Valuetainment - September 06, 2022


10 Reasons To Start A Business During A Recession

Hosted by
Patrick Bet-David
Mentioned
Entrepreneur
Defund Universities - Shocking Truth About The College Monopoly System What Most People Get Wrong About Competition

Episode Stats


Length

9 minutes

Words per minute

225.71

Word count

2,229

Sentence count

148


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

During a recession, there is less competition, bigger opportunity for you if you can survive and thrive during this type of season. Access to good talent is out there and typically at a lower cost than it was before when the market was great.

Transcript

Transcript generated with Whisper (turbo).
Hosts, guests, and mentioned names generated with spaCy (en_core_web_sm), reconciled against Wikidata.
00:00:00.200 Theoretically, many experts may tell you a recession is the worst time to start a business,
00:00:05.720 but I'm going to give you 10 reasons why this is the perfect time for you to start a business.
00:00:16.320 Stick around to the variant.
00:00:17.320 I'm going to give you a PDF with all the notes from today's content, and if you get value
00:00:20.020 from the video, give it a thumbs up and subscribe to the channel.
00:00:22.760 Having said that, pruning season is here, which means five things happen during a recession
00:00:29.040 and market crash.
00:00:30.240 Number one, bad companies go out of business.
00:00:32.760 Number two, it creates room for new companies to grow.
00:00:35.420 Number three, starts a decade or so of growth.
00:00:38.520 Number four, no more overpriced talent.
00:00:40.860 And number five, access to talent previously unavailable.
00:00:45.200 These five things are great opportunities for new businesses, small businesses, and entrepreneurs.
00:00:50.460 So now, 10 reasons why this is a great time to start a business for yourself.
00:00:54.480 Number one, when a season like this show up, unfortunately, many people don't make it, which
00:00:58.480 means there is less competition.
00:01:00.740 Anytime there's less competition, if you've got a better story, you're able to get in front
00:01:04.780 of the customers better.
00:01:05.780 So again, point number one, during a recession, there is less competition, bigger opportunity
00:01:10.960 for you if you can survive and thrive during this type of a season.
00:01:15.700 Point number two, all-in mentality.
00:01:17.800 Unfortunately, and fortunately, when times like this comes up, recession, market crash,
00:01:24.040 crash against the wall.
00:01:25.420 People don't have a choice but to be all-in because they have to pay the bills.
00:01:29.400 They have to survive.
00:01:30.580 They have to fight.
00:01:31.700 There is no choice.
00:01:32.820 So a climate like this attracts a team of people that are willing to say, let's roll
00:01:38.520 up the sleeves.
00:01:39.520 Listen, man, this ain't good times.
00:01:40.800 We got to go out there and fight.
00:01:42.220 And everybody has a higher all-in mentality during a season like this than when it's a perfect
00:01:47.700 season.
00:01:48.700 Point number three, access to good talent.
00:01:51.160 So when a market turns and it's kind of like it is today, good talent gets fired, Amazon
00:01:55.600 just laid off 180,000 people, banks are letting people go, Facebook's not hiring people right
00:02:00.220 now, Google's telling people, you better come in, or else a lot of companies are letting
00:02:04.380 go of people.
00:02:05.680 This is not like they're getting rid of their bad people, they're just getting rid of people
00:02:08.820 because they have to get rid of people.
00:02:10.640 What does that mean to you?
00:02:12.220 Talent is out there and typically at a lower cost than it was before when the market was
00:02:17.460 great.
00:02:18.460 If you're a startup or a new business, you can get talent at a reasonable price today
00:02:22.300 that you couldn't get a year or two years ago.
00:02:24.680 Point number four, everything is cheaper today when it comes down to vendors.
00:02:27.840 For example, if you want to get office space today, there's plenty of office space, plenty
00:02:32.820 of markets that you can get typically discounted when the market is a little bit uncertain about
00:02:37.400 what's going to be happening.
00:02:38.900 Vendors, less customers, they need business, they're willing to talk to you.
00:02:42.600 For me, I started my own insurance company in 2009.
00:02:45.480 I'll never forget the meeting I had with AIG.
00:02:47.980 I'm having a meeting with AIG.
00:02:49.320 They've got 20 executives sitting that fly out to their office in Houston, and they're
00:02:53.440 all sitting there, and every second of the day, the news is talking about AIG is going
00:02:58.260 out of business.
00:02:59.260 And me, I need a contract with an insurance carrier.
00:03:02.560 So I'm sitting in a corner of the table by myself, everybody sitting around, I'm writing
00:03:05.760 stuff on the board, trying to get them to do business with me.
00:03:08.960 Finally one of the guys says, listen, let's just face it.
00:03:11.880 We need someone right now to write our business because people don't want to write AIG, and
00:03:15.720 you need somebody that gives you a contract.
00:03:17.600 We think we've got a perfect marriage.
00:03:18.820 And he was right.
00:03:19.900 They gave me a contract because nobody else was giving it to me.
00:03:21.980 I was a smaller company, newer company, and they needed somebody to write their business,
00:03:25.540 and we were willing to do it.
00:03:26.880 It became a perfect match.
00:03:28.380 We got the opportunity, they got the win, everybody moved on.
00:03:31.880 But if the market was great, that may have not happened.
00:03:34.880 Point number five, it takes a downturn to find out who's real and who's not.
00:03:39.020 The reality of it is, when I was saying this is a pruning season, we don't really know who's
00:03:43.960 real and who's not.
00:03:44.860 We don't really know who's tough and who's not.
00:03:47.200 Running a business is very, very, very hard.
00:03:51.640 Don't let anybody fool you.
00:03:54.080 For every one person that makes a 98 go out of business, just keep that in mind.
00:03:59.140 It's not like one of these things where everybody goes out there and does it.
00:04:01.260 So for you, if you're sitting there saying, man, I don't know if I want to go out there
00:04:03.740 and start a business.
00:04:04.740 No problem.
00:04:05.740 It's somebody that isn't team up with them, but the reality of it is, if you are somebody
00:04:10.180 that's not afraid of hard work, if you are somebody with a real vision, if you are somebody
00:04:14.180 that's willing to pay the price, this is the perfect season for you.
00:04:18.940 Point number six, it takes times like this to reveal the real disruptors.
00:04:22.340 By the way, what do I mean by this?
00:04:24.060 When season is like this and everybody is scared and things are breaking, you're able
00:04:28.180 to see if I was running it that way, I would have done this.
00:04:30.740 Ooh, if I had done, I would have done it this way.
00:04:32.740 Ooh, what if we did it this way?
00:04:33.740 Oh, what if we did it that way?
00:04:35.500 This is like, for example, education.
00:04:37.060 We had a podcast that we did on education today and the whole conversation was, if all these
00:04:41.500 things are broken today, what if somebody actually produced a great university where you truly
00:04:47.260 wanted your kids to go there because when people came out of that school, they were stronger,
00:04:51.180 they were leaders that were doing great, you would want them to go in there, right?
00:04:54.900 Well, it takes an economy like this, a climate like this for education and universities that
00:04:59.580 are getting called that left and right for somebody to come and disrupt it.
00:05:02.180 So for you, whatever industry it may be, you may be looking at an industry saying, I would
00:05:06.060 have done it in a very different way.
00:05:07.940 This is a perfect season for disruptors to be born.
00:05:10.780 If that's you, perfect time for you.
00:05:13.180 Point number seven, cheaper equipment due to more bankruptcies.
00:05:16.500 I shot a friend of mine that one day, this is in 2008, all of a sudden he says, Pat, take
00:05:21.280 a look at the gym I just bought.
00:05:22.280 I said, what are you talking about?
00:05:23.280 He says, come take a look at my gym.
00:05:24.420 I go to his place, he's got unbelievable equipment.
00:05:28.840 The guy prior to him bought this gym, he bought state of the art equipment, spent like a half
00:05:33.780 a million dollars for this massive gym.
00:05:36.140 He came, he bought it pennies on the dollar, I think he spent less than like $80,000 on
00:05:40.620 the equipment.
00:05:41.620 All in house, the equipment was only used for three or four years, he took it over.
00:05:45.020 Why?
00:05:46.020 Because there's a lot of discounts right now for people that couldn't build it, couldn't
00:05:48.540 make it in business.
00:05:49.660 We just went and looked at a property right in a 150,000 square foot building that we
00:05:53.040 may make an offer on or not.
00:05:54.820 And they're asking, here's what we're asking, here's what we're asking, I said, listen,
00:05:57.420 I'll make a cash offer of $22 million right now if you want to.
00:06:00.340 And they're like, well, there's no way we're going to be doing that.
00:06:02.580 No problem.
00:06:03.580 It's okay, because I don't need this building, but I'll make a cash offer of $22 million.
00:06:07.860 Point is, everything is discounted during times like this.
00:06:10.860 So if you are starting a business, you don't have to buy things at full price.
00:06:15.860 Things are discounted by others who weren't good operators, and the market doesn't favor
00:06:20.940 good operators.
00:06:22.300 The whole concept of this is somebody makes up a path, isn't that kind of cold?
00:06:25.860 It's not.
00:06:26.860 I learned very quickly when I went to summer league to see if I can play for my basketball
00:06:32.000 team, even though I'm 6'4", 6'5", by the time it was done, guess what?
00:06:35.920 I was not ready, and they didn't put me on the team.
00:06:38.420 As big as I was, as tall as I was, as fast as I was, I did not make it.
00:06:42.920 It was a pruning process that means I'm not meant to be a basketball player, just like
00:06:47.380 a lot of people are not meant to be operators.
00:06:50.040 Everybody can go out there and find out if they're an operator.
00:06:52.200 If you do, if you have the cuts and courage, and you say, I'm going to do it, or you're
00:06:54.920 going to partner with somebody, this is a good time, and things will be discounted.
00:06:59.240 That's just the reality of it.
00:07:00.960 Number eight, investors have fewer opportunities to invest in.
00:07:04.340 What does this mean?
00:07:05.500 When again, pruning season comes in, and a lot of people don't make it, investors don't
00:07:09.180 have a lot of opportunities, because not a lot of people are starting businesses during
00:07:12.120 that time.
00:07:13.120 You know, just a year and a half ago, oh, you can invest 100 million in this, 5 million
00:07:16.400 in this, 2 million in this, a million in this, a half a million in this.
00:07:19.220 There aren't that many opportunities during downturns, which if you are somebody that's
00:07:23.840 putting up numbers during a season like this, it is a lot easier to get the attention of
00:07:28.620 investors today than maybe you would have gotten two years ago in a great market.
00:07:32.720 Point number nine, incumbents became lazy.
00:07:35.400 What do I mean by this?
00:07:36.900 If you're getting into a marketplace, and say somebody went on a seven year run, and
00:07:41.520 the company grew, their business is doing very, very well, typically success makes people
00:07:47.660 lazy.
00:07:48.660 Unfortunately, a lot of times people are like, oh my god, look how we're doing, look how
00:07:52.020 much money I'm making.
00:07:53.100 They go off six days a week, they go off five days a week, they sleep in, they go home earlier.
00:07:57.280 Most people compete that way.
00:07:58.760 So when you do come in and you choose to compete, you're making them work.
00:08:02.900 Listen to me, I'm going to give you something, a little bit of an insight.
00:08:06.380 Nothing is more exciting as a competitor, when I make my competitors work.
00:08:10.660 It's so awesome when you do that.
00:08:12.760 When your competitor sits there and they're like, man, I've been free for the last five
00:08:15.900 years, no one's been saying anything to me.
00:08:18.020 I've been sleeping in, I've been kicking back, I've been drinking, I've been partying.
00:08:22.120 What the hell is this new business doing, making me go to work?
00:08:25.340 They don't like that.
00:08:26.400 This is an opportunity for you to make them go to work.
00:08:28.960 Because quite frankly, a lot of people haven't been working for a long time, they've just
00:08:33.700 been acting like it.
00:08:34.820 So the success makes it seem like they're working, they have not been working.
00:08:38.300 You come in, you're not afraid of work, you see blind spots, perfect opportunity for you
00:08:42.200 to go out and do something with your business.
00:08:44.080 Point number 10, the opportunity to stretch a dollar.
00:08:46.800 So what does this really mean?
00:08:48.080 If you're born in a wealthy family, and the family's rich, and it's like, well, how much
00:08:52.560 is this thing?
00:08:53.560 800 bucks, I'll take it, right?
00:08:55.060 But if you're born in a poor family, and somebody says, how much is this thing, 800 dollars?
00:08:59.180 800 dollars?
00:09:00.180 Yeah, why?
00:09:01.680 I can only afford to give you 450.
00:09:03.620 450?
00:09:04.620 Yeah, I can't give it to you for 450.
00:09:06.240 Man, I can't do nothing about it, that's all I got.
00:09:08.520 I'll give it to you for 650.
00:09:10.000 Nope.
00:09:11.300 Most I can go is 550.
00:09:12.300 All right, whatever, take it at 550.
00:09:14.600 See the guy that's got money, would have taken it at 800, but the guy that doesn't have
00:09:18.340 money and is trying to stretch the dollar, just save 250 dollars.
00:09:22.000 When you start a company, everybody who's part of that startup learns how to stretch
00:09:26.560 the dollar in every possible way.
00:09:29.560 Your competitors that have been around for a while with a lot of cash in a bank account,
00:09:33.300 they don't know how to stretch the dollar.
00:09:34.660 That's an itch for you.
00:09:35.660 I was straight up with you.
00:09:36.660 If you got value from today's video, give it a thumbs up, subscribe to the channel.
00:09:39.160 If you want the PDF, click here to get the PDF.
00:09:42.500 And if you want to watch another video, I highly recommend you watch it during a season
00:09:45.320 like this.
00:09:46.320 It's called Grandmaster Entrepreneur.
00:09:47.320 It's a speech I gave in Long Beach a few years ago.
00:09:50.360 Click here to watch that video.
00:09:51.420 Take care, everybody.
00:09:52.420 Bye-bye.