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How to Start a Business During the Recession

Updated on June 4, 2012
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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.

  1. Did I develop a strong business plan?
  2. Do I have the energy, motivation, and follow through to make it work?
  3. Do I have partners? Businesses with 2-3 entrepreneurs are twice as likely to succeed.
  4. Can I support myself financially? Too many businesses fail because the entrepreneur must making a living.
  5. 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?

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Traits of a Successful Recession Business

A successful recession business will focus on the following needs:

  1. Helping people save money.
  2. Help people make money.
  3. Assist people in finding work.
  4. Provide inexpensive entertainment.
  5. Reuse and recycle.
  6. 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.


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    • Simone Smith profile image

      Simone Haruko Smith 5 years ago from San Francisco

      Huh, you make some really good points here!

      And whaaa? You bought a house for only 10K? That's incredible! I hadn't thought of how discounted everything is right now. I suppose it really DOES make a big difference!

      Also, I've noticed that scarce resources can really help innovative, agile new business foster. Just look at how many people are adopting the lean startup model and creating awesome products and services with so little waste and fuss... it's awesome!

      Recessions may be a drag, but as you've pointed out quite well here, every cloud has a silver lining!

    • Robert Erich profile image
      Author

      Robert Erich 5 years ago from California

      Thank you all for your comments. Yes, there are many challenges, but it is indeed possible. I look forward to seeing more people successfully start a business during these challenging times.

    • lindacee profile image

      lindacee 5 years ago from Arizona

      Great Hub and advice for those thinking of venturing into the world of entrepreneurship during tough economic times. You offer up great ideas and tips, but don't sugarcoat the obstacles and difficulties fledgling business owners face. I appreciate that. Well done!

    • Jacob Schmitt profile image

      Jacob Schmitt 5 years ago from Sherwood, AR

      I totally agree and I think that anytime is a good time to start a business. I feel the recession forces people out of their comfort zone and makes them do what it takes to survive and for a lot of people they had no choice but to make their own job by starting a business. I like the writing I also like seeing people encourage others we all know that there is way to much discouraging things in the world today good job bro.

    • greatstuff profile image

      Mazlan 5 years ago from Malaysia

      This is an inspiring article, especially to those who are out of jobs. In fact I know of someone who opened a roadside kiosk (which is OK here in Malaysia, subject to certain conditions)after being laid off, and is now making more than what he used to earn, in his previous job

    • TToombs08 profile image

      Terrye Toombs 5 years ago from Somewhere between Heaven and Hell without a road map.

      Great hub, Robert! Hubby has been toying with the idea of starting a mobile boat repair business (the nearest boat mechanic is over 150 miles away and has a 5 month back log). It's what he went to school for and is currently working as a diesel mechanic in the oilfield support services. He's always getting asked to work on someone's boat. This hub will be very helpful if he decides to take the plunge and go for it. :) Voting up and more.

    • Chemistry Book profile image

      Chemistry Book 5 years ago

      I think it's easier to start a business during a recession because energy and policies are deliberately inclined to new businesses and jobs. Also, the recession allows for an array of opportunities like cheap materials, ease of getting loans and perhaps reduced competition.

    • KevinTimothy profile image

      Kevin J Timothy 5 years ago from Tampa Bay, FL

      Robert,

      Dude, this is pretty awesome. Well written, organized, and EXTREMELY helpful. I do believe that the biggest hurdle is people believing that they CAN actually have a successful business. Risk = Rewards. Thanks.

    • Robert Erich profile image
      Author

      Robert Erich 5 years ago from California

      @Riverfish24: Thank you. I am going to learn a lot about making attractive hubs from both you and several of the other members of the apprenticeship program!

      @cprice75: You are absolutely right. High gas prices and the crash in the housing market have both been a huge cause of this recession. We really need to find alternative forms of energy.

      @Global-Chica: I am glad you enjoyed the article! The hope is to certainly reveal that every cloud does have a silver lining. Have a great day!

    • Global-Chica profile image

      Anna 5 years ago from New York, NY

      Robert, your hub gives hope during these trying times and really points out the positive aspects of the current recession. Great job and voted up and useful.

    • cprice75 profile image

      cprice75 5 years ago from USA

      With the news on employment for the last couple of months, this appears to be a timely piece of work. Of course, just about every recession in the last 40 years has been caused in part by high gas prices. This one is no different. Voted up and shared.

    • Riverfish24 profile image

      Riverfish24 5 years ago from United States

      Good stuff, I like the way you have reiterated the main points in the coloured boxes. Very effective. So interesting and encouraging for folks trying to make it work.

    • Robert Erich profile image
      Author

      Robert Erich 5 years ago from California

      @krsharp: Thank you! I look forward to reading more of your work as well.

      @leahlefler: Yes, it is a very tough time. Consulting is actually a great way to go into business for yourself. I may write more about that later.

      @Om Paramapoonya: If you haven't written about your ebay business yet you certainly should! I'm sure your advice could help many people.

    • Om Paramapoonya profile image

      Om Paramapoonya 5 years ago

      Very informative and timely! I like the way you succinctly summed up the traits of a successful recession business. I opened an eBay store about a year ago, selling recycled clothing. And it's been doing pretty well despite the bad economy.

    • leahlefler profile image

      Leah Lefler 5 years ago from Western New York

      These are definitely trying times - a family member lost his job a year ago and he has been unsuccessful in finding another - so he has decided to go into business for himself. He does consulting work for companies (in customer service) and is also going to delve into tax preparation services. Great hub!

    • krsharp05 profile image

      Kristi Sharp 5 years ago from Born in Missouri. Raised in Minnesota.

      Loved it! Great idea for a hub in these trying times. Voted up. Can't wait to read more of your work. -K