New Venture Lab: Equipping Christian Entrepreneurs

Question

Given the current economy and political environment of today, if you were going to focus on a particular type of business, market or segment what would it be?  What would be your top 3 choices?

Answer

You ask a very good question.  It is extremely important for entrepreneurs to properly read the market context and create appropriate opportunities to meet the new and different demands.  In many cases, it is simply re-orienting your same skills into a different product or service that does a better job of meeting different needs.  Be sure to see the blog post An Analysis of the Great Depression to see what kinds of industries, companies, products and services survived and even thrived during the Great Depression.  A number of concepts come to mind for thinking through potential opportunities:

Concept: As consumers cut back on spending, demand will be created for cheaper substitutes.  See the blog post Creative Entrepreneurship in a Downturn for more on this concept.

• Example: As the demand for new cars goes down, the demand for car repairs goes up as consumers attempt to get more out of their current car.
• Example: As the demand for new homes goes down, the demand for home repairs, additions and upgrades goes up as consumers decide to continue living in their current home rather than buy a new one.

Concept: As employers cut back the number of employees, the demand for outsourcing the tasks that still need to be done goes up.

• Example: As the demand for a full-time recruiter goes down for many companies that stop recruiting, the demand for matching skills with outsourced opportunities goes up.
• Example: As the demand for full-time IT support staff wanes due to the shrinking number of workers, the demand for ad-hoc, outsourced IT support will go up.

Concept: As consumers look for ways to save on their budgets, demand will be created for any product or service that offers tangible savings.

• Example: As the demand for electricity, gas and other basic utilities will go down somewhat as consumers tighten their belts, demand will go up for lower-cost alternatives that offer, real and immediate savings, such as switching to the no-frills long distance plan or the no-name electrical supplier in a competitive market.  Note: if the payoff it too far out into the future, demand may not pickup, e.g. the solar system that costs $40k and has a 10-year payback is too big of a bet for most consumers to make in a downturn.
• Example: During the recession and energy crunch of the 1970's, as demand for gasoline went down when Americans cut back on unnecessary travel, demand for converting vehicles from gasoline to propane ran high and automotive repair entrepreneurs across the country prospered by installing propane conversion kits to meet the demand.
• Example: While demand for packaged foods and processed foods may slow at grocery stores, the demand for seeds, gardening tools and other gardening supplies will increase.

Concept: As consumer look for ways to save on their budgets, demand will increase for information-based products such as budget tools and "how-to" books on how to lower your cost of living.

• Example: As general e-commerce spending has decreased, traffic at coupon-based and savings tips sites has sky-rocketed.
• Example: As general book sales have slowed, demand for simple living books, gardening books and survival guides has increased.

Concept: As the demand for typical investments has slowed and the value of the dollar has dropped, demand for better stores of wealth has increased.

• Example: As investments in passbook savings and alternative assets such as hedge funds, venture capital and real estate has dropped, investment in gold and silver has increased.  A number of New Venture Lab members are currently cleaning up by selling and hand delivering silver bullion.

Concept: As the demand for growth-oriented business services slows, the demand for restructuring or cost-cutting business services goes up.

• Example: The CPA firm that sees demand for acquisition due diligence or other growth-oriented services go down, will likely see demand in cost-cutting consulting services go up such as invoice auditing services, financial review services and vendor negotiating services go up.
• Example: The commercial real estate broker that sees demand for new space leasing go down, will likely prosper by offering lease renegotiating services, for which demand will run high.