Against the Wind
If you have a great business idea, there’s no need to wait for the economic storm to die down. The recession may be the perfect opportunity for aspiring entrepreneurs to start a business. By Charles Cooper
Doom and gloom—that’s what we have been hearing for months now regarding the economy. The pundits, the Congress and the Administration have all used the same words: downturn, problem, crisis, catastrophe, and recession. No one wanted to claim that word at first, but it didn’t take long for everyone to accept the fact that we are, indeed, in a recession with everything that entails. Knowing that, why in the world would you think this is the time to start a business? Because, it really makes sense.
“It’s true that we’re in the midst of an economic tsunami,” said small business expert and co-founder of StartupNation.com, Rich Sloan. “But that only means more opportunity. After all, when everyone is down and out, their needs become more urgent. Any businesses that cater to those ‘screaming needs’ may be perfectly poised to become recession-busters.”
Why Start a Business Now?
There are plenty of reasons for you to start a business now, the most basic reason being that if you are like the rest of the 8-13 percent (depending on how you manipulate the data) of the population out of work, you need an income and if no one out there will give you one, you need to start generating money for yourself and that means starting your own business. That alone may make this the ideal time for you to start your business, but there are a host of other reasons as well.
“People are desperate for work,” said Sloan. “That means you can find higher quality people less expensively than ever before. Great people make great companies, so this could give you a huge edge. Also, it’s less expensive than ever to get your business off the ground. Deals and discounts abound. You can hang the OPEN sign far easier and faster today than in times when vendors were fat and happy and offered fewer incentives.”
The ability to find great people is only half the story. Technology has evolved rapidly to open up unprecedented opportunities for entrepreneurs. “You can market your business effectively, efficiently and inexpensively like never before,” explained Sloan. “For example, email marketing costs pennies per email and is one of the most direct, immediate and productive ways to drum up sales. With recipients’ permission, you can message them with your offers and provide helpful updates to stay top-of-mind during these distracting times.”
Sloan also explained how other technology-driven game-changers – online social networking and search engine marketing – could make a big difference for your business. “By being active on sites like Facebook and using micro-blogging sites like Twitter (in addition to your own website’s blog), you can significantly expand your contacts and prospects and develop interaction with them that can lead to revenue with stunning speed and scope. It’s basically schmoozing without ever leaving your office. Add to that the opportunities associated with search engine marketing, where you pay only for qualified traffic—referred to as “clicks”—to your website, and you quickly begin to realize that spending is no longer a guessing game with slow returns on investment. These days, you can generate instant results with minimal money at risk.”
Viable Business Types
Now that you have decided to take the plunge, you need to choose a business that will not only carry you through the hard times, but will also thrive when things improve. Sloan advises, though, that you should only choose a business that you are extremely passionate about. “You’ll need that passion to sustain you and to make you contagiously exciting in the presence of customers, employees and financiers,” he said.
That said, there are several different broad categories of business that are viable right now. Sloan breaks them down into necessities, screaming needs, no downside and proven formulas.
Necessity businesses. Typically, these are must-have services, businesses that are required—not optional—in order to conduct life normally. Some examples would be healthcare-related businesses, automotive repair, perhaps IT support for residential customers, and financial planning.
Screaming Needs businesses. These are things that people urgently need in this economy. Can you supply these needs for less? If you can, then you’re onto something. For example, if people need their fashion fix, maybe you can supply fashion accessories less expensively, or be an information resource for discounted items. “We know of one entrepreneur who provides discounted parking to people who purchase city parking through his site,” said Sloan.
No Downside businesses. “We’re referring to monetary downside here,” said Sloan, “so any business requiring minimal upfront cost would qualify.” One example of this would be a home-based business with an online store. “You can sign up for a template website on a pay-as-you-go basis very affordably. What you do have at stake, of course, is your time and the opportunity cost of having chosen not to pursue a potentially lucrative alternative path.”
Proven Formula businesses. According to Sloan, franchise businesses tend to have lower risk because they’ve already been proven to work. “This formulaic approach to running a small business may be perfect, especially if you’re spinning out of the corporate world and don’t have much experience as a wily entrepreneur. While it’s a less ‘innovative’ path, opening a franchise location can give you all the other benefits of running your own show.”
Taking the Next Step
Sloan advises new entrepreneurs to take the following steps to “quickly replace confusion and fear with information, confidence, a clear path forward to get your own business off the ground.” They are:
Play to Your Passion. Figure out what turns you on—if you’re passionate about a business idea, your chances of success go way up. That passion will help you get through the tough times.
Take Stock. No, not shares of the company. We mean take stock of what your skills are, the resources you have available, and the track record you might be able to leverage from a marketing perspective.
Commit to Your Concept. Create a short but clear statement about what your business idea is. Force yourself to distill the idea into a brief statement that’s clear to any third party (money people, customers, partners, employees, web designers, etc.)
Google Like Mad. To collect some quick research, immediately start Googling for anything associated with your idea. The faster you become an authority, the faster you’ll be able to define your business strategy, including pricing, target markets, milestone timing, operations and more.
Test Drive. Find a few people who’ll be a sounding board for your ideas and strategies. This helps you avoid buying into your own hype. And don’t be afraid to ask people who have no relationship with you. In fact, you can ask someone who runs a similar business in a non-competitive geographic market to be a mentor.
Given the opportunities and circumstances arising from this particular economic environment, Sloan offers one last bit of advice: “Your instincts might have you hiding under a rock right now, shed that conservatism and get your own business started. You can not only survive, but thrive in this economy.”
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