Many entrepreneurs and future entrepreneurs are frightened by the prospect of starting a business during a recession. Times are tough, so it should be the worst time to open a business, right? Wrong! This may surprise many but when there’s an economic slump, it can be a great time to test the waters and try your hand as an entrepreneur. Whether some might have lost their jobs or need an additional revenue stream to support their families, creating a new source of income has, for many, become a pressing and important issue.
Because of the low-cost involved, starting an online business during a recession is a viable option. If becoming an online entrepreneur is a path you wish to pursue, here’s why and how you should go about it:
Be Cheap and Creative
With fewer funds at your disposal, you’ll be forced to be financially disciplined and a lot more creative. Avoid immediate financial risk by selecting a business with minimal overhead costs. Your new online business must require you to place an emphasis on your strengths and experience. Being cheap will force you to exercise better judgment with your money. And fortunately it can actually be cheap to run an online startup. A recession will, if anything, make it cheaper still.
Start small; entrepreneurs should not begin with a business large in scope. Find a service or product that holds resonance with you, and provide you with a great sense of satisfaction. The challenge of managing an online business in rough times helps bring out qualities that everyone should have to succeed – creativity, discipline and perseverance.
Your Advantages
Establishing an online business during the recession means you actually have far less competition to deal with; that also means you can worry less about fighting with other companies for market share. Recruiting new employees will be easier because people who have been laid off are eager to find employment and new opportunities - recessions lead to committed teams. On the other end of the spectrum, there is much less pressure on you to expand your business.
Recession, What Recession?
It may surprise many to learn that the following companies were founded while a recession was in full swing. They include:
• Adobe
• Intel
• Compaq
• Microsoft
Save Up
Recessions are generally a difficult time for raising funds from potential investors. They are less likely to fund companies when the economy is suffering. For this reason, starting a business that requires hefty amounts to get off the ground during hard times isn’t the best idea. So save up! The immediate cause of death in a startup, whether online or not, is always running out of money. On the other hand, enough money can also provide you with some investing power. While some investors may fear investing in startups during a recession, it might not be such a foolish idea. Think of those who were the first investors in the companies mentioned above…
Useful Info
Much useful information regarding becoming an online entrepreneur is available to you, allowing you to go through all of your options, make the correct decisions, and asking important questions. There are countless books and online resources available to help with your process. More importantly don’t be shy to Google a variety of topics related to online startups. By simply Googling “best online businesses to start during a recession,” I found the following list of suggestions on articles and message boards:
• Accounting Services
• Bulk Food Sales
• Affordable Luxury Items
• Debt Collection Agency
• Resume-Writing Services
• Auto Repair Services
• Home Staging
• Cosmetics and little indulgences
• Virtual Assistant
And so, your brainstorming session can now begin. A few obvious (but sometimes forgotten) pointers to keep in mind as an entrepreneur: make sure you know your product and service inside out; it will enable you to market your product properly. Never neglect customer relations and consider customer satisfaction an absolute priority. And of course, be prepared to work hard. After all, recession or not, startups do succeed or fail based on the qualities of their founders.
For additional reading and information:
Inc.com presents 3 fascinating case studies about startups who struck it big during a down economy.
Here is an interesting article featuring small business predictions for 2011.
AlertPay's own Firoz Patel, CEO, will be speaking at this week's International Startup Festival in Montreal, July 13-15, 2011. Click here to view the festival's official website.
Image: Gregory Szarkiewicz / FreeDigitalPhotos.net
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