Starting Business in a Recession
October 2nd, 2008 . by ClivetThe fact that there is a recession looming is no reason to abandon all plans for starting a business. Most people with experience of setting up a new venture will talk about the length of time is takes to collect and assembly all of the necessary pieces, particularly if there is only a single person involved.
Most businesses require acute control of costs when starting up and invariably the director or owner end up carrying out most of the function themselves. These can include writing the website, contacting suppliers, accounting functions and so on.
The point being made here is that given the long lead times between start a business and operations actually commencing, most people would do well to begin putting plans in to action well before they intend to start trading.
A quiet period at the beginning, whether caused by recession or other factors can help a new business to find its feet and allow it to temper its systems as a result of receiving a few orders.
When the economy picks up and the sales generated starts to increase, the systems and knowledge have been adjusted and the operation can cope with customer requirements efficiently.
This was certainly my experience and I can not stress how grateful I was to have a calmer period of adjustment before the business really began to attract a substantial number of customers.
There is a lot of merit in that argument as everyone who has started a business knows; there are always reasons which can be conveniently found to put off tomorrow what should really be done today.
If a plan can survive the rigors of the greatest recession since the 1930’s then it is indeed a good business idea.
From a practical point of view, there might well be sacrifices and probably risks which would have to be made and taken when deciding to start a business. Here the recession should in all reasonableness be an important factor.
IF the owner has a mortgage, debt or other commitments then a realistic appraisal of the effects of the recession of the required profitability levels should be carried out.
It is important not to confuse bravery with stupidity as the latter will culminate in the overall financial position of the owner being worst than before and perhaps hinder their ability to start a business when the recession has ended.
Some obvious options are to work for the business on a part time basis, take on a partner or to approach the commercial operations in a way whereby costs are minimised and the exposure of the owner is reduced.
A limited company might offer an isolation mechanism for separating the owner from the business. The limited liability protection could become an invaluable feature in cases where risk and uncertainly are perceived as higher as a result of the recession.
[…] generally fewer people will consider starting a business in a recession, the future business taxes which the Government relies on for the sustainment of public finances […]
This provides me with the inspiration I was looking for. Many of the people I have spoken to cautioned against my plans to start a company offering computer maintenance and upgrades to my local area.
I accept that business might be quieter now than it was a year ago but nonetheless, I am ready to go. For many years the idea was toyed with and family commitments prevented them from being a serious option as consideration had to be given to the impact on others.
The drive, ambition and determination are there now and any postponement may lead to it never happening. There are some useful articles on this website and others which do not over-dramatise the recession and the current state of the UK economy.
My new company can be successful, the Starting Business Faqs helped fill in most of the gaps in my knowledge. All I need to do right now is to survive the next few years which I believe I can do.