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How to Start a Business During the Recession
Starting a business is an interest that floats around the minds of many people. During a recession, when finding a job is more difficult than finding a lepricon’s pot of gold, the idea of starting one’s own business becomes even more appealing. After all, if no one else will give you a job, why not create your own – guaranteeing you employment?
I have some great news for you. During a recession is the perfect time to start a business. Many of the greatest business tycoons of the last century made their wealth during the Great Depression, countless internet experts overcame the dotcom bust of the early 2000s to become successful business professionals, and the household business names of tomorrow will likely be people who took advantage of the countless opportunities during this recession – turning financial pain into gain.
The Benefit of a Recession: Everything is on Sale
On Black Friday countless people flock near and far to find the best deals, purchase the toys and necessities that they have always been after, and take advantage of any other sales that appeal to their interests. What if I were to tell you that a recession is essentially a huge, extended sale?
During a recession people sell products, land, and services for significant discounts simply because they need the business. Although having enough money to purchase these products and services can be challenging, if you can afford to make the buy, the future payoff will be significant.
Personally, I just purchased a house for $10,000 that I am fixing up and will be renting out. A 14 year old girl in Florida is doing this same thing – with the help of her mother, she has just purchased her first rental property. There are deals to be had on everything from used SUV’s and private jets, to cruises and homes.
The government is even on sale! Depending on the industry one goes into, there are a variety of tax breaks and other incentives the government has put in place to encourage growth.
Therefore, making the purchases necessary to launch a business may be much cheaper now than in the future.
Will My Business Succeed?
Ask yourself the following questions. If the answer to most of them is "yes", your odds will be pretty good.
- Did I develop a strong business plan?
- Do I have the energy, motivation, and follow through to make it work?
- Do I have partners? Businesses with 2-3 entrepreneurs are twice as likely to succeed.
- Can I support myself financially? Too many businesses fail because the entrepreneur must making a living.
- Can I make the necessary connections? Networking is everything! Who you know determines how well you succeed.
The Process of Starting a Business During a Recession
Starting a business is never an easy task and should not be taken lightly. It is important to develop a strong business plan, do market research, and make sure that you have the financial support necessary to both launch the business and provide for yourself until the business is profitable.
Statistics say that only 1 in 5 businesses make it through their first year of operation. This means that the odds are not in your favor. It is a good idea to study the basics of business, read the stories of other successful entrepreneurs, and develop a network of supporters who will assist you through the process. Hope for the best but plan for the worst. Before starting a business make sure that it will not be the end of the world if the business fails – you never want to financially corner yourself.
Finally, it is important to take into consideration the businesses that thrive and flop during hard economic times. During a recession is not the time to launch a high end boutique or a private jet service. Although these businesses could still succeed if promoted correctly, the chances are poor. Consider businesses that take advantage of the struggles that people currently face.
What costs do you cut back on most when money is tight?
Traits of a Successful Recession Business
A successful recession business will focus on the following needs:
- Helping people save money.
- Help people make money.
- Assist people in finding work.
- Provide inexpensive entertainment.
- Reuse and recycle.
- Provide Do-It-Yourself assistance to projects.
Businesses that Thrive During a Recession
For a business to be a success during a recession it must focus around saving people money, required costs, or inexpensive thrills. While many businesses have struggled during the recession, there are a large number that have been doing incredibly well.
Here are some businesses and industries that seem to thrive during an economic downturn:
- Walmart (and small dollar stores): Consumers are seeking inexpensive products.
- Fast food restaurants: Cheap food is in style when the pocket book is almost empty.
- Thrift/Used goods stores: People are recycling and willing to purchase used equipment if it means a significant decrease in cost.
- Groupon and other deal sites: Anything that provides people with discounts such as coupons, group deals, and other products at a reduced cost.
- Foreclosure businesses: cleaning, maintaining, and repairing bank owned houses.
- Rental facilities: People are renting houses, offices, vehicles, equipment, etc.
- Gardening: With low incomes, many people are interested in supplementing their diet with homegrown food.
- DIY: Basic home repairs, mending clothes, and other services that are often outsourced when someone has money end up being done at home during a recession.
The Next Step to Start A Business
If you are still interested in starting your own business during economically challenging times, your next step is to begin developing a strong business plan. Failing to plan is planning to fail. Although it may feel more beneficial to just start your business, spending some quality time planning will provide you with a strong game strategy to help ensure success (or, as often as not, the act of planning will convince you that the idea is not as successful as you first anticipated).
Let me know of any other recession friendly business ideas you have implemented or heard of in the comments below. I wish you the best as you continue to work hard through this economic downturn. Remember, 95% of success is mental. Think positively and success will come running.