However, history shows that waiting out an economic downturn may not be the best policy. Generally, businesses succeed or fail based on the demand for the product or service they deliver. As the old saying goes, if you build a better mousetrap, the world will beat a path to your door. And that is just as true in good times as in bad. For inspiration, here are a few examples of businesses that were founded during economic downturns and went on to enjoy great success.
Method Products ¨
This hip line of environmentally friendly soaps and household cleaners was originally founded in 2000 and grew into a highly successful enterprise despite the recession that immediately followed. The key to the company's success is that the founders, Adam Lowry and Eric Ryan, had a new idea about an old product category. They began with a modest investment that quickly became a multi-million dollar business, providing top-quality products for every room in the house.
Technology giant HP, which posted revenues of more than $100 billion in 2007, had very humble beginnings. In 1934, in the midst of the Great Depression, Bill Hewlett and Dave Packard, electrical engineers, established what would become Hewlett-Packard ¨ in a Palo Alto, California garage. They became partners in 1939, investing a little over $500 in the new business.
Cameron Hughes Wine ¨
Wine consumption in the US is growing faster than a newly-planted vineyard, and the technology tools that are available now provide new ways for consumers to connect with choice vintners. Cameron Hughes, a San Francisco-based entrepreneur, tapped into the new demand by founding Cameron Hughes Wine ¨, a wine trading company, during the economic downturn in 2001. The company buys wine in relatively small amounts from major producers and sells it economically to big-box retailers. The company's sales are projected to reach $20 million this year.
Adobe Systems ¨
In 1982, the US was in the midst of a recession fueled by high gas prices. Adobe Systems ¨ launched that same year with a digital font product. In the mid-80s, the company became a major player in the consumer software market. Adobe Systems ¨ went on to launch its flagship product, Photoshop, in 1989 - in the midst of another recession. Today it's a multi-billion dollar enterprise, and its two original founders serve as co-chairmen of the board.
As the founders of these top companies demonstrate, a positive economic cycle is not a prerequisite for founding a successful business. And for every start-up firm that becomes an industry giant, there are thousands of small businesses that may not be household names but are still thriving companies that perform essential services for their communities. So if you're considering a business venture, remember that your product or service is more important that the economic climate.