Start-Up Opportunities In Hard Economic Times
by Elizabeth H. Cottrell, IAHBEStaff Writer
If you have been dreaming and planning to start your own business, you may be tempted to put those dreams and plans aside in the wake of all the terrible economic news you’re hearing on television and radio. Wall Street seems to be imploding, banks are failing, unemployment is skyrocketing, businesses are laying off workers, and bad economic news seems to be the order of the day. Your friends and family may be discouraging you from going out on your own right now. What should you do?
A Reality Check is in order: Choose wisely
This is not the time to be unrealistic about your plans or frivolous with your or your family’s money. If you are still employed elsewhere, take the time to research your entrepreneurial interests carefully, test your market, make sure you have the necessary capital, and try, if you can, to start out on a small scale or part time before committing full time.
Service businesses usually require much less overhead than retail or manufacturing businesses, and they are often much more easily run from your home. Think about the area where you live, what the demographic make-up of your area is, and what the needs are of your neighbors and people like you. What kinds of things would you pay someone else to do to make your life easier? In many areas, senior citizens are a rapidly growing age group, often with disposable income. They have many needs, from transportation to help with cleaning, shopping, and personal needs. Your business niche might be to meet one of those needs.
If you are still considering different types of businesses, consider industries that are known to withstand economic downturns. Conduct an internet search for “Recession Proof Jobs” and you’ll get lots of ideas. While this will pull up employment opportunities, it will get you thinking about industries that still have money and cash flow. Perhaps you could come up with a business idea that services some aspect of these industries or those that work in these industries. Consider these: Sales Reps, Software Design, Nursing, Accounting Executives and Staff, Networking and Systems Administrators, Administrative Assistants, Business Analysis and Research, Finance Staff. Technology is strong now, so maybe it’s a good time to get some more training if you need it. Mortgage broker Steve Curnutte, quoted in a Times Picayune article by Kate Moran, says “Entrepreneurs with a background in technology are perhaps best poised to make money and do some good during this period of financial upheaval.”
Conversely, avoid businesses in the industries hardest hit by the recent economic downturn: housing, construction, lending, banking, mortgages, and investing.
Take stock of your current skills, talents, and credentials
To get going with the most momentum, you should look for opportunities that are related to your professional experience or some area that you already know well so that you don’t have to start at the bottom with both knowledge and contacts. If you do stay in your current field, however, make sure that you’re not violating any non-compete agreements that you’ve signed with former employees.
Misfortune creates opportunity
Sadly, this is very true. After a hurricane devastates an area, for instance, there is tremendous opportunity for builders, carpenters, and anyone who can help those home and property owners who want to rebuild and repair and get back to normal again as soon as possible. When there is fire and smoke damage, companies who specialize in helping homeowners recover will benefit. When a bank must foreclose on a property and a family has to leave, there is opportunity for someone to be hired to come in and spruce up the house to get it ready to rent or put back on the market. We even heard a very ugly story of a unique opportunity that occurred when families who were evicted caused so much malicious damage to homes that crews were hired to come in and clean up broken glass and damaged property.
Look for Trends
One way to look for opportunities is to consider trends in society. The recent economic downturn will probably put an end to the “Bigger is Better” trend that has been going on for decades. Undoubtedly people will start downsizing and there will be more emphasis on value than on excess. People will be trying to simplify their lives. If you can help them do this, you may have a great business opportunity.
Another Trend is towards Conservation. “Green” practices are gaining in popularity and are likely to continue as resources get more scarce and people become more informed about the importance of conservation. Look for opportunities to sell products or services or consulting to help people make smart, energy-efficient decisions for themselves and their families.
As health insurance costs skyrocket and people live longer, Americans are expected to take more and more responsibility for their own health and wellness. If you can teach people how to get healthy and stay healthy – or sell them products or information that can do this – you may be able to take advantage of this trend. Trend watcher Gerald Celente calls this the “Heal Thyself” trend.
Good Expenses…Bad Expenses
Rieva Lesonsky, former editor-in-chief of Entrepreneur and author of Start Your Own Business, suggests that when starting a business in tough times, you should avoid unnecessary costs until your cash flow is sustainable. Work from home and use public places for meetings whenever possible to avoid the cost of renting space. Use furniture and equipment you already own instead of buying or leasing new, and if you must have something else, look for used equipment. Avoid expensive marketing and try to turn your customers into marketing ambassadors by making them happy and rewarding them for referrals.
There are some areas in which you do not want to scrimp and where your money is well spent. These include:
* Paying for legal advice to set up your new business as a limited liability company (LLC) so your personal assets won’t be at risk.
* Getting health insurance through COBRA from your last job, through your spouse’s employer, through AARP, or through a trade organization.
* Putting up a professional looking Website.
* Making a business plan. Lesonsky recommends Business Plan Pro (http:/www.bplans.com).
Yes, times are tough, but with the right attitude and some serious thinking and research, it could be the best time to start a new business.
Celente, Gerald. Trends 2000: How to Prepare for and Profit from the Changes of the 21st Century. Grand Central Publishing. 1998.
Lesonsky, Rieva. Why Tough Times Are Good Times to Start A Business. Bottom Line Personal. October 15, 2008.
Moran, Kate. Hard Times Bring Opportunities for Entrepreneurs. The Times Picayune. October 28, 2008. .
Weiss, Tara. Recession Proof Jobs. Forbes.com. July 19, 2008:
© 2008 Elizabeth H. Cottrell. All rights reserved worldwide.
Elizabeth H. Cottrell is a home-based entrepreneur, freelance technical writer, and owner of Riverwood Technologies, a desktop publishing company in Maurertown, Virginia. She is currently a staff writer and editor for IAHBE.