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Business Tip - August 2010

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Starting a business in a down economy

High unemployment, beleaguered stock values, corporate and personal bankruptcy — these headlines have become all too familiar. But the same factors that signal a recession can actually highlight a great opportunity for folks hoping to start small businesses.

For one thing, fewer businesses in the marketplace can mean fewer potential competitors. For a start-up company, that can be good news. It's difficult to enter a market when the economy is booming and competition is stiff.

Also, a down economy can mean cheaper prices for goods and services. As companies close branch offices, they may be willing to sell office equipment, furniture, electronics, and other items at discounted rates. Check eBay and Craigslist for deals. Find local businesses that are closing their doors and see whether they're selling stuff you need.

Skilled labor is also more readily available in a down economy. It's perfectly acceptable to contact downsizing businesses to find employees who might be a good fit for your company. With today's employment outlook, skilled workers may be willing to take lower salaries, at least for now. As your business prospers, you may be able to ramp up salaries and offer other benefits. Over time, some folks who have only worked for large corporations may even find that a small business fits them better. Your newly hired Boeing engineer may be happier designing equipment parts in your small machinist's shop.

If you're thinking about starting a small business, here are two time-tested suggestions:

  • Start small. You'll want to test the market for your product or service without risking too many resources. In these days of tight credit, you'll probably need to pump a good deal of your own money into any start-up venture. Take it slow and let it build.
  • Seek advice. Find other small business owners, perhaps in other cities, and pick their brains for suggestions about overcoming obstacles, keeping the business focused, and prospering in hard times. 

If you'd like additional suggestions for getting your business started, give us a call.
"Business Tips" are published monthly to provide useful business information. Return to this site every month for helpful suggestions on how to make your business more profitable.

The information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.

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