Let’s see . . you have assessed your personality, business skills, and personal lifestyle. Now, you should have a better sense of whether owning a business is right for you. However, you may have decided that it’s not for you – not right now or not ever. It’s easier to stop at this point than after you have spent your entire savings or the bank’s money. Whatever you ultimately decide, your assessments won’t be wasted. They’re the foundation of your decision to start or buy a business; name your business; conduct your market research; choose a business entity; develop your financials; price your product or service; choose a location and all the other “must do’s” before opening a small business.
But, then from way back in the room, I hear a booming voice. . . “Start a business in a recession. You’re kidding, right?”
No, I’m not kidding. Starting a business during our economic recession might seem like an impractical, and candidly, crazy idea. But, hard economic times have proved to be good times for business start-ups. Many very successful businesses were founded during our lowest economic periods. To name a few, there is Disney, FedEx Corp., Hewlett-Packard, IHOP Corp., LexisNexis, Burger King Corp., and Microsoft.
According to an article in USA Today, a recession is “a great time to start a business especially those that don’t require a lot of start-up capital.” Investors are less likely to invest and banks are less likely to loan when the economy is “tanking.” It’s definitely too early to predict the end of our down-turned economy. However, if you were thinking of launching a small business, it might be wise to hurry up before the recession ends. No, you did not misread my statement.
Eventually our economy will again experience growth. Small businesses with simpler business plans may find this recession to be a great time to get started. You might consider starting your business because:
• You’ll find great “deals.” From suppliers to commercial space, from advertising to business professionals, there are good deals everywhere. You can anticipate easier negotiations, too. Property-owners may be willing to give lower rates and shorter lease terms. Professionals like accountants and attorneys may lower their fees. (However, they may increase their fees once the economy gets better.) Furniture and equipment are being “closed out” everywhere. They may be used, but in excellent condition.
• You may be forced to. Many would-be entrepreneurs have not acted on their dreams, because it’s hard to give up their benefits and the safety of a paycheck. In today’s “laid-off” climate, that’s completely understandable. It’s difficult to find a new job in any industry. But, many take that as a motivation to start their own business. You may not agree with it, but it’s a reason all the same.
• You are forced to be innovative. Starting a company during a recession is still scary. For fear that things may get worse during hard times; it’s hard to commit a large amount of capital. Or, you may not have any funds at all to commit to start a business. So, replace capital with innovation. Your creative plan should be lean, but efficient. Instead of throwing money at a problem, you should employ a cheaper, but effective alternative.
• There’s less competition. Businesses that ran poorly or on a very thin edge are weeded out. You’ll have fewer competitors. In today’s economic challenge, just make sure your product or service, marketing, and customer service are all quality.
• You’ll be ready when the economy starts turning. The most productive time in an economic cycle is when demand is high, and supply is low. If you wait until the economy is growing again, you’ll loose precious time. Once things are going well, there will be a rush to fill the demand. If you're already in business, you're ahead of the rush. As others scramble to start businesses, you can remain one step ahead of them while improving yours.
In 2008, Melissa Chang of www.thestandard.com wrote an article that’s still applicable today. She lists four other reasons why a recession is a good time to start a company:
1. A recession forces founders to be frugal.
2. Recessions force entrepreneurs to take another close look at their ideas.
3. Recessions lead to committed startup teams.
4. Recessions toughen up companies.
Have your Assessment 1, 2 and 3 answers ready for "To be or not to be. . . that is the question" Part 6 - What's next. . . start, buy, or franchise?
You can read Melissa Chang’s article at: http://www.thestandard.com/news/2008/03/20/five-reasons-why-recession-good-time-start-company?page=0%2C0