Starting a business is difficult enough when the economy is
strong but when you decide to start a business amid a 9.7
percent unemployment rate--while foreclosures are at an all-time
high and bankruptcies are reaching epic proportions--the odds
for success seem hopeless.
For startups willing to defy the odds, there are many advantages
to starting a small business during a recession, and it can even
be done without burring yourself in debt. Experts will tell you
that the absolute best time to start a business is during a
recession, and several well-known, highly successful businesses
were launched during weakened economies.
Why did these companies succeed against the odds? They succeeded
because the founders recognized a need in the market and filled
it. Identifying that market need is the key to success for any
business--regardless of what the economic climate is when those
market needs are fulfilled.
Hewlett Packard was started in a garage during the Great
Depression with startup costs of just $538. It was the first
technology company to exceed $100 billion in revenue and is
currently operating in almost every country worldwide. Burger
King got its start during the recession of 1954; the Whopper was
added to the menu during the recession of 1957. Microsoft was
started during the 1975 recession. Bill Gates dealt with
primitive computer languages until the creation of MS-DOS, which
IBM Corp purchased, starting the company's climb to fortune.
Tips for Starting a Business In a Recession
The high risk of failure during recession requires that the
start up costs are kept as low as possible. Businesses that
start and survive during a recession are in the best position to
take advantage of the inevitable economic upturn. Businesses
that postpone launch until the economy shows signs of
strengthening are that much further behind, and give a head
start to competitors who took the risk of starting during a
recession. Keep starting costs low by:
Keeping your day job. If you're lucky enough to still have a
job, try starting your business in your off-hours. You'll have
the steady income from your existing job to pay your living
expenses and can focus on making your new business profitable
without the risk.
Not buying, leasing or renting office space. Most businesses can
be started right from your home. Don't waste money on an office
space or retail storefront before absolutely necessary. Use your
kitchen table, home office, basement or garage as office space.
Some businesses will never need to venture outside the home.
Not hiring employees. If you need help from other people, use
contract workers and issue 1099s instead of hiring employees.
Not wasting money on advertising. There are countless ways to
advertise your business, product or service without spending
money. If you--the maker of your product or provider of your
service--can't sell yourself, no one else can, either.
Recession Proof Industries
Whenever possible, you should look at starting businesses in
industries that are considered “recession proof”. These are the
industries where consumers will still pay for the products or
services offered even when money is tight. Recession proof
industries tend to be:
Food
Health care, including psychology and substance abuse
Computers and IT--especially fixing other peoples computers.
People aren't buying new equipment; they're fixing what they
have to save money.
Security / criminal justice / police
Education--adults go back to school when they lose their jobs;
more high school graduates will go to college because they can't
find jobs out of high school
International business--just because the economy is bad in the
US doesn't mean it is everywhere else
Finding Your Niche
When starting a new business, whether you create a product or
provide a service, you need something that distinguishes you
from everything else that's already available. Your long-term
success is defined by your ability to be both unique and better
than your competition, by adhering to these principles you’ll
fill a void in the marketplace.
(from the enterpreneur.com)
