It seems like nearly every day there’s more bad news about the economy. Even worse, it’s hard to see any light at the end of the tunnel. Given that, it may seem like a terrible time to start a small business. So here’s something that may surprise you: it’s actually not. The truth is that many small businesses that launch during tough economic times not only flourish, but are stronger and leaner than they would have been otherwise. Here are a few tips on how to take advantage of what an economic downturn has to offer:
Plan thoroughly. One of the most important things you can do to promote the success of a business you start in a downturn is to develop a game plan. The most effective way to do that is with a business plan, although a simple Excel spreadsheet works well too. The first step is to devise realistic, feasible numbers for your business. Take a look at the sales projections that you may have already developed. Do they jibe with the sales volume other small businesses in your industry are now experiencing? Also take a look at your expenditures. As you’ve likely heard, prominent venture capital firms are urging their portfolio start-ups to cut costs where they can. With that in mind, attack your business plan (or spreadsheet) with a scalpel and excise as many unnecessary expenditures as possible.
Focus your start-up. One of the most common mistakes entrepreneurs make is to trying to do too much, too soon. Direct all of your energy and cash on the one product or service you think is most saleable. Remember, you can always grow your business or product lines later. An economic downturn is not the time to spread your capital thin.
Don’t underestimate the competition. Many entrepreneurs assume that because an economic downturn weeds out frail businesses, that the playing field is wide open. Sure, some businesses are wiped out by tough times. But the businesses that remain are likely strong enough to present a real threat to your new start-up. Thoroughly research who’s in your space before you enter it, and make sure you know why your competition is still standing.
Lastly, push aside the fear, uncertainly, and doubt that’s gripping Wall Street and the nation. Times are tough. But if you’re serious about starting a business right now, you’ll have to throw some caution to the wind. That doesn’t mean you shouldn’t have a healthy respect for what’s shaking down on Wall Street. But, you shouldn’t be so crippled by “what ifs” that you can’t move forward with your start-up.
This guest post was written by Bryan Howe, Founder and CEO of MasterPlans.com.
Photo by Now I’m Always Smiling!.