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Starting in a Tough Economy

To fund a startup in the current economy, focus on your own capital.
March 11, 2009
URL: http://www.entrepreneur.com/article/200612

Here are two questions I recently received at AskJim.biz from budding entrepreneurs like you. Take a look and see if they help. And remember, always seek excellence, not perfection.

Q: Is now a good time to launch a startup, considering all the economic challenges?

A: The viability of your business model is critical in any environment. But there is one startup issue in the current environment that is different from past downturns: the credit crisis.

In every economic downturn I've witnessed (starting with the recession of 1969), the subsequent recovery was helped by a fully functioning credit system just waiting on customers to come back. The current recession is different in that, while for established small businesses credit is generally available through their banking relationships, credit for startups is more difficult to find.

Here are two reasons why it will be more difficult to capitalize a startup right now.

The key to funding a successful startup in the current environment is to focus more on your own capital, not debt, and grow organically (i.e., slower) through the best form of capitalization: customer sales. With customer sales and a well-managed business, you should soon be able to establish credit alternatives based on your business's performance.

Q: How should I establish working hours for my homebased business?

A: Your hours of operation will depend on your business, clients and personal situation. Some people think being homebased gives them the flexibility of working whenever they want, but that's not always the case. Here are some rules of thumb to consider.

Jim Blasingame is the award-winning host of The Small Business Advocate Show and creator of the small-business knowledge base AskJim.biz. Also find Jim at smallbusinessadvocate.com.