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Good Time to Launch a New Product or Business? You Bet. Here's Why.

Good Time to Launch a New Product or Business? You Bet. Here's Why.

December 22, 2008

Let's get one thing out of the way: you and I are not like most people. Psychologists will tell you that in the event of a crisis, most people have one of two reactions. They either fight or flee. But we're not like most people.

We're entrepreneurs, builders of business, and leaders. So there's a third trait that we possess that most others don't. When the going gets tough, we innovate.

If there's a crisis, we also see an opportunity. It's one reason why many companies are launched in recessions (more about that in a moment). So while the headlines may say a majority of adults are worried about earning less in 2009, we're thinking about how we're going to earn more. In fact, 69% of small business owners in the U.S. say they won't let the current economic climate impact their plans to expand or employ new staff, according to a survey called the 'DNA of an Entrepreneur' by international specialist insurer Hiscox.

Despite the recession, nearly half (46%) still feel that they can make more as entrepreneurs than the traditional corporate world.

It's not surprising that 33% accept that in general, running a business is a gamble but here's what shocked me: only 1% cited cash flow and the downward economy as their biggest fears when deciding to start a business. Innovation is the primary motivator.
And it's during times like these when great ideas are born. Just take a look back through history.

Ad Age magazine was founded less than 90 days after the 1929 stock market crash, so they dug through their archives to analyze the issue of innovation during three of the worst times in our recent history: the Depression and during the worst recessions of the early 1970s and 80s. Here's what they found:

  • Time Inc. made much of its fortune launching magazines during recessions with the debuts of Time (1923); Fortune (1930); Sports Illustrated (1954); People (1974).
  • In 1980, when one in only 5 households subscribed to cable TV, a few got in on the ground floor including CNN, USA Network and Cinemax. Ad Age predicted: 'Nearly 20 networks will lose an estimated $150 million to $200 million this year in gambling on the future.' Boy were they wrong. Today, 9 in 10 households get TV via cable, satellite or alternative delivery.
  • American Airlines, in May 1981, amid a recession, introduced AAdvantage, the industry's first loyalty-marketing program. Frequent-flier programs went on to become a permanent fixture among the airlines.
  • On the brink of bankruptcy (the first time), Chrysler introduced auto rebates in early 1975. Today, rebates are like a drug that the automakers just can't seem to shake.
  • Even in the toughest times, there's a market for premium products. The premium cat food, Fancy Feast, rolled out between 1980 and 1982. Absolut vodka began its ad blitzes in 1981 to become the No. 1 imported vodka in 1985. Calvin Klein in 1982 launched its designer underwear for $14.50 for three pairs ($33 in 2008 dollars!)
  • When new cars weren't selling in 1930, Ford got into the repair business at its dealerships and launched its parts-and-service campaign. In 1975, GM upped the ante when it pitched Mr. Goodwrench.

    In every case, an entrepreneur's back was against the wall. The deck was stacked against them. Use whatever clich' you like, but for every person who thought it was a great idea there were probably five more who thought the idea was awful. But they forged ahead anyway. Whether it was a desperate act or a stroke of genius, each one took a chance during some of the most difficult economic times in our country. What can you begin now that may be the next big thing? Even in the face of a recession, what can you launch?