Starting a Business During a Recession
Starting a Business During a Recession
When entrepreneurs start a new business they often have a nasty habit of paying little attention to whether or not the timing it right for that business idea. Some will start their business either way, no matter what the data (or the bozos) say. And some of those entrepreneurs are going to be successful in spite of the worst of odds. But today’s economic uncertainties actually puts the question of timing front and center in the entrepreneur’s minds eye.
So here are some things you should consider before starting a business in today’s brutal business climate:
It was the worst of times:
•Consumer’s are tightening their purse strings which will mean slower sales. One of the most common mistakes a new business makes is over estimating their revenues, leading to a lack of working capital sooner than they can achieve their break even point. During these less than robust economic times, entrepreneurs will have to make sure they are fully capitalized before launching.
•Access to credit for start-ups has always been tough…now it is even tougher. Lenders have increased their requirements for personal credit scores, collateral and equity. They have also shortened loan terms and increased interest rates making the loans you can get less than desirable.
•The number of venture capitalists and the size of their deals is shrinking. Even before the current economic downturn VC firms started looking at two types of start-ups deals: a) The very large deals - i.e. fifty million plus and b) The very small deals - i.e. those under one million. Today, many venture capital firms have all but disappeared and valuations have become leaner for those start-ups obtaining capital.
It was the best of times:
•In most areas there is tons of cheep real estate on the market and the supply is only going to grow as retail and service businesses take a massive hit. Now is the time to negotiate the shortest lease terms, lower rental rates, cash for fit-up, an initial rent free period or any combination of concessions you can dream up.
•Starting lean and “bootstrapping” your business will allow you to test ideas and make adjustments and give you time to work out the bugs. Assuming you have enough capital to make it through a slower than average period, starting now will allow you to test market new products and services without the fear of loosing too many customers while you make adjustments.
•Input costs (gasoline, food prices, energy, etc) are declining and suppliers are desperate for business. Sales are slow for everyone, including those supplier and vendor who will be selling to you. In addition to cheaper inventories and overhead, advertisers are hit particularly hard during economic downturns. Entrepreneurs can use that fact to get the best bang for their marketing buck and a stellar deal on your grand opening blitz.
•Competition will be focused on their own problems rather than trying to ward off potential new entrants. Now may be the perfect time to stage a sneak attack on the big guns in your area. While they will be busy cutting advertising, cutting customer service, cutting corners and struggling under the weight of their own size you can swoop in light, nimble, and packing cash to draw customers into your store.
•Finally, if you can make it in these times…you can make it any time. Some of the country’s most successful businesses including Burger King, FedEx and Microsoft were all started during some of our country’s toughest economic times. Who knows…your company may be next.
I wish all of you a prosperous Year!
Donovan Wadholm
Starting a Business During a Recession - To learn more about this author, visit Donovan Wadholm's Website.
Like this article? Share it with your friends
It Was The Best Of Times, It Was The Worst Of Times…
When entrepreneurs start a new business they often have a nasty habit of paying little attention to whether or not the timing it right for that business idea. Some will start their business either way, no matter what the data (or the bozos) say. And some of those entrepreneurs are going to be successful in spite of the worst of odds. But today’s economic uncertainties actually puts the question of timing front and center in the entrepreneur’s minds eye.
So here are some things you should consider before starting a business in today’s brutal business climate:
It was the worst of times:
•Consumer’s are tightening their purse strings which will mean slower sales. One of the most common mistakes a new business makes is over estimating their revenues, leading to a lack of working capital sooner than they can achieve their break even point. During these less than robust economic times, entrepreneurs will have to make sure they are fully capitalized before launching.
•Access to credit for start-ups has always been tough…now it is even tougher. Lenders have increased their requirements for personal credit scores, collateral and equity. They have also shortened loan terms and increased interest rates making the loans you can get less than desirable.
•The number of venture capitalists and the size of their deals is shrinking. Even before the current economic downturn VC firms started looking at two types of start-ups deals: a) The very large deals - i.e. fifty million plus and b) The very small deals - i.e. those under one million. Today, many venture capital firms have all but disappeared and valuations have become leaner for those start-ups obtaining capital.
It was the best of times:
•In most areas there is tons of cheep real estate on the market and the supply is only going to grow as retail and service businesses take a massive hit. Now is the time to negotiate the shortest lease terms, lower rental rates, cash for fit-up, an initial rent free period or any combination of concessions you can dream up.
•Starting lean and “bootstrapping” your business will allow you to test ideas and make adjustments and give you time to work out the bugs. Assuming you have enough capital to make it through a slower than average period, starting now will allow you to test market new products and services without the fear of loosing too many customers while you make adjustments.
•Input costs (gasoline, food prices, energy, etc) are declining and suppliers are desperate for business. Sales are slow for everyone, including those supplier and vendor who will be selling to you. In addition to cheaper inventories and overhead, advertisers are hit particularly hard during economic downturns. Entrepreneurs can use that fact to get the best bang for their marketing buck and a stellar deal on your grand opening blitz.
•Competition will be focused on their own problems rather than trying to ward off potential new entrants. Now may be the perfect time to stage a sneak attack on the big guns in your area. While they will be busy cutting advertising, cutting customer service, cutting corners and struggling under the weight of their own size you can swoop in light, nimble, and packing cash to draw customers into your store.
•Finally, if you can make it in these times…you can make it any time. Some of the country’s most successful businesses including Burger King, FedEx and Microsoft were all started during some of our country’s toughest economic times. Who knows…your company may be next.
I wish all of you a prosperous Year!
Donovan Wadholm
Starting a Business During a Recession - To learn more about this author, visit Donovan Wadholm's Website.
Like this article? Share it with your friends
 | |
 |
No article feedback found. |
| |
Leave Your Feedback |
 | |
| |||
David BarrDavid Barr is the President of Venture Opportunities, Inc. David has been a professional business broker/intermediary since 1980 focusing on General Business Brokerage and Mergers and Acquisitions representing client transaction value from $400,000 to $20,000,000. Mr. Barr has handled the sale of over four hundred and fifty companies. David earned a university degree from the State University of New York majoring in economics and business. David holds the Mergers and Acquisition Master Intermediary and the Certified Business Intermediary designations from the International Business Brokers Association. He is also a Senior Business Analyst and a Texas licensed Real Estate Agent. For more information about David and Venture Opportunities, visit www.bizdealmaker.com. - Visit David Barr's Website |
|||
Anne BarrAnne Barr has over 26 years experience in sales and marketing, six years as a franchisee. She has assisted over 367 business owners and purchasers to achieve their goals in career change, transition and exit strategy. She holds the designation of Certified Franchise Executive from the International Franchise Association, Certified Business Intermediary from the International Business Brokers Association and Board Certified Broker from the Texas Association of Business Brokers. Anne is active in professional organizations, networking groups and volunteers for non-profit entities. As owner/operator of four successful businesses, Anne has proven people skills and enjoys helping clients find the right "fit" in business ownership. Visit www.FranchiseOpportunitySpecialist.com for more information about me and my company. - Visit Anne Barr's Website |
|||
Casey GollanCasey Gollan, Business Coaching & Mentoring Programs. Add $1 Million to $10 Million in the next 1 to 3 years. Since 1996 Casey has to added hundreds of millions of dollars to businesses. Watch a free video see client results Business Coaching website. - Visit Casey Gollan's Website |
|||
Kim CastleWith nearly two decades in the advertising and design business, with clients like Domino's Pizza, General Motors, Direct TV, Pedigree, Wolfgang Puck, Higher Octave Music, Hollywood Celebrity Products, Disney, and Paramount, as well as thousands of entrepreneurs around the world define, structure, communicate, and position their business for greater profits, BrandU(R) co-creators Kim Castle and W. Vito Montone discovered that entrepreneurs could experience the same power that big brands command for a fraction of the cost with the world's only process-based results-drive Integral approach to business creation. BrandU(R) is helping entrepreneurs grow with the power of extreme clarity from idea...to brand...to market(TM) and helping one million entrepreneurs become successful and whole so that they can make a difference in the world. Are you one of them? If you want to experience clarity all the way to the bank(TM), get started now at http://www.brandu.com. - Visit Kim Castle's Website |
|||
Jeff FosterWebBizIdeas.com is a Minneapolis website design company founded to help people start an internet business by providing them with website, business, and internet resources that help foster the growth of successful online businesses and develop innovative Internet business ideas. We specialize in internet consulting & internet marketing. - Visit Jeff Foster's Website |
|||
David AchesonDavid Acheson is the founder of DCJA Consultancy. DCJA Consultancy is a management consultancy business specialising in B2B sales consultancy. They offer bespoke and packaged sales consultancy including Sales Optimisation Review, Interim Sales Management, Sales & Marketing Review, 1:1 Sales & Management Staff Analysis, Management Training, Solution Sales Training, Creation of New Pay Plan, KPI's, run Customer Feedback Campaigns, assist with Recruitment, Coaching, Appraisals and set up Strategic Marketing Campaigns. David spent his early career in accountancy and then moved into sales in 1982, working in Office Equipment, IT, Advertising, Training, Outsourcing and Consultancy. He has held many Senior Positions in SMBs and Global Organisations including Head of Sales Operations & Head of Business Development. His knowledge, skills and great experience of the Sales Industry has led to David making keynote speeches and running educational sessions to key businesses through organisations including The Chamber of Commerce and Business Link. - Visit David Acheson's Website |
|||
Leanne Hoagland-SmithAre your sales where you want them to be? Will you be one of the few who achieves sales or business success or one of the many who have failed to change? Are you tired of being told you are like everyone else? Then you may find my first book on sales of interest. Be the Red Jacket in the Sea of Gray Suits, The Keys to Unlocking Sales available at Amazon or at http://www.processspecialist.com/red-jacket.htm. This book is a reflection of my no-nonsense approach to improving sales to overall business results. If you are truly committed to making sustainable changes, then I can help you secure a positive return on your investment because I focus on executable solutions not telling you the problems you already know you have. From training to corporate (group) coaching to executive one on one coaching, my approach is to assess, create awareness, build a goal driven action plan and then execute. The bottom line question is "Not do you or your employees know it, but do you or they want to do it?" Please call for a free strategy session at 219.759.5601. - Visit Leanne Hoagland-Smith's Website |
|||
Cheryl MatthynssensCheryl is a life skills coach, licensed Chemical Dependency Counselor and a 20 year entrepreneur. Cheryl's dedication to achieving a life of balance led to her expanding her teaching from the simple managing of life's daily challenges to adding financial well being as well. A direct marketer with DrinkACT, she is gaining ground in the online community with her concepts of making sure business owners, entreprenuers and employees have well rounded life styles. She opened up a small affiliate site - The Balance Guide- to help others find resources for mental and emotional well being. Visit Cheryl's blog to see more of the diversity beyond business she has began offering online at www.thebalanceguide.blogspot.com - Visit Cheryl Matthynssens's Website |
|||
|
To learn more about the Evan Elite Author Program please contact us. | |||
 | |
|  |
Subscribe to Donovan's articles
 | |
|
|  |
 | |
|
| |
 | |||||||
|
 | ||
|
||
|
||
|
||
|
| ||
 |
| Have you written articles that would be of value to entrepreneurs? Become an expert on our site by publishing them! Expose yourself to a wide audience, drive more traffic to your website and get more sales! Click Here for details. |
|
|
 |
| Modeling the Masters: Learn the true secrets behind Walt Disney's business success factors & grow your company! Video produced by Phanta Media |
|
|
 |
"Learn straight from Evan how you can Make a Full Time Income (And More) from a Website"
Click Here To Learn More |
|
|
|
|
Get advice & tips from famous business owners, new articles by entrepreneur experts, my latest website updates, & special sneak peaks at what's to come!
|
|
|
 Serenity Cards Evolution of Networking A Clean Desk Performance Improvement Plan Coaching System |
|
 | ||
 |
Top 50 Marketing Blogs
Top Blogs To Watch In 2008 | |
 |
Write The PR
Press Release Builder | |
| ||
 | ||||
| ||||
|
| ||||
| ||||
|
|
|
|
|
||||||||||||
|
Email us your ideas on how to make our website more valuable! Thank you Sharon from Toronto Salsa Lessons / Classes for your suggestions to make the newsletter look like the website and profile younger entrepreneurs like Jennifer Lopez and Sean Combs!
|
|
|
