The coronavirus pandemic has overturned most aspects of daily life, not least the way we work.
For many, that has brought with it a period of great uncertainty and possible job insecurity. But for aspiring entrepreneurs, it has also created a window of opportunity, according to the author of bestselling business book The Lean Startup.
Eric Ries, whose 2011 book has sold over 1 million copies worldwide, told CNBC Make It that economic downturns are, in fact, the best times to embark on a new business.
"The best time to be an entrepreneur is when everyone is running for the exits. So yeah, it's about to be a great time to be an entrepreneur," said Ries.
Indeed, some of the "greatest companies you've heard of were born in a crisis," he continued.
General Motors, IBM, Disney, Toyota and HP are among the big name businesses born during or in the wake of economic downturns, such as The Great Depression and World War II. Airbnb's founder and CEO Brian Chesky said in a recent LinkedIn live interview "we were literally born in a crisis," referring to the 2008 global financial crisis.
That is in part because input factors — the costs required to produce a product or service — are low during a downturn, which is "to an entrepreneur's advantage," said Ries. Those costs include labor, land, food and borrowing. The U.S. Federal Reserve has already cut interest rates and introduced stimulus packages aimed at supporting businesses.
But also because after a crisis, people are often hungry for change. That is the case this time more than ever because many key sources of leadership have failed to deal with the pandemic, said Ries.
"This one is special, not just because of how awful it is, but because so many of the conventional sources of leadership have been dramatically discredited," said Ries.
"How many of our institutions across the world have been shown to be sclerotic and ineffective? How many of our companies are hiding in a hole, putting their head in the ground instead of helping the people that work there or their communities?" he continued.
That discrediting is a "terrible thing for society," but a "tremendous opportunity" for entrepreneurs, said Ries, highlighting a gaping hole for new leadership.
"There's a new hunger — and that hunger's only going to grow — for new leadership, new ideas, new models," said Ries.
The Lean Startup, which entrepreneurs including Mark Cuban have credited for their success, outlines the best approach for thinking about starting a business. It centers on three key steps:
- Start with the customer first, drawing on interviews and feedback to get a clear picture of what they want.
- Build a minimum viable product quickly to get your idea out there.
- Test and iterate that product continuously to work through any flaws.
Already, said Ries, "an incredible flourishing of entrepreneurs" have emerged in response to the virus, for instance those producing medical supplies via 3D printing. But, he said, there's plenty more scope for aspiring business leaders to "take the plunge and give it a shot."
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