The beginning of this year 2016 is filled with substantial uncertainties. China is still heavily suffering which provoke important turmoil and volatility in the financial markets. The Fed just raised its interest rates for the first time in years. The Middle East is prone to constant incidents and geopolitical tensions. Europe’s growth is uncertain. Valuations of several notable startups are coming down. Oil and commodities prices are reaching rock bottom. The U.S. Presidential race is still opened to surprises. And many more shifts are creating doubts in investors’ minds in these first days of the year.
When taking all these elements in consideration, one could wonder if it is the right time to create and launch new businesses or go after new opportunities. The short answer is yes. It is usually in time of distress that the best companies are founded.
One of the main reasons for this is the need for entrepreneurs to create solid and enticing businesses as the environment gets tougher. The threshold to funding becomes harder and fewer ideas are pursued. Only the really good ones survive. In such an environment, the competition can at times also be less ferocious as less people take the risk to trade the relative security of their job to pursue new ideas. By starting something in those situations, entrepreneurs can take a head start. They can also spend more time thinking and adapting their business to really ensure product-market fit. Metrics become even more important and fashionable perceptions and trends are deflated.
The good news is that as of today, we have not yet reach such a tumult in the markets as we faced many times in the past. The current economic situation, at least in the U.S., is much better and stronger than when the financial world was unravelling in 2008. Macroeconomic variables are not pointing at this time for 2016 to bring back a crisis of this magnitude. Still, we are riding high on valuations, liquidities and asset prices. Any significant or unexepected trigger could easily cool down and create jitters in the economy.
For new companies, this situation is often irrelevant. Even with a world moving at breathtaking speed, it takes time to build strong and long lasting companies. People tend to think that their endeavor is a matter of months or few years when in reality most companies take at least over 5-7 years to get where they originally wanted to be. The current or expected economic situation should never prevent a good idea to be pursued. It just need to be pursued differently. Execution is really one of the deciding factors at the end as much as good financial management is crucial to have sufficient resources to last.
In short, whatever the world brings in 2016, it is always a good time to pursue a great idea with careful planning.
Happy New Year.