Tuesday, September 26, 2023

5 keys to successfully starting a business during a recession

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Shreya Christinahttps://cafe-madrid.com
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By Nellie Akalp

‘Recession’ is a scary word for entrepreneurs. This is understandable: an inverted economy brings challenges and risks. However, the “R-word” doesn’t have to be crippling if you’re an aspiring entrepreneur. A little positive thinking, preparation, and action can go a long way in getting out of the recession and building a thriving, successful business.

How do I know this? My husband and I launched our company during the Great recession from 2007-2009.

Starting a business successfully during a recession?

1. Recognizing and seizing opportunities

As larger companies lay off employees, entrepreneurs who provide services to self-employed individuals may find opportunities in tough economic times. This was the case with my company: the recession fueled demand for our business formation and compliance registration services. Other business-to-business areas well suited to building businesses during a recession include bookkeepers, accountants, tax preparers, IT professionals, and freight and logistics companies.

Historically, recessions have tended to increase the demand for affordable household and personal staples as well. Industries known to do well include discount and retail stores, home and auto supply stores (which sell goods for DIY repairs), healthcare, and cosmetics.

Of course, regardless of their industry, companies can succeed or fail. Therefore, it is critical to pre-assess your strengths, weaknesses, opportunities and any threats to get a realistic picture of your situation and its potential.

2. Get “Off the Base” to Gain Ground

When we first started, our biggest challenge was gaining market share. Some of the big players were our main competitors, so we had to introduce ourselves to the market in a memorable way. Instead of putting all our money into expensive advertising and other marketing materials, we’ve invested time in grassroots efforts. We give our name a face by networking extensively at business and industry conferences. During those events, we also presented educational seminars to demonstrate our expertise. That, in turn, led to a lot of word of mouth.

I believe that these kinds of basic approaches offer the same value for money today. With so many companies relying on digital marketing to attract business, entrepreneurs who recognize the value of face-to-face networking can quickly make a name for themselves.

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3. Stay on track, but have a contingency plan

Recognizing that starting a business during a recession comes with risks, my husband and I mapped out a “Plan B” in case things don’t quite go the way we expected. Part of that plan was to provide alternative services in the event that the recession drags on longer than expected.

Entrepreneurs should always have a backup schedule, even if they are not dealing with a recession. While you can’t predict the future, you can use common sense and logic to anticipate potential challenges. By thinking about “what ifs” and developing strategies to address them, you give yourself the ability to adapt and turn when less than desirable conditions arise.

4. Don’t compromise on your standards

When we started our business in 2009, we vowed to provide a consistent experience and never resort to the kind of “bait and switch” tactics some other companies used at the time to attract customers. That may have cost us a little more money in the beginning, but it was well worth it, because it instilled confidence.

While it can be tempting to twist the truth or skimp on quality or quantity during a recession, it’s a surefire way to dust a company’s reputation. New businesses need to make a name for themselves by keeping their promises to customers. If a company doesn’t meet the standards customers expect or complicates the experience, it sets itself up for failure.

5. Learn and adapt

My husband and I honed our entrepreneurial skills during the Great Recession. The challenges and inconvenience made us more aware, intuitive and effective entrepreneurs. We found that starting a business in a recession provides opportunities to learn and grow as entrepreneurs. But it’s up to you to make that happen!

Things change over time no matter when you start a business. During economic upheavals, changes can happen quickly and often. So, especially during a recession, it’s essential to watch for shifts in customer needs, regulations, supplier availability, and other factors that affect how you do business and your ability to serve your customers.

Is the time right to start a business?

Is there ever one perfect time to start a business? Recession or no recession, challenges and risks will always be part of the equation. A business idea is just an idea until an entrepreneur puts it into motion. If you are passionate about your business activities, start doing your homework now to evaluate the feasibility of your idea.

What opportunities do you see during the recession? What contingency plans can you create to navigate the potential obstacles? Stay optimistic and realistic – it’s a combination that will serve you well in any economic climate.

About the author

Nellie Akalp is founder and CEO of CorpNet.com, a trusted source and service provider for business incorporation, LLC filings, and business compliance services in all 50 states. See Nellie’s articles and full bio at AllBusiness.com.

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