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Amid talk of a recession, experts share why now is a good time to start a business and which industries are the most promising

Female professional discussing with coworkers through video call.New technologies make it the best time to start a business.

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  • Government officials have said a recession in the US is “pretty likely” in the near future.
  • But it’s still a good time to launch a business, experts told Insider. 
  • Here’s why aspiring entrepreneurs should consider starting up right now. 

In the past few months, experts have debated the possibility of an upcoming recession. Meanwhile, inflation continues to rise and consumer prices remain high. While the prospect of an economic downturn can be worrying, indicators suggest it’s still a good time to start a business.

Technologies like freelance marketplaces, website-building platforms, and social media make running these service businesses more accessible and inexpensive than ever before, said Dave Mawhinney, an entrepreneurship professor and executive director at Carnegie Mellon University. These factors also make it a good time to be a solopreneur, he added.

“When starting a business, your capital needs are as low as they’re ever going to be,” he said. “If you can bootstrap it yourself, you can do that at any time, in any economy, under any situation.”

Throughout the first two years of the pandemic, 9.8 million new business applications were filed, according to US Census Bureau data. Entrepreneurs have continued launching startups in 2022: In November, 418,905 new business applications were filed. Freelancing is one of the most prominent new ventures for founders, as 60 million Americans offered freelance roles this year according to a report by freelance platform Upwork, Bloomberg reported.

Mawhinney, along with an economist, a business coach, and an entrepreneur, each shared their predictions for the coming years and why they encourage aspiring business owners to jump on the entrepreneurial bandwagon now.

It’s not as bad as it looks

Economic slowdowns can give people pause, but the economy is still in a very strong place, said Luke Pardue, an economist at the HR platform Gusto. 

“We don’t really see that hesitancy to spend that might predate a future recession,” he said of the consumer market. 

In fact, consumer spending rebounded in June: the US saw an increase of $94.9 billion in spending on goods and an increase of $86.2 billion on services, according to the Bureau of Economic Analysis. To be sure, this is partially due to inflated costs. However, the increases also show that consumers are willing to pay for what they need. Because of this, entrepreneurs should consider launching companies in tech, financial, and personal services, said Pardue.

Another hopeful characteristic is the changing relationship between the economy and entrepreneurship, Pardue said. 

“Previously, entrepreneurship fell during recessions because people became a lot more risk-averse,” he added. “But what we’re seeing now is they’ve realized that employment itself is risky, and it’s become easier to start that business.”

In fact, consumer spending skyrocketed in November: the US saw a record number of shoppers take part in the Thanksgiving, Black Friday, and Cyber Monday shopping spree, spending an average of $325 each over the weekend. To be sure, high spending values are partially due to inflated costs. However, the increases also show that consumers are willing to pay for what they need. 

Knowing that consumers are willing to spend even amid financial concerns, entrepreneurs should consider launching companies in tech, financial, and personal services, said Pardue.

Solopreneurship is low-cost and low-risk 

With record inflation increases causing the cost of goods, gas, and utilities to rise, service-based businesses can be low-cost alternatives to product startups or tech companies with high expenses. And business ventures without additional employees, office space, or anything more than a computer and WiFi are easy to start with little overhead, he added. 

Additionally, the need for solo-run professional services (virtual administration or consulting) and personal services (ridesharing and grocery delivery) have each increased over the last two years, Pardue said. 

Solopreneurs also have a unique opportunity to tap into recent layoffs and hiring freezes, said online marketing entrepreneur Andréa Jones. “The businesses that are reducing their internal staff are now outsourcing to agencies and freelancers” because they still need certain tasks done, she said.

COVID-19 created new opportunities out of necessity

Aubree MalickAubree Malick is a business coach.

Sarah B. Photography

Over the past two years, professionals in many industries have embraced remote work. Aubree Malick launched a virtual-assistant business in 2018, and during the pandemic, she saw employers’ need for project-based and virtual workers. She took the opportunity to launch a virtual-coaching business that taught other aspiring freelancers how to sell their services. 

“A lot of companies are recognizing the benefits of hiring a freelancer on a month-to-month retainer,” compared to paying an employee a full-time salary with benefits, she said. 

She encourages her coaching clients, who are aspiring entrepreneurs and freelancers, to take advantage of the new opportunities. “Remote work is starting to become the norm,” she said. 

New technology allows us to capitalize on our skills

In order to maintain low startup costs, Mawhinney suggests capitalizing on skills you already have, like financial literacy, copywriting, or administrative work.

What’s more, it’s never been easier to build your network of customers, he said. For example, marketplaces like Upwork and Guru allow business owners to connect with potential clients, he added. 

Malick said that sharing social-media content is another way to widen your audience.

“Paid advertising is not the top dog anymore,” she said, referring to algorithm changes that prioritize video and reels. “It’s not about how much money you have to throw at advertising. It’s about who provides value and does so on a consistent basis.” 

Additionally, the social media industry is becoming increasingly complex, said Jones. “It’s copywriting, design, video editing,” she said. 

Industries like technology and professional services are here to stay

Jessica HawksJessica Hawks is a virtual-assistant coach, content creator, and podcaster.

Courtesy of Jessica Hawks

As the economy and workplace keep changing, it’s important to stay on top of the latest trends, technologies, and tools, Mawhinney said. He added that it’s also necessary to continue differentiating yourself in those spaces. 

“You have to create a skill set where you’re amongst the best at it — be irreplaceable,” he said.

Marketing, computer engineering, coding, social media and video production, business coaching, and financial consulting are some of the most sustainable solopreneurship ventures today, the experts said. 

“If you have a skill set, you have to be a couple of steps ahead of somebody who wants to get to where you are,” added Malick, who says that online courses, one-to-one coaching, digital products, or even something simple like a grocery shopping can be turned into a business.

Read the original article on Business Insider