While the economic recession has been tough on many people, it has arguably been a good thing for Canadian start-ups.
What? Yup, bad times = good times for Canadian start-ups.
Here’s why: One of the realities of the recession has been that many companies have slashed their workforces to control costs. Many of these employees are smart, productive and talented but were turfed because corporate survival became paramount. These people are developers, programmers, designers, business analysts, communicators, marketers, salespeople and accountants.
With dim job prospects, many of these people started to take on project, contract and freelance work. The rates they have been charging are relatively modest given it’s been more important to get work than squeeze out every last penny from clients. In the process, these people have discovered they like being their own boss rather than working for someone else. The lifestyle freedom, flexibility and, as important, new professional challenges have proved to a good thing.
At the same time, customers are happy because they’re getting work from skilled and enthusiastic suppliers at lower costs than hiring a full-time employee or hiring a full-service agency. As a result, it’s been a win-win scenario for everyone involved.
So, what does this mean for Canadian startups?
Already forced to operate lean and mean because there’s a dearth of venture capital around (although that appears to be changing), Canadian start-ups have been able to tap into modestly-priced talent to get things done – anything from user-interface , design, development, marketing, financial services and sales work.
In the midst of the recession, start-ups have been able to get a lot of done without spending a lot of money. It may be a difficult economic landscape but start-ups are working to take advantage of it.
The big question is what happens when the economy starts to recover? What happens to many people who start getting full-time jobs again? Will this talent pool start to disappear? Will prices for freelance, contract and project assignment start to increase? Will start-ups stop enjoying a “Recession Dividend”?
The answer is probably but perhaps not to extent that you might think. Some people who have been forced to do their own thing may not want to head back to the cubicle farm, and will continue to offer great service at reasonable rates. Meanwhile, some companies that have received received bang-for-the-buck from freelancers and contractors may start to think there’s no reason to pay higher rates so they will continue to stay away from hiring full-time or using a full-service agency.
As we start to head out of the recession, there are encouraging signs that Canadian start-ups have weathered the storm and that smooth waters are on the horizon. With access to modestly-priced talent and an encouraging number of new seeds fund being created, the Canadian start-up landscape may be poised for good times.
What do you think? Have start-ups been able to capitalize on the recession? Will they continue to benefit when the economy bounces back?
