07 June, 2009

New venture in an economic slowdown?


Afraid of starting a new venture in an economic slowdown? Don't be, say investors. War times, recession and economic slowdown give excellent opportunities to set up new businesses and gain competitive advantage.
Capital expenditure and wage costs cannot be any cheaper than in these times. From Hyatt and FedEx to GE and Hewlett-Packard to Indian firms like Mindtree and Wipro BPO all were born in a slowdown. To set up a new venture, a core marketing and operations talent is essential. Economic slowdown gives an excellent opportunity to attract such talent at low wage costs, and give them excellent equity rewards and challenging work in return.
Top talent is also liable to easily migrate if their growth is not taken care of (in terms of salary hikes or promotion), even though in a recession. Capital infrastructure businesses will also find the expenses cheaper than they would in boom times. Any product follows the normal PLM (product life cycle management) graph. It follows five stages of development, introduction, growth, maturity and decline. Most ventures start with a loss and achieve break even after six months to an year. And the curve can be timed in such a way that the growth period starts with the period when stock markets start picking up pace.
The ideal maturity period should end with another phase of boom and beginning of a slowdown . Though no business can achieve accurate timing, entrepreneurs can time their product launches gauging the trend of the curve. Raman Roy, founder of three BPO ventures and CEO of Quattro BPO says: that there's is no good or bad time to start. "If you start selling bullock carts in this age, it won't work even in a boom times. Even we started Spectramind in post dot com bust, and we did very well. If the idea is good it will sell. It should satisfy the needs of a market."Roy started Spectramind at the peak of the dot com bust in 2000, with funding from Chysalis Capital. In two years, the company ramped up to 9,000 employees. It was bought by Wipro for $175 million after which Roy founded Quattro BPO with his own capital.

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