The Recession is A Great Time to Start a Business

From Moneyning.com by Thursday Bram

Recessions are the perfect time to start a business: FedEx,
Microsoft, Burger King and even GE were started during the recessions
the U.S. has experienced over the last century and a half. If you’ve
been thinking about starting a new business, the fact that the economy
is down should not stop you. In fact, there are many reasons why the
national economic situation should encourage you to start a new business
now.

You Have Motivation

If the recession is affecting you directly, you’ve got something that
can make all the difference in how successful your business will be:
motivation. When we’re comfortable, it’s often difficult to ramp up a
business to something that will actually pay a living wage. After all,
there are fall back plans like landing a job. When we don’t have as many
options, though, we have an incentive to push harder. If letting a
business fail simply isn’t an option anymore, we’re more likely to dig
deep and find solutions that will help our businesses succeed.



It is possible to create some mental motivation without a recession, of
course — but the mindsets of entrepreneurs during economic downturns are
the reasons that companies like FedEx and Burger King grew quickly.
They served a niche and provided products and services that customers
wanted, but, especially at first, the company founders needed to get the
company going in order to make a living.

Motivation can be what carries you through from the initial
enthusiasm for your new business, past the hard work necessary to get
any new venture going, to the point where that business is successful.
It won’t be easy, but it can be done.

You Can Get Better Deals

One of the big concerns for starting a new business is whether you
can find the money to launch the project you want to work on. While the
costs to start many types of small businesses have dropped dramatically
over the past three decades, a recession makes it even less expensive to
start one. The vendors you may be hoping to work with are likely to be
willing to negotiate more on their rates than if you went to them in a
boom time. Everyone, from manufacturers to marketers, is willing to
discuss special recession pricing, if only to make sure that income is
coming in. Make sure you are taking advantage.

There is a downside, of course: you probably won’t be able to
increase your profit margin despite getting lower prices. But, depending
on the contracts you’re willing to sign, you may be able to ensure that
these lower rates continue for quite a while.

You can also negotiate other considerations, such as when you
actually pay for the services or products you need. Cash flow is often a
concern for a new business: a loan is often necessary to cover your
early costs. If you can delay even some of those costs until you’ve got
money coming in (something more vendors are willing to discuss now), you
can reduce the amount of money you need to borrow.

Lower initial costs for starting up your business means that you
don’t have to make as much money to both support the business and
yourself. That benefit can make the difference in not only how soon your
business can be profitable, but also in whether you need a job or
another source of income to support you in the short-term. Right now, a
job is not always as easy to come by, making it especially important
that a new business be profitable as fast as possible.

You’ll Be In Shape for the Long Run

Right now, many companies are looking for ways to trim their budgets
and reduce costs. If you’re starting a business now, you’ll have to be
aware of costs and keep them down — but you’ve got the opportunity to
start from scratch and build a solid base. Companies that are launched
during good economic times may have difficulty determining which of
their expenses are truly necessary: if you’ve never done business
without an expense account, it may seem impossible to keep doing
business after you’ve lost it.

But a business that starts out lean will have a clearer view for the
future. Your company may grow and allow you to add on perks in the
future, but you’ll always know what’s really necessary for you to run
the business. When the next recession rolls around, you may not even
need to trim your business’ budget: a lean operation can simply sail on
through. You can even find new ways to do things that aren’t apparent to
people who are looking at an established method of doing business.

Don’t Let a Recession Stop You

Any point in the continuing cycles of the economy has its pros and
cons, at least in terms of entrepreneurship. Simply because we’re in a
recession, though, doesn’t mean that it’s a bad time to start a
business. Now may not be the best time to start if you never considered
creating your own company until the economy started having problems —
the more time you can take to plan a business, the more likely it is to
succeed — but if you have done the research and know what it will take
to get your new venture going, don’t wait.

It’s not just certain types of businesses that will do well if you
start them now, either. While it might seem that people would be
reluctant to spend money on entertainment and other unnecessary expenses
during a recession, any sort of business can do well in a recession if
you’ve got a way to bring in income. Even MTV was started in a recession
— if you can reach a market that will pay for your product or services,
you can be successful no matter what state the economy is in.