Tip #2: Create a Strong Foundation for Your Small Business

In this series of articles, we are talking about starting up a business during a recession. It may be the best time, but fledgling small businesses still need to pay attention to some basics if they want to fly without falling.

We took a look at some of the specific dangers that potential entrepreneurs need to look out for when they are thinking of starting a business during bust times.

In this article, we will take a look at building a firm foundation for your business during the current recession.

Identify a Target Market

Every business needs to know who their clients are, the people that make up what is called their ‘target market’. In a recession, this will mean identifying the people who are most ‘recession proof’ and appealing to their needs.

Believe it or not, there are large segments of the population that tend to keep similar spending habits, even during a recession.

The biggest group are people from their mid 40s into their mid 60s. As a whole, this group has less financial burdens than any other demographic in our society.

Typically, their mortgages are paid off, their children are grown or almost grown, and they have reached their highest earning potential as far as jobs go.

Moreover, they have already weathered a recession (or three) in their lives and understand both current and future implications of the financial picture. This means they are more secure in their decisions than other groups.

Another market to target is not so much demographics, but areas in which you can appeal to people. No matter how bad times get, there always seem to be some niches where people are still willing to spend their money.

Most of the time, these niches have to do with forgetting their troubles; bars, liquor sales, tobacco sales, inexpensive entertainments, and so on all tend to do stay afloat and even profit during recessions.

During a recession, people want to take a mental break from their problems.

Targeting an area that people can’t seem to do without will help to ensure your business is still making money during a recession.

Write A Detailed Business Plan

This step in building a good foundation for your business is no different in a recession or during a boom. Nothing will help you more in your business than following a plan which you determine for that business, and the best way to make sure you follow it is to write it down.

You might be bursting with ideas and plans for your business right now, but most of the time people forget what their intentions were halfway in.

Coming up with a business plan that you write down will mean you always have something to refer to as you conduct your business. You should lay out budgets, what your focus is, where your revenue is coming from, your target market, and your marketing plan in your business plan.

One hint that you may want to consider for a business plan during a recession is the use of percentages instead of solid dollar figures.

For example, you might want to commit 20% of the money you make each month to marketing, rather than committing to $1000. This way, you can roll with uncertain economic punches.

In our next article in this recession business planning series, we’ll explore some common pitfalls of starting a small business in a recession and how to avoid them.

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