“Starting a business in a recession is like vacationing in the off-season,” says Eric Ryan of Method Cleaning Supplies, “It’s a little less crowded, and everything starts going on sale.” And who doesn’t love a sale.
It runs counter to every human intuition. But starting a company in a down economy is actually very logical from a pure economics perspective. First of all, it’s cheap. In a recession, there are many opportunities and deals to be had; you just need to remain calm and know where to look. Everyone is feeling the pain of this financial crisis. So, everything is negotiable. Rental space, equipment, labor and even inventory can be had at major discounts if you play your cards right.
Secondly, it’s a quiet time in the market. Established companies slash their marketing budgets at the first sign of recession, and they quite often lose customers as a result. That makes it the perfect time to grow organically and grab market share, especially if you’re competing on price. According to Inc. Magazine “Downturns are actually a great time to sign up new accounts. That’s because companies are examining every expense for ways to save. If you can offer a better price than their current vendor, you will have a decent chance of winning their business.”
For women long harboring secret desires to own a business, it’s a particularly attractive time to make the move. Women are already becoming business owners at a record rate.
The 2008 US census reported there are an estimated 10.1 million women owned firms, up from 6.4 million in 2002, an increase of 58% in the last six years. And with the economy in shambles…many women and mothers are trying to think of ways to help their families stay afloat. Big companies are tightening their belts, cutting budgets and jobs, and it is that much harder to get back into the work force, so there’s no place to go, but out on your own.
Plus, most female entrepreneurs tend to start small and grow their businesses slowly and organically, having little need for outside funding. Women, in general, tend to start more home-based or online businesses. These businesses have low start-up costs and tend to allow for a great deal of flexibility. This is a key factor in our current economic climate, where credit is hard to come by.
Here are some hard and fast rules to doing it yourself in a down economy:
Grow slowly and organically (because financing is hard to come by anyway). Start small. Test your products and services before you officially bring them to market. Reinvest your profits and work out the kinks before you expand.
Stay at home. Don’t run out and get that office space if you don’t absolutely need it. Keep your expenses to a minimum in the areas of your business that will not affect your product/service or brand image.
Go online. Use the web as your store front as well as a marketing tool. Start up costs are minimal and acquiring customers through blogging and social networking is fast, and easy. Rent can be one of your biggest expenses, so if you can do without the physical space or store front, then by all means “go on line, baby”.
Offer value products or services or add value to existing products and services. Consumers are very careful with how they are spending their dollars these days, so if you can offer something they really want for less money or give them more for the same price, they will most likely buy from you.
Get creative (network, partner, find customers the cheap way). Network with anyone and everyone you can think of. You never know who you may meet or who you already know that can help you and your business. And while you are networking, look to partner or share customer lists with non-competing, like businesses. Maybe plan a promotion or event together to help benefit both businesses.
Advertise. The first thing that most companies cut in a recession is their marketing budgets. Ads will never be cheaper than they are right now. And customer acquisition is the name of the game in the beginning. As other companies slow down their marketing efforts to cut back on expenses, you are in prime position to grab some valuable market share. Look to cut corners elsewhere, not here.
If you are planning on taking the leap, remember not to let a pesky old recession stand in the way of your dreams coming true. Visit us at www.nedandshell.com for small business advice, success stories, resources and networking. And don’t forget to use the ultimate entrepreneur’s guide book and planner to get you through Sixteen Weeks to Your Dream Business.
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