Business Opportunities Weblog

How to Start a Business in a Bad Economy

By on October 29, 2008 in Guest Posts

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!.

startup

Business Opportunities Weblog editor and publisher Dane Carlson lives in the Sierra Nevada mountains of California, just 15 miles from Yosemite National Park. He accidentally became a professional blogger in 2001. He has added 12,208 posts to the site.

Another Idea: How to Start a Business Plan Consultant Business

  • Jaclyn

    Normally i never would have viewed a bad economy as a great time to start a business. But i have seen quite a few business’ starting up and i actually have a family member who is starting his own business and views it as a perfect time to start his business. The way i see it is that it’s a little gutsy and scary any time you decide to start a business, and if you get the urge/idea to start a business….then go for it, at least you can say that you followed your dream’s/instincts and you went for it.

  • http://coolproducts.com CoolProducts

    “Lastly, push aside the fear, uncertainly, and doubt that’s gripping Wall Street and the nation. ”

    I had to quit reading the WSJ because it was about to give me an ulcer. It is smart to stay informed, but not overwhelmed with all of the chaos that is ensuing.

  • http://www.scrappyupstarts.com Marc

    Great post!

    I have to say, if you’re launching in this economy you need all the help you can get – this site, http://www.scrappyupstarts.com – is looking for “scrappy” entrepreneurs and start ups to tell their story – there’s a forum for bartering services – great, free way to show off your site and startup idea.

  • Ken Gillett

    Interesting read…I just found an interview of a CEO of a business development firm who say the economy is BS. And in fact, it is not only a good time, but the BEST time, to start a business in a rough economy. You can call BS on his opinion even here: http://downtobusiness.com/bs-meter/start-business-bad-economy/

  • http://www.5-star-life.com Darren

    Hi,
    I think whether you start now or in the future, just get started there will always be good and bad times. The DO, is in the DOING not procrastinating.

  • http://www.emperialmarketing.com kim

    Hi was looking at your blog Great work ,well bad economy is bad but there are ways to get out of it …like i did well i smack up blogs here and there being social and sharing what i find,i Got an great suggestion go to my site and watch the videos and if you think its to much to pay out well sign up as an affilliate 50%recurring montley pay outs so please vist =>www.emperialmarketing.com

  • http://www.BusinessFast4ward.com Yoshiko

    Hi Dave,
    This is a very timely post for the current economic situation. In Crisis lies opportunities!

    I totally agree that focus is key to success, especially in light of tight budgets of the average small business. And we should never put our eggs in one basket so to speak.

    Although Planning is never enough, getting started on a good business idea is critical. work out a business plan, do research on a needs basis to find out what potential clients really need and match it with your business. Tweak the business plan as you go along, as business is a dynamic process, and we are working within an ever changing environment.

    For strategic business and marketing tactics that complements Business Opportunities Weblog, do check out http://www.BusinessFast4ward.com.

  • http://www.amazoncleaning.net Atlanta Maid Service

    If you are always working and trying to improve your business, this time will benefit you. It comes down to darwinism and natural selection. There are plenty of companies out there who do not deserve to be in the market, as long as you are doing this correctly, you will survive.

  • Kasanita

    I understand this is the perfect time to START a business. But if the economy is going downhill, where and how does one try? There’s no money right? I was asked this and didn’t know answer. Help please?

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