How to Start a Small Business in a Down Economy
Starting a small business is always challenging, but it's especially so when you're starting in a down economy. Lower-than-average spending and less financial activity overall means customers are harder to come by, and they purchase less than they normally would. Major purchases are delayed, and consumers are extra-sensitive to taking chances with new service or product providers. Making your small business startup a success in a slow economy means doing more with less and making every dollar--and every customer--count.
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Instructions
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Choose a business with low overhead and low start-up costs. Search for businesses that can be operated from home and require little upfront capital to start. Look for businesses that can be profitable while starting out, and avoid businesses that require investments in retail space, equipment or large inventories.
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Focus on a narrow niche or special category in your industry. Talk to as many potential customers as you can, asking them what product or feature they need the most. By focusing on just a portion of the market, your business can benefit from being perceived as having expertise in your niche.
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Test the waters by starting small and risking only a little money. Starting small allows you to learn the market and test your product without committing all of your resources. If you discover changes that will improve your product, you can correct your course to take advantage of your discovery.
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Bootstrap everything you're able to and focus relentlessly on controlling your costs. Every penny you spend is one less that's available to keep your business running, so make due with items you already have. Buy used instead of new and barter your product or service when possible to conserve your cash on hand.
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Finance the business yourself. Borrowing for a small business is always difficult, but it's especially so for a new business in a down economy. Instead, use the resources you have and scale your business to fit your means. Retirement accounts, investments, savings and credit cards are all possible funding sources.
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Do more business online. The internet is the cheapest means of advertising and promoting your business; much of the online promotion you can do is free. Doing business online also means pre-answering questions with FAQs and lowers both the time and cash expenses involved with processing orders.
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Leverage Internet sources to minimize operating costs. By shopping online, you'll find savings not available with local providers. And by outsourcing non-essential functions through websites such as Elance or Guru, you'll save potentially thousands in employee expenses while freeing you to focus on generating more business.
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Provide wow-inspiring customer service. With great customer service, you'll lose fewer customers and keep those you have coming back for more. Especially in a down economy where saving money is paramount, customers value personalized attention to their needs, and the relationships you establish now can pay dividends for years to come.
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