Recessions mean less money floating around and that means less employment opportunities, less money to enjoy life, and so on. However, did you know that recessions can be an ideal time to start your own business?
Through desperation or opportunity, many of today’s most successful businesses were start during a recession.
In this series of articles, we are going to take a look at some tips for start a business during a recession.
We’re not saying you will eventually achieve the success of Microsoft or HP, but the fact is that recessions offer good businesses a chance to shine, and then to expand when everything gets rolling again.
To start off, we are going to offer a couple warnings and things to avoid when planning your business.
Planning Pitfall #1 – Scams
The first thing every potential entrepreneur needs to know is that during a recession, there are lots of other businesses offering you a shot at millions in exchange for your own money.
Odds are you have already seen a jump in sales pitches from this type of company even if you haven’t made a mental note.
They know that people are looking for jobs, looking for money, and the easier it sounds the better.
The problem with this type of sales pitch is that it often sounds very good. It’s no different from the Amway companies of the early ’90s, pyramid schemes, and so on.
Slick sales people will call up, knock on your door, or make a pitch on the Internet that makes everything sound easy. What you need to do, before shelling out the cash to “get your business started” is read between the lines.
How quickly does the salesperson transition from slick to prick? Smooth then sour is a tried and true way to hook people in, if they are all emotion and no fact, pass up the opportunity.
Planning Pitfall #2 – Overhead
Every small business startup needs to be very careful with overhead, but in a recession, even small mistakes can add up to bankruptcy.
You need to carefully monitor everything from the rent you are paying to the equipment that you use.
This is actually where recessions can play in the favor of businesses. Most products are overpriced, and odds are you can get computers, printers, even phones for much cheaper than the first price you see.
Companies are selling less and therefore making less, and will want to make up that deficit with volume. Rent is governed by the same standards; less businesses means more office space.
Start your small business from your home if you can, but if not then don’t get swindled with high rent when the market is stagnant. You’re in the driver’s seat with this one.
Planning Pitfall #3 – Personnel
Finding good employees is a hard task at times. This is a part of your business planning that you will not want to over look. If you plan your personnel badly then you could be risking your business success on bad employees.
A recession means a chance at finding good employees for businesses, and you should take advantage of this. Boom times mean that great people have employment easily, but a recession means great people are out looking for work so there is a much better pool to choose from.
Make your selections carefully, but never treat employees as though they are expendable. When the economy picks back up, you will want them around!
In the next article, we’ll take a look at how to raise the funds for your new small business – and how to keep the money flowing.
