Some say the best time is when the economy is hot and people have money to spend. You’re more likely, they say, to get customers to part with their hard-earned cash when they have more of it.

Others hold the opposite view, one that may be particularly relevant now, with a recession on its way, or perhaps already here. Start when times are tough, they say. Why? First, many large companies become risk-averse in times like these. They cut back on spending, and on innovation, too. That means less competition for you!

For entrepreneurs, there’s opportunity in those cutbacks. When demand for all kinds of goods and services falls, resources become cheaper and more easily available. Yep, that means people, production facilities, and most of the other inputs your start-up will require.

And there’s a third, more personal reason. Those whose life ambitions include a nascent entrepreneurial streak quickly realise in times like these that they are not likely to get promoted, at least not any time soon. So maybe it’s time to strike out on their own. Indeed, there’s lots of history that supports this view.

Bill Hewlett and David Packard started HP during the Great Depression in 1939.  Bill Gates and Paul Allen launched Microsoft in the throes of the 1975 oil embargo that was wreaking havoc everywhere. More recently, Brian Chesky and Joe Gebbia hosted their first Airbnb customers in 2008 because they were short of cash to pay their rent.

But does timing really matter?

In the classic 1967 movie “The Graduate”, the character played by Dustin Hoffman, a recent university graduate unsure where to head next, was given the advice, “Plastics.” More recently that advice might have been “Software.” Or “AI.” Or “Crypto.” 

The reality is that fads, by their very nature, come and go. What’s far more important to aspiring entrepreneurs isn’t timing. It’s finding set of customers who have a compelling problem they need solved and are willing to pay to solve it. As the famed venture capital investor Vinod Khosla once noted, “To me, any big problem is a big opportunity. It’s very simple. Nobody will pay you to solve a non-problem.” So, if you’re entrepreneurially inclined how might you get started toward finding a suitable problem to solve?

Today’s start-up process

The conventional wisdom says the startup process goes something like this:

• Come up with a great idea
• Write a compelling business plan
• Craft a persuasive pitch deck
• Raise venture capital
• And shortly thereafter, Voilà!, you’ll be rich!

I hasten to tell you that most of the time entrepreneurship doesn’t really work that way. Most new ideas fail, some sooner, some later. For the ventures that make it, it’s usually not via Plan A. For PayPal, it was Plan G, the seventh application for Max Levchin’s incomparable encryption abilities.

And it gets even worse. The famed Silicon Valley firm Andreessen Horowitz rejects more than 99 percent of the opportunities it is shown, as do most investors elsewhere. In fact, the vast majority of fast-growing firms never raise any venture capital, in the UK or anywhere. There must be a better way, and there is.

Tomorrow’s entrepreneurial mindsets: reshaping the start-up process

My advice to those aspiring to strike out on an entrepreneurial path is this:

• Use problem-first, not product first logic. In other words, don’t ask yourself to come up with a great “idea”. Instead, as Khosla suggests, find a compelling problem you can solve. I advise my students to make a “bug list” as they go about their daily activities, to which they add things they find that “bug” them.
• Think narrow, not broad. Too many aspiring entrepreneurs have been brainwashed into thinking they should only consider opportunities that lie in “huge” markets. Wrong. The smaller the initial market, and the more unique its needs, the better your chance of being the sole provider who can satisfy those needs. Nike, today’s global leader in athletic shoes, got its start by making shoes targeted at elite distance runners, those who could run nearly a four-minute mile. If there’s ever a prize awarded for the smallest market ever, this market would probably win!
• Ask for the cash, then ride the float: When Elon Musk and his partners started Tesla, they managed to sell 100 Tesla Roadsters to 100 wealthy and environmentally conscious Californians, for $100,000 each, cash, please, before they even started to build the first one! Do the maths: that’s a cool $10 million cash in advance with which to get the Roadster engineered and get production underway.

Why not you? Why not now?

Most entrepreneurs I know get started because they spot an opportunity – a customer problem – to make the world, or at least their small part of it, a better place in some way. Travis Kalanick and Garret Camp started Uber with a handful of drivers with black cars so that “everyone can ride like a millionaire.” UberX came later. So, find yourself a problem that you’re equipped to solve, in a tiny target market. If it’s a compelling enough problem, the customers will pay you in advance to solve it. Then off you go!