Starting a Business In a Recession

25 July 2009


A stark reality hit the business community at the beginning of 2009 when the Federation of Small Businesses reported that 50 companies were closing every day. And the most depressing statistic within this headline was that six of them were pubs!

So should these harsh conditions deter entrepreneurs from pursuing their dreams? Should you start your business now, or stick with the security of your salaried job? To be fair, that question is no longer a burden for the weekly thousands of newly unemployed who form part of another grim statistic.

And while I’m at it, up to 75 per cent of new business start ups will close within three years.

Okay that’s it. Enough of the gloom and doom. Let’s start again.

Over a quarter of new business start ups succeed and thrive. So that means that you are three and a half million times more likely to operate a successful business than to win the lottery. 

There are winners and losers in every market and never more so than in a downturn. When cash is in short supply, consumers look for value or ways of saving money. So it’s no surprise that, towards the end of last year, businesses like Aldi and Dominos Pizza reported strong figures. And in difficult times products that can satisfy emotional needs often do well. During the 1991 recession sales of Haagen Dazs ice cream soared. It was a luxury that didn’t cost much.

And surely you know if an idea is stupid. Who of us can honestly say we’ve never watched a floundering, sweating ‘entrepreneur’ on Dragons Den without thinking ‘what an idiot?’ I’ve even taken to peering disdainfully at the TV and muttering, in my best Glaswegian drawl, ‘I’m out.’ My personal favourite was the guy who came up with Safespring – a device to stop gravestones from falling over.

In the eighties we all knew that selling water in bottles wouldn’t catch on, we weren’t that gullible! And ten years earlier, opening a vegetarian restaurant more than a bean’s throw from Notting Hill would have been silly. Come to think of it there still isn’t one in Burnley! Please don’t interpret that as a gap in the market. It isn’t. 

If you can thrive in a recession just imaging the opportunities for your business when the gloom lifts.

But before you take your idea or your redundancy package and begin to turn it into your new enterprise, take advice from people who can guide you – existing business owners who can warn of the pitfalls and accounting professionals who can help you to form your strategy and maximise your profit. If you don’t want to do that, just give your money to me and I’ll use it wisely.

And remember – Cash is King. As every banker will tell you - there’s no future for any business that succumbs to greed by gambling on higher risk products and rewarding its sales people and directors with enormous bonuses. Now that would be daft.

Stuart Wilkin writes for Insider
www.insidermedia.com


Posted  25 July 2009

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