Is now a good time to startup, considering the economic challenges? Should I wait for an upmarket to launch my business venture?

Having met with many entrepreneurs in startup mode, it is obvious to me that even seasoned business owners tend to panic when they mention the current recession. Actually, what makes the entrepreneurs get a crippling case of cold feet in our days more than anything else, is the credit crisis. While for established small businesses credit is generally available through their banking relationships, credit for startups is more difficult to find.

However, despite the credit crunch, the truth is this: new companies can prosper in hard times. I do believe that opportunity still knocks for those who know how to take advantage of it. So, what steps should be followed to weather the storm when launching a business in today’s economy?

1. Concentrate on providing necessity-based products or services. The truth is that even in downmarket, the consumers need staples like food, health care products, and computer services. If people can opt for a less expensive alternative or delay a purchase while times are tough, that's not the business to be in.

2. Be aggressive in getting the word out. Find free or inexpensive ways to promote your business without sinking a fortune into advertising. Join a networking group. You can paint a car to advertise a local business. Take the benefits of free publicity by writing a column for a local newspaper. It will build your credibility at the same time.

3. Find few big customers and make sales at deep discounts. It's worth to give those customers a price break if one or two big contracts can cover your overhead. Striking a deal with a couple of sizable customers might keep you going while you look for more profitable projects.

4. Keep full-time staff at a minimum. Hire part-time employees or outsource part of your work to keep your costs in line. Find freelancers who can take overflow work or specialty jobs so you don't have to invest resources employing people who will be underutilized. Add more full-time employees at later date as the business grows.

5. Run a tight ship budget-wise. Don’t buy brand new furniture. There is nothing wrong with sitting in someone else chair for a few years. Limit your long-term commitments. You don't need to buy or lease a copier since you can go to OfficeMax or Kinko's when needed. Know where every $ goes. And remember, it is not that important how much revenue you generate but rather how much you keep. Cash is King!

It all comes down to smart business. Well-run businesses could hold their own in difficult times. That principle is as true for startups as for established businesses. If your products or services are necessities and you are prudent when handling money, then go for it!



Need help starting or managing your business?

Call (757) 692-3210 or email Galia Kouzmanova at gkouzman@wealthbudget.com.

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