Who in their right mind would want to start a business during a
recession? Hey, it's not as crazy as you might think. Many
entrepreneurs know that hidden among the recent deluge of stories
of crashing revenues, lost contracts and layoffs are myriad
opportunities. And they're determined to mine them.
"This isn't your parents' economy," says
Steven Van Yoder, a marketing consultant in San Francisco and
author of an upcoming self-published book tentatively titled
Rise Above Recession: How to Recession-Proof Your Business to
Thrive in Any Economy. "You need to learn from it and
build a business that's going to withstand the new storm.
Recession-proofing needs to be built right into the foundation of
all businesses these days."
Working the Economy
The first thing your new company is going to need is a solid
business plan. Not only can a business plan help you get a line of
credit from your bank, but a solid plan also provides a clear path
to revenue. Make sure you also include a few contingencies for
tough times. (For more information about writing a business plan,
visit www.entrepreneur.com/bizplan.)
Content Continues Below
Your plan should include data on your market size and geographic
reach. If, for example, you plan to open a retail shop that sells
baby products, you need to make sure there are a lot of young
families in the area where your store will be located. Start with
free data from the U.S. Census Bureau. Then check with your county and
town governments as well as your local school district. You'll
find a plethora of information on local family demographics. Even
the bridal registries at local retailers can help you determine how
many babies will likely be born in a given area.
As you consider the type of business you want to start, estimate
how much it will cost to get the venture off the ground. During a
recession, those with low startup costs—and no need for
venture capital—typically do better. "Right now,
there's very little appetite for outside capital because
investors are worried about their own stock profiles," says
Richard Geller, co-CEO, co-founder and chief marketing officer of
Sponsera Corp. LLC, a McLean, Virginia, consulting firm that helps
small businesses build alliances with large corporations.
It's important to keep necessary startup expenses low. That
may mean starting the business in your home, buying used office
furniture and leasing computers, which requires a lower initial
cash outlay than purchasing. Hire as few people as possible.
"I was a salesman by day, a proofer by night. I'd be the
courier if need be," says Joe LaValla, 44, co-owner of
Integrity
Graphics Inc. in Windsor, Connecticut, referring to the early
days of his printing company. "Instead of hiring people to do
these things, we put in the hours and knew it was going to pay off
in the future."
Of course, when the economy goes south, it takes more than hard
work to get a company off the ground. It takes an understanding of
changing business dynamics. In hard times, consumers decrease their
spending on luxury items; businesses put off major purchases. And
your company gets stuck in the middle if you don't position
your products or services as must-haves. Companies that provide
value—real or perceived—do well regardless of the
economy. That list includes repair shops, consulting services and
technology providers.
"The better times are, the more the dial moves toward
luxury; the worse times are, the more [it] moves to
necessity," says Rob Frankel, a branding consultant in Los Angeles.
"If you're smart, your brand will take on more value to
your users, to the point where they value it more as a necessity
than it may be." If your product or service is well-branded,
Frankel notes, consumers will be reluctant to part with it even if
it's not truly a necessity. "That's the point of
branding—to turn users into loyal users and
evangelists."
Page 1 |
2 |
3 