Is now the right time to start your business?

Start your business in a recession Downturn or recession – the technical points are irrelevant, it’s clear that times are tough for both consumers and businesses. But people are still going out and starting businesses.

Starting a business in a slow growing (or shrinking) economy might not seem like the smartest idea but as we’ve seen, businesses that start in the middle of a bubble are often the first to burst when things go south.

So is the reverse true? Are businesses that start life at the ‘wrong time’ actually leaner, meaner and more robust companies in the long term? If they are, it could be down to one or more of these reasons:

Reason One: Limited access to lending forces self-reliance

I’m often struck by how long some businesses can trade without ever turning a profit – and some without even generating any revenue to speak of. Smaller and non-existent borrowing facilities push businesses to generate revenues sooner and emphasise profitability. For smaller firms, having to rely on your own sources of capital has a way of sharpening your focus – it’s one thing to lose the bank’s money but losing your own …

Reason Two: Tight capital forces companies to bootstrap and limit costs

Of course the fancy offices, flash cars and leather chairs can wait. But what about the ‘essentials’, are they really that essential? Early adoption of best practice and new technology can help you accomplish more with less – necessity is the mother of invention after all.

And where you do have to spend, suppliers are often more flexible in difficult times too. From IT equipment to office rental – there are savings to be made and favourable terms to be negotiated.

Of course, when things do pick up you’ll be running a much tighter ship with much better margins.

Reason Three: Tough times force better sales practice.

From the ROI on your advertising to your ability to close the deal, less money in the marketplace means you have to get better at generating sales. That means:

Innovation – Give them a reason to open the purse strings
Tenacity and the ability to close business
Marketing ROI – You can’t afford the waste of poorly performing marketing activities, everything has to be measured and justified. “Make it look pretty” marketing gives ways to results driven campaigns.
An emphasis on CRM and customer retention – When customers are queuing up outside your door it’s easy to be slack, now your relationship is all important
Low cost and no cost marketing – If the budget doesn’t stretch you’ll need to focus on the things you can afford. Advertising is replaced by public relations, content marketing, cooperative methods and referral strategies to name a few.

Reason Four: Aggression and enthusiasm in a weak market

While everyone else is cutting back and cutting corners – on an effective marketing crash diet to cure the hangover of excess – you’re in a position to attack the market with a fresh pair of eyes and a sense of enthusiasm.

Slow markets are the playground of disruptive technologies and innovative small businesses. Your competitors are too busy trying to shed costs and reign in spending to keep a focus on the market – you’ve none of that baggage to hinder you.

We all know the stereotype of the kid from the tough neighbourhood who learns the ropes the hard way – only to beat the pampered, sluggish champion. If you can learn to keep costs low and maximise sales your David will be better placed than any Goliath once the economy turns the corner – and you’ll have nothing to fear if it goes south again.