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Starting A Small Business In This Recession

Apr 1, 2008
Starting a small business is a real challenge. It is a test of will, skill, determination and desire. Most normal and rational people would not consider starting a small business in this recession. But of course, if you are like me, than you are not normal, although you probably have been accused of having temporary fits of rationality from time to time.

Starting a small business requires you to focus on exactly what you want to deliver to your customers. A vague idea about what you will offer your customers, or for that matter, an even more vague idea of who your real customers are can deep six any business startup, particularly in a recession.

Interest rates are dropping, and so is the availability of credit. Consumer confidence is declining, and so is everyone's spending ability. People cannot spend money that they do not have - particularly when their credit cards, home equity lines, and margin accounts are no longer available to fund that spending spree. This is just one of the traps that lay in wait for you when you are staring a small business in this recession.

There are some great opportunities that occur in recessions. Remember, when things go bad, a lot of people lose money and assets. Many people will lose their homes, their savings, and their dreams. Recessions and economic downturns do not destroy wealth - not completely - they transfer wealth.

Wealth transfer happens all the time. People who thought that the Internet stocks would always go up in value transferred their wealth to those who knew better and bought some solid stocks for little or no money. Those stocks rebounded years later - creating wealth for the "opportunists." The housing crisis that started this recession is creating the same types of opportunities.

People are losing their homes and others, who are the current opportunists, are buying these same properties at deep discounts. The banks that made loads of money a few years ago selling and financing these properties are now only too happy to get some return on their investments to stem the losses.

This period of fear, uncertainty, chaos and doubt creates huge opportunities for those starting a small business in a recession. It is during this period that people want help. They want something that is certain. They want something that they can depend on. They want hope!

You are starting a small business in a recession. You are a poster child for hope. Many people, particularly friends or family will think that you are crazy. They will think that because they are struggling that you should be also. The will project their problems and their situation on everyone else. You can counter this by focusing your sense of hope and positive can-do attitude, (if you don't have this - don't start a business), on them.

Your target customers will all want some type of hope or reassurance in these tough times. You are the entrepreneur who took the risk, wears a smile, and fulfills their wants (not needs) are the perfect example for them to look up to. Be positive and give them great service, and let them know that no matter how bad things get, they can count on you.

So, after starting your business in a recession and identifying your target market and servicing their needs you will have great days and you will have terrible days. Attitude makes the difference. Be aggressive in marketing and sales. Create an image that resonates with your target market. Monitor this image carefully because you will rely on it heavily from time to time.

Find out all of the info that you can about your competitors. Your competitors, at least some of them, will be caught up in the negative momentum of the recession. They will initially view it as a distraction, then an impediment, then an obstacle, and ultimately a crisis.

You want to be very prepared, because when your competitor sees an obstacle they trip, when they see a crisis they fall. When your competitors fall, they tend to do something that their customers do not like. Exploit this - remember recessions are about wealth transfer and customers are a type of wealth.

Starting a small business in a recession is tough, but can lead to huge success. It requires a positive attitude, a laser like focus on serving your customers, and the ability to exploit your competitor's weaknesses. With the right preparation starting a small business in a recession can be the most rational decision that you ever make.
About the Author
Art Espey is a serial entrepreneur who has grown several businesses in both good and bad economic times. Art can be reached at www.thebusinessninja.info or www.4steps2.com.
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