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How can startups take advantage of downturn?

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ith the stock markets looking abysmal and corporate's cutting staff and expenses, the situation might be looking grim for startups. However, there's a different side to the story, and an interesting one too.

The situation is so bad that trade pundits are foreseeing an economic meltdown, quite like the times when companies like Motorola and Apple first took flight.

When Galvin(Motorola founder) finally got the car radio working, he wasn't registered for the June 1930 Radio Manufacturers' show, and had no display booth or appointments with prospective customers. He started Motorola during the Great Depression of 1930. There was no money in the company's budget for marketing. Yet, he made presentations on the streets and built a company worth millions of dollars.

If we get anything out of this example, economic slouches may not be such a bad time for a startup.

I am not hinting that you should jump into the market during a downfall. Of course, every startup requires economic backing from various financial institutions who wouldn't be very encouraging during an economic crunch. The economy has some effect, certainly, on your business, but more or less, technology is untouched by financial ups and downs.

When Bell discovered the telephone, he did not wait for the economy to be in good shape to tell the world about his invention. Technology just gets outdated if delayed. Had Graham bell waited, it had been too late.

Startups with fresh ideas would only jeopardize their success by waiting for calmer waters.

As far as investors are concerned, you might attract less fundings than you might have in a stable or an affluent environment, but the mantra to running a successful startup lies in the fact that you have to run it as meagerly as possible. Save on every resource you can. This way you not only have lower production costs, but can also offer your clients better deals which the competition would find hard to churn out.

This not only helps you get better and more projects but also make money when every one around is losing money. This in turn means better talent and recognition.

Since you would be doing better than the other established firms, you will attract talent from these organizations who would be more willing to work with you as you can offer stability. By the time the economy has sprung back in action (and even if it hasn't), you would have built yourself a successful startup.

So maybe recession is a good time to start. You can still contemplate whether having less competition is better than having less investors, but the worst thing you can do to an idea is to waste it. So, don't waste this one and who knows, you might be the next Larry OR Sergey.

Rizwan Iqbal - Co-Founder of Sutra Services Pvt. Ltd.

A full services People Consulting firm which offers a unique partnering model with Digital, Mobile and Internet startups.