What influence crises have on the process of starting a business

Studies show that economic crises affect business start-up processes accelerating Act. The Corona crisis could also have this effect.

Starting a business – more autonomy and entrepreneurial risks

For the decision to take the step into self-employment, there is diverse motives: Founders want to realize their own business ideas. They often associate this with the desire for greater autonomy and self-realization. Others are trying to avoid imminent unemployment or unemployment that has already occurred, or would like to take advantage of new business opportunities resulting from current market developments.

Irrespective of the individual wishes associated with this, people who become self-employed must also reckon with entrepreneurial risks. Above all economic crises are considered a risk factor that can ruin the dream of self-employment. However, statistics and studies show that crises can even speed up the start-up process – if the start-up of a company well prepared and the company is able to react quickly and appropriately to problematic developments.

How long do founding processes take?

When asked how much time it takes to start a business and when the start-up process is complete, there are no general answer. Practice shows that the founding time of new companies is very heterogeneous.

The ideal-typical process of founding a new company consists of a total of four phases. The pre-foundation includes the initiation phasein which the business idea is developed, as well as the concretization phase, in which the future entrepreneur prepares his foundation and creates, among other things, the business plan and the financial plan for it. Here the entrepreneur also selects the legal form of the company.

the post-foundation phase includes the implementation phase – i.e. the start of business. It is completed when the company generates its first sales. The founding process ends with maturity phasewhich lasts until substantial gains can be realized for at least three consecutive months.

A corresponding study with 524 newly founded companies shows that their maturity phase on average completed after 29 months was. In detail, however, there are big differences – some companies reach the profit zone after just a few months, others only after years. are crucial here three factors: The industry, the founding country and above all the business model. The realization of innovative business models usually requires a longer start-up process.

How do founders react to economic crises?

At first glance, economic crises are an explicit negative factor that prevents start-ups and can cause difficulties for newly founded companies. Studies on the effects of the financial and economic crisis from 2007 to 2009, however, paint a different picture: The founding process of many companies – and here in particular the pre-startup phase – had changed by up to ten months compared to the years before the crisis shortened, many founders also reached the maturation phase faster. Possible causes are that start-ups are particularly common during a crisis in order to avoid unemployment and the budding entrepreneurs are under particularly high pressure to succeed.

Whether there is a comparable effect in the corona crisis only the future will tell. However, it is already clear that the industry in which the company is to be founded has a particularly large influence here. Especially in sectors that have seen a sharp drop in demand due to Corona, start-up activity is also declining, at least in the short term.

Just like established companies, companies in the start-up phase that are already active in the market often try to adapt their business models and marketing strategies to the new ones circumstances to adjust. It is very likely that many founders who were in the preparation phase at the beginning of the Corona crisis postponed their business start-up, so that the start-up activity could intensify after the pandemic. In addition, Corona has the potential, the behavior and the Consumer Preferences to change permanently – in the past few months, the crisis has already led to a surge in digitization, among other things. For founders, this also results in new entrepreneurial opportunities in the long term.

Business start-up advice – professional support for founders in crisis

Professional start-up advice, for which grants are possible, is always recommended for prospective entrepreneurs. Already in the preparation and planning phase, but also afterwards, you receive the Support from proven experts (Service: consultant search). Even in the Corona crisis, consultations help to efficiently implement the foundation. They help companies that are already active to minimize or prevent economic difficulties. aspects of the consultation in both cases are adjustments to the business model, business plan and liquidity plan optimizations as well as access to sources of financing and state aid (service: subsidy check).

Further information on the topic and sources of contributions: Entrepreneurship in focus (external PDF link)

reading tips