Business Start-Up in a Recession - Stacking the Odds in Your Favour
The uncertainty of the economy causes the thought of business start-up in a recession to be quite a daunting task.
Of course this is understandable with the negative economic growth that leads to unemployment and increased debt for both the individual and the economy as a whole.
However, it is a known historic fact that some of the great businesses of our time were started in periods of recession and the economy itself is boosted by the activities of small to medium sized businesses.
So though it may be a daunting prospect, starting a business in a recession can be a good option to consider.
When done properly it could end up being a very rewarding venture indeed.
The following pointers will help stack the odds of success in your favour: 1.
What product or service are you looking to offer? Although passion for your product or service is a good place to start, you should give careful consideration to the type of products or services that you offer.
The reason for this is, when money is scarce due to inflation, people will lean more towards products and services that take care of the necessities before looking to the luxuries of life.
2.
How can you reduce your business start-up costs? You want to seriously consider your business start-up costs and make this as lean as possible.
For example, is it possible for you to run your business from home as opposed to having an office outlet? This will eliminate the cost of leasing which is usually a substantial amount of money out of your business start-up costs.
You may also want to consider low cost options for furnishing your office if you have to be located on external premises by either collecting unwanted furniture from friends and family or visiting an auction site.
Employing some part time and temporary staff as opposed to full time and permanent staff is yet another option to consider.
3.
Have you considered alternative ways of raising finance? Even though some fortunate few may have money saved up to finance their business start-up venture, the majority of us are not so lucky.
Most of us will more likely go to our local banks where the interest rates are high.
In comparison, some of the smaller banks such as the co-operatives and less well known banking names usually offer more competitive rates, so they are worth paying a visit.
Also private individuals such as friends, family and business associates may be alternatives to consider.
In this case, you may want to consider interest free options where the return on investment will materialise at the end of a given period, for example 5 years.
The advantage of this strategy is the fact that you will not pay any interest at the outset thereby reducing your initial running expenses and as a result giving your business a better chance of survival.
However, it is important that you seek legal advice before entering into any sort of financial arrangements, even with your family and friends.
4.
Low cost marketing strategies: Your marketing revenue is the only money that leaves your company, apart from expenses for merchandise, which has the potential of increasing your incoming revenue.
However, in a recession as well as any other time for that matter, low cost strategies will serve us in good stead and help bring about growth more effectively.
Low cost marketing can be done using the traditional method such as direct mail advertising but you have to start small and test before marketing on a wider or larger scale.
The other option which I subscribe to is marketing your business online.
With this method, you can reach a wider audience using very low cost and sometimes free methods of advertising.
Before you do any form of marketing however, it is advisable that you carry out some market research.
This is important because it will help you tailor your marketing to your target audience- this will ensure that your marketing activities are more effective and it will stretch your budget as far as it can go to produce the results that you desire.
Business start-up in a recession should not be looked upon as a daunting proposition.
The odds will be stacked in your favour if you take the points discussed above into consideration when choosing the type of business to set up and how you eventually run the business.
Of course this is understandable with the negative economic growth that leads to unemployment and increased debt for both the individual and the economy as a whole.
However, it is a known historic fact that some of the great businesses of our time were started in periods of recession and the economy itself is boosted by the activities of small to medium sized businesses.
So though it may be a daunting prospect, starting a business in a recession can be a good option to consider.
When done properly it could end up being a very rewarding venture indeed.
The following pointers will help stack the odds of success in your favour: 1.
What product or service are you looking to offer? Although passion for your product or service is a good place to start, you should give careful consideration to the type of products or services that you offer.
The reason for this is, when money is scarce due to inflation, people will lean more towards products and services that take care of the necessities before looking to the luxuries of life.
2.
How can you reduce your business start-up costs? You want to seriously consider your business start-up costs and make this as lean as possible.
For example, is it possible for you to run your business from home as opposed to having an office outlet? This will eliminate the cost of leasing which is usually a substantial amount of money out of your business start-up costs.
You may also want to consider low cost options for furnishing your office if you have to be located on external premises by either collecting unwanted furniture from friends and family or visiting an auction site.
Employing some part time and temporary staff as opposed to full time and permanent staff is yet another option to consider.
3.
Have you considered alternative ways of raising finance? Even though some fortunate few may have money saved up to finance their business start-up venture, the majority of us are not so lucky.
Most of us will more likely go to our local banks where the interest rates are high.
In comparison, some of the smaller banks such as the co-operatives and less well known banking names usually offer more competitive rates, so they are worth paying a visit.
Also private individuals such as friends, family and business associates may be alternatives to consider.
In this case, you may want to consider interest free options where the return on investment will materialise at the end of a given period, for example 5 years.
The advantage of this strategy is the fact that you will not pay any interest at the outset thereby reducing your initial running expenses and as a result giving your business a better chance of survival.
However, it is important that you seek legal advice before entering into any sort of financial arrangements, even with your family and friends.
4.
Low cost marketing strategies: Your marketing revenue is the only money that leaves your company, apart from expenses for merchandise, which has the potential of increasing your incoming revenue.
However, in a recession as well as any other time for that matter, low cost strategies will serve us in good stead and help bring about growth more effectively.
Low cost marketing can be done using the traditional method such as direct mail advertising but you have to start small and test before marketing on a wider or larger scale.
The other option which I subscribe to is marketing your business online.
With this method, you can reach a wider audience using very low cost and sometimes free methods of advertising.
Before you do any form of marketing however, it is advisable that you carry out some market research.
This is important because it will help you tailor your marketing to your target audience- this will ensure that your marketing activities are more effective and it will stretch your budget as far as it can go to produce the results that you desire.
Business start-up in a recession should not be looked upon as a daunting proposition.
The odds will be stacked in your favour if you take the points discussed above into consideration when choosing the type of business to set up and how you eventually run the business.
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