption that happened across the world, and some phenomenal companies came up which use technology which changed how a box moves from point A to point B and made the whole system a lot more optimised.” 

For Evan’s fourth guest, Sir John Hegarty, the current downturn is his 9th experience of a recession.

He set up advertising agency Bartle, Bogle and Hegarty in 1982 - in the depths of an economic dip.

John said:
“Great businesses [are] providing something truly great for people. And that comes from optimism. 

Because I've always been on the creative side. We always say you know, cynicism is the death of creativity. And businesses, we would argue, are creative constructs. And the essence of creativity is optimism.”

John shared his believes that when the country is suffering an economic downturn, there is more opportunity to employ young people and negotiate great rents - another important factor in starting a business.

Do’s and don’ts for a startup in a recession

• DO be careful with cashflow. Once the market picks up, you’ll not only have survived but can demonstrate to investors that you’re great at managing your money. Go you!

• DO build your business for the long term and focus on providing something truly great for your customers. Keep asking yourself what problem you’re solving and what your essential outcomes are.

• DO seize opportunities to hire great people and negotiate a great rent (if there’s one silver lining of people losing their jobs and premises, it’s that you have a chance to scoop them up).

• DON’T let fear stop you trying something new. As Cappucine said: “You need to be able to recognise that you’re not going to get everything right.” 

• DO try to treat a crisis as a learning opportunity: whether it’s a recession, a pandemic or an upheaval in personal life. Keep working on your personal resilience.

• DO get the support of people who've been through recessions: ask for mentorship and ask advice, because as Sarah put it “Running your own businesses can be lonely and difficult. The idea of entrepreneurship is romanticised.”

• DON’T stubbornly stick with a business plan that’s not working. Pay attention to whether there is a genuine demand for your product or service. If the demand is not there, it’s time for a new business plan.