Should I Start a Business in a Recession?

March 29th, 2009 by | Print

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Some soon-to-be solopreneurs that have been seeking advice on some of the online forums that I participate in as of late have been asking, “Should I start a business in a recession?”

 

Both the bull and the bear represent market conditions that create opportunities. A bull market is more forgiving than a bear market, but the odds for success are based more upon building a business on the basics than starting up in a booming market. The following are 12 essentials to a successful business regardless of the economy.

 

  1. Create a business that integrates with your life plans of personal and economic goals.
  2. Be passionate about your business and the market that you are servicing.
  3. Build a business that is an extension of your strengths and experience. Know your weaknesses. Have them covered by others, but manage the results.
  4. Research your market (overall industry, competitors, and customers). Make sure that the market is large enough to meet your financial goals and is not shrinking significantly.
  5. Have a business plan. Create a plan based upon a unique value proposition for you market at a fair market price.
  6. Make sure that you are well funded.
  7. Get involved within your industry. Build a network of mentors, business associates and joint venture partners.
  8. Know your financial limits. Don’t operate beyond your means.
  9. Take action. Stay involved. Don’t let your business coast on autopilot.
  10. Provide a consistent experience.
  11. Review your business and market on a regular basis.
  12. Adapt to the changes in your market.

 

How many of the 12 essentials listed above seem targeted at a slow market? They are all based solely upon the necessities for a business to survive regardless of the economy. This doesn’t mean that I suggest that you turn a blind eye to the effects of the economy on your target customer base. A number of these essential points will have you knowledgeable about the changes within your market and taking appropriate action to modify your business to meet the changes in demand.

 

Most businesses are mediocre at best – slave to market fluctuations. The reason for this is that the unskilled or overly egotistical will only have a grasp of less than half of these steps.

 

Why?

 

Because most business owners are not entrepreneurs, they are managers at best. Creating a business out of nothing takes a skill set that surpasses that of managing an operation based upon another’s idea. And just because you created your business from scratch doesn’t mean that you aren’t simply a manager. Does your business have a unique value proposition? If not, you probably started your business based upon the egotistical belief that someone else was making money doing something that you could do, too.

 

Sure there are many businesses that are basically copied from the same concept. But, their chances for survival are only strong when the market is strong, too. These copycat businesses comprise the majority of misguided dreams that result in hard luck stories that fall victim to a bad economy when in reality they were lucky to get off the ground at all.

 

So instead of focusing on whether you should start your business in a recession or not, concentrate on the 12 essentials listed above. If you do, a bear market will bear better opportunities instead of becoming a bigger risk.

 

All The Best,

Doug Dolan
The Solopreneur’s Guide

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2 Responses to “Should I Start a Business in a Recession?”

  1. Paul Says:

    Great article. I would add that another benefit of starting in a down market is how well positioned you will be once the economy picks up. Many others will have been afraid to start similar business and others that existed before will have failed. Plus you have learned how to survive in the leanest times so you will be very ready to survive during better times.

    Paul

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