Setting Up a Business in a Recession
Conventional wisdom says that business and recession don't go together, with tough economic times hitting businesses hard. In fact, many businesses don't survive through a recession. However, despite the tough challenges present to business owners during bad financial times, there are ways not only to manage an existing business, but also to start up a new business venture. Setting up a business in a recession requires sharp acumen, patience and above all, commitment and perseverance.
Other People Are Reading
Instructions
-
-
1
Conduct some research on your product or service and the corresponding market. One of the ways to be successful in business during a recession is to provide something people need versus an extravagance. In most instances, despite hard financial challenges, people will still spend money with businesses that deal in necessities, such as auto repair shops, grocery stores, home improvement/repair stores and similar businesses. Make sure the demand is present in your market for whatever your business offers.
-
2
Develop a solid business plan that accounts for a few years of lean financial times before growth. For example, in a regular business plan, you might include plans for obtaining capital, ways in which you will promote your business, plans for growth, and research on your products and services. However, when you are starting a business in a recession, you should include information on short-term goals for the first six months to a year of your business operations, determining how you will raise capital in a cash-strapped environment and how you can be competitive in pricing to draw people in to buy.
-
-
3
Get creative with raising capital. In a recession, loans and other financing products are harder to come by. Creative ways in which to raise start-up money include gifts from family and friends, traditional fund-raising and turning to small investors. Small investors might be 30 people, for example, who each donate a smaller amount to your company, instead of just one or two people who donate a larger amount. This is also beneficial because in the event of a business loss, it would not be so pronounced for each of those small investors.
-
4
Set your prices competitively. Because it is a recession, people just don't have the disposable income they are used to having, so you need to set your prices accordingly. Be as competitive as you can without hurting your financial bottom line. Remember, in these lean times, it is more about profiting enough to sustain yourself and your business, and less about bleeding your customers dry for all they can spend.
-
5
Hold a grand opening with a bang, promoting your super-low prices. Once you are ready to open up shop, the best way to get people into your business is by enticing them with specials. During a recession, people still want to spend money; they just have less of it to spend. Hold a one-day-only special with prices even lower than usual. Give people coupons and other financial incentives to come into the store and at least spend a little bit of money.
-
1
