How to Start a Family Business in a Recession

It's always risky to start your own business, but during an economic downturn, it's particularly challenging. Uncertain economic times, however, don't have to keep you from starting a new family business. Because they don't require as much help from outsiders, family businesses are more likely to succeed during a recession.

Instructions

1. Come up with a good idea. During any part of the economic cycle, people need to buy certain goods and services. Be sure that your family business offers something that people need regardless of the amount of expendable income they have.

2. Develop a business plan. Draw out exactly how you want your business to run: where it will be located, what it will provide to customers, and whom the target customers will be. Be sure to create a detailed budget that includes expenditures and projected profits.

3. Obtain start-up capital. Family members with extra income are the ideal business partners. If you and your family need outside funding, research banks and other lending institutions that give loans to entrepreneurs.

4. Discuss with your partners how each of you will be involved in the family business. Decide what everyone will contribute in labor-hours, if there will be silent partners and who will provide capital, but not work. Make sure that every participant is sure of her role.

5. Write down the rules for the family's participation. Once everyone has agreed to how the business will run, be sure that a copy of the guidelines is distributed to all participants. Consult with a lawyer on the document to prevent any future confusion or disputes.

6. Plan for the future. Decide how the family business will be passed down through the generations.