It’s safe to say that a huge percentage of the world population is currently going through a cost of living crisis. The prices of many essentials that we need to live are on the rise, which means many people are spending a lot of their income on things like accommodation, fuel, food, energy and more. Sure, these are things that have always eaten up the larger portion of anyone’s income. But now, it’s taking up even more of people’s monthly pay, leaving a smaller amount left over for disposable income and luxury spending.

It’s not surprising that during this time, many people are seeking ways to earn extra money and that many people are considering setting up their own businesses to generate extra income to keep them ticking over. But at the same time, people aren’t spending as much, so now could be seen as a time where setting up a new business might not be the greatest idea, as consumer spending is down. So, what should you do? Is now a good time to start your business or should you hold off until people’s finances even out?

Here’s some information that should help you to make the right decision for your individual needs.

Will You Be Going Into Debt to Start Your Company?

First and foremost, you need to consider whether you have the money available to set your business up now, or whether you’ll be taking out large scale loans to do this. Times are uncertain and nobody can ever know how a business is going to perform, so if you’re taking out a loan that you have no means of paying back if your business doesn’t take off, now might not be the time to get started.

An alternative option that people are considering is investment from others. An entrepreneur looking for investors can seek out individuals who will put an agreed amount of money into helping the company start up in exchange for a percentage of the profits down the line. This puts the risk on the investors’ shoulders rather than your own.

This is a much better approach to take for the moment, as long as you can get a good deal and the investor doesn’t request too large a percentage of your profits or business in exchange.

Is Your Product an Essential?

If your product is an essential, chances are, consumers will be happy to still buy it right now. However, when it comes to sheer luxury spending, you may find that demand for luxury products is drying up right now. People are being much more savvy with what they’re buying and are much more reluctant to spend the little money they have on something frivolous. It’s a good idea to conduct market research into your product ideas before getting started, asking questions concerning price and likelihood of purchase.

As you can see, now is a difficult time for business owners. While businesses pose a good opportunity to make money and help you out during the cost of living crisis, you do need to consider current spending trends and determine whether your venture is likely to succeed or fail.