Is a downturn a good time to start a business?

It's not a bad question actually. Bill Gates didn't wait for the recession of 1974-75 to pass when he founded Microsoft. Other companies that started in recessions include CNN, GE, Sports Illustrated and Hewlett Packard. GE started in the Panic of 1873 which ran for six years. You can read the complete list here.

All these companies were started by people who saw an opening in the market. Regardless of the state of the economy, they moved in.

Entrepreneur and brain scientist Jeffrey M. Stibel predicts that 2009 will be a period of tremendous innovation. "Times of economic contraction create dislocation in free markets," Stibel argues. "Smart entrepreneurs recognize this market opportunity and create "engines of change." 2009 will present a massive platform for innovation and will be a watershed moment for business creation. I believe this not just because of the events of history, but also because of the current technological landscape: this is an era of nascent technology, ever increasing in speed, breadth, and scope."

He has a point. There are many advantages to starting up in a downturn. Hard times force you to ask hard questions, be more frugal and get more committed teams willing to sign on for less.

Let's see what innovations this year produces.