by Gary Beach

Now is the Best Time to Start a Business

May 07, 20092 mins
IT Strategy

Many of today's biggest companies opened their doors when other businesses were closing theirs.

The U.S. economy has weathered 18 recessions spanning a total of 90 years since 1776, not including the current downturn. Each of those 18 prior recessions, some with descriptive names like “The Long Depression,” which lasted a whopping 23 years from 1873 to 1896, had one thing in common.

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They ended. And so will this one.

Thirty years ago, when I was a research analyst at McGraw-Hill, I analyzed the 1979 Fortune 500 list to determine what percentage of those companies had incorporated during a recession. It was about 40 percent.

I decided to repeat the analysis with the 2008 Fortune 500 list, and here is what I discovered:

Among the companies on the 2008 Fortune 500 list, 35 percent incorporated into business during a recession—a number that is remarkably similar to my 1979 analysis.

So I decided to go further.

I put under my economic microscope only the top 100 companies on the list. I was curious to learn if more or fewer than 35 percent of these largest companies had incorporated during a period of economic contraction.

Are you ready? Forty-six percent of the Fortune 100 incorporated during a downturn.

It gets better: 52 percent of the Fortune 50, 64 percent of the Fortune 25 and seven of the Fortune 10 all opened their doors while economic pain was all around them.

So what does this analysis mean? I have reached two conclusions:

First, if you are pining to start a company that you believe can scale to be one of the world’s most dominant firms, you shouldn’t be afraid to start it in a recession.

Second, watch your back. That 35 percent of the nation’s 500 largest public companies launched during a period like the one we’re in is stark evidence that—the recession notwithstanding—competitors are starting up all around you.

If you would like a slide recapping the data, just send me an e-mail.