For Start-Ups, Bad Times Mean Good Times

The recession has actually helped Canada’s start-up industry grow.

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 equal good times for these business.

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 Canadians started to take on project, contract, and freelance work. The rates they have been charging are relatively modest, given that it has been more important to get work than to squeeze out every last penny from clients. In the process, these people have discovered they prefer being their own boss rather than working for someone else. The freedom, flexibility, and, just as important, new professional challenges have proved to be 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 start-ups?

Already forced to operate lean and mean because of the 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 done. It may be a difficult economic landscape, but start-ups are figuring out how to be productive without spending a lot of money.

The big question is what happens when the economy begins to recover? Will this talent pool start to disappear as many begin to find full-time employment again? Will prices for freelance, contract, and project assignments 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 better bang for their buck from freelancers and contractors may start to think there’s no reason to pay higher rates and so they will continue to stay away from hiring full-time staff or using full-service agencies.

As we emerge from 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 seed funds being created, the Canadian start-up landscape may be poised for good times.

This essay originally appeared here. For more about the author, Mark Evans, visit his website.