Conventional wisdom indicates a weak economic climate would not the best time to start a business. But history has shown if you use best practices, you’ll enjoy success as an entrepreneur.
If you have ever dreamed about it, there might be good reasons why the seed for entrepreneurship was planted in your mind.
It does not matter that the Biden Administration — with its socialistic political mindset — has proven it’s inept in economics and business.
True, the economy and consumer confidence skyrocketed before the pandemic under the Trump Administration. The unemployment rate was the lowest it’s been since 1969, the most people were employed in America’s history and the stock market soared.
10 Principles to See Coronavirus as Opportunity for Growth
Nonetheless, an economy — good or bad — should not dissuade you from your entrepreneurial dream.
So go for it. Good ideas are worth a lot of money, in any economic climate. So why wait?
It’s worth noting many successful companies were launched in economic downturns. They range from General Electric to Hewlett-Packard.
Entrepreneurial personalities do not let fear run their lives.
Think of fear as an acronym, FEAR: Frantic effort to avoid responsibility. Entrepreneurs see a good idea as a responsibility to act.
Plus, a weak economy motivates them to work harder and smarter on developing and executing their ideas.
That’s true with a decline in consumer confidence, an increase in home foreclosures and a tepid business climate. Yes, there are numerous pitfalls for startups, and it will probably be the most difficult undertaking of your life.
Even as many companies cut back, new business opportunities appear. You’ll have to hustle. Successful entrepreneurs do their homework and work as hard as dedicated athletes who train for high performance.
Here are the 21 tips on how to start a business in a recession:
1. Pick the right niche. You’ll need to enjoy your work and be passionate about it in order to succeed.
2. Take baby steps. Strategize now while working at your present job. Don’t quit or wait for a layoff. If you’re out-of-work, money is problematic but you might not have a choice. Consider all your options.
Good ideas are worth a lot of money, especially in a recession. So why wait?
3. Develop your vision. Write a one-page vision, which explains where you will want to be. Then, consider a business plan for a roadmap. Do your research and become an expert in your industry. Know your competition.
To determine where you are business-wise, conduct a SWOT analysis to assess your strengths, weaknesses, opportunities and threats. Some firms then develop and implement a strategic plan. A business plan is a management tool — vis-à-vis a strategic plan — which is a leadership tool.
This also means learning accounting techniques, forecasting your cash flow, and considering buying good bookkeeping software.
Don’t forget an exit strategy in the event you decide to sell or want to leave at an opportune time.
When Should You Develop an Exit Strategy? Now…Here’s How
4. Seek expertise. Read about successful entrepreneurs. Look for a mentor and a qualified sounding board.
Also, contact a Small Business Development Center. The organization has countless offices throughout the country.
5. Get a head start on marketing and selling. Line up customers before you launch. Always remember: Cash flow is paramount.
You might want to read this article, “The Seven Steps to Higher Sales.”
6. Market and sell every day. Establish a marketing budget and stay with it. Many companies lose market share by cutting advertising and promotion. Implement strong public relations.
Make yourself known to your local public officials and news media. Suggest to reporters that they consider interviewing you when they want an authority in your niche. Look for ways to multiple sales with your customers.
Digital Marketing for Newbies – SEO, Content and Emails
Consider networking with larger companies – many outsource to micro-businesses.
7. Make customer service a priority. When customers take their businesses elsewhere, my research shows 7o percent of the time it is because they feel taken for granted.
Practice great customer service for referrals and repeat business. Survey your customers. When a customer pays you a compliment, ask a question such as this: “What are the names of two people just like you who might appreciate my company’s services.” Be sure to follow-up with the referrals.
If you plan to free-lance or become a consultant, consider my “5 Strategies to Build Trust with Clients — Tips for Consultants.”
8. Harness the power of the Internet. Learn blogging and search engine optimization techniques, and how to develop online press releases. A strong Web presence is paramount.
10 SEO Strategies for Best Organic Search Engine Ranking
9. Line up your resources. Seek references from trusted associates for a good accountant and lawyer. Plan your policies and procedures. Learn to manage your books.
10. Arrange your financing. You’re unlikely to get a bank loan without a track record. Besides, it’s more economical to use your own resources and start from scratch. Avoid reliance on credit cards and home equity.
If you are seeking investors, consider another column I wrote: “What No One Tells You about Raising Investment Capital.” It features an interview with leading consultant Joey Tamer.
11. Appearances matter. Look professional – pick a good business name, logo, memorable tagline, and a branding-benefit statement that adequately tell your story. That also means quality business cards and stationery, a Web site, and email address using your domain name. For more, see: “Profits: Size Doesn’t Matter but Image, Professionalism Count.”
12. Understand legal requirements. That includes business license and taxes at the local, state and IRS. If you’re planning to hire employees, check with your appropriate state agency.
13. Consider buying a micro business. Avoid buying a company that’s losing money unless you’re certain you’ll succeed. Consider proposing owner-financing in a leveraged buyout. But do your due diligence. Walk away from a prospective seller who shows even a hint of bad practices.
14. Develop backup plans for equipment and operations. You’ll never know when bad weather or misfortune will strike. Fortune favors a prepared mind and business. See: “19 Tips to Protect Your Core Assets from a Disaster.”
15. If you plan to hire employees, learn best practices in human resources. Hire the best workers, who demonstrate the 3 A’s – attitude, appearance and ability. (Note a good attitude is most important.)
Motivate them to be productive and to make your business look good in the marketplace.
16. Location. Just as in buying a home, there are key points to remember about where to locate (scroll down to the last paragraph for a link).
17. Keep sources of inspiration handy. Bone up on slogans and quotations to keep you motivated.
18. Community service. In addition to your regular routine of hard work, recreation and exercise, you’ll find it gratifying to devote time, talent and/or money to a worthy cause to lessen the misery in your community.
19. Network and join your local chamber and industry associations. Develop relationships and become a spokesperson for your industry. Become known as your industry’s CEO as the “go-to” person for the media and your peers.
And get involved in public policy when events adversely affect your industry. Government agencies are not known for enhancing or even protecting entrepreneurs’ economic and political liberties.
20. Budget time for continuous improvement. It’s vital to regularly reflect on your business and how to evolve in the marketplace. Review your SWOT analysis annually, and fine-tune your planning.
21. Remember to play and rejuvenate your mind. That means you should exercise, engage in your hobbies and do whatever works for you to stay mentally healthy.
Career Tips: 5 Morning Habits of Winning Entrepreneurs
Again, if you start a business, it will be the hardest thing you will ever do.
Yes, it’s a lot of footwork. But if you start with these rules, you’ll enjoy a competitive edge.
From the Coach’s Corner, to help you determine your entrepreneurial capabilities and for more insights on starting a business, I was honored when New York Times columnist Brent Bowers featured me in two articles:
- “Been There… Done That… Here’s How”
- “Advice on Taking an Entrepreneurial Leap” (including tips on where to locate a business)
“As long as you’re going to be thinking anyway, think big.”
-Donald Trump
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