Starting in a Tough Economy

To fund a startup in the current economy, focus on your own capital.
Magazine Contributor
3 min read

This story appears in the March 2009 issue of Start Up. Subscribe »

Here are two questions I recently received at 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.

  • Credit cards: Millions of small businesses capitalized their startup phase with credit card debt. Today, that option is much more limited than in the past.
  • Home equity: Again, millions of startups were capitalized with this credit source, which is a much more limited option today.

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.

  • Client expectations: If your clients expect you to be in your office and available at certain times, like 9 a.m. to 5 p.m., then your business depends on meeting those expectations.
  • Avoiding distractions: If specific hours allow you to avoid distraction, like working during school hours, before the family wakes up or after they've gone to sleep, then establishing a schedule may be helpful.
  • Avoiding overworking: If you've become a workaholic because you never seem to leave the office, a work schedule is recommended.
  • Establishing a routine: Setting business hours early on may help you get used to the difference in working from your home vs. commuting to a job.
  • Helping others transition to homebased work: Setting work hours may also help others in your household get used to the idea of you working from home.

    As time goes on and you get more comfortable and established in your homebased business, you will have a better sense of what hours you need for work and what hours are personal time.

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

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