As the experts argue about the definitions of a recession, the reality is that things are definitely not booming. That hasn’t dampened America’s entrepreneurial spirit, but it’s made people more cautious. So should you consider starting a new venture in today’s economic climate?
“Many people think that starting a new business in a slowing economy doesn’t make sense, but for many businesses, there are advantages,” says Peter Justen, is president and chief executive officer of MyBizHomepage. Justen says there are definite perks to starting a new business when the economy isn’t great; you can:
Negotiate for a great deal on the lease. Real estate is slowing in most regions of the country which allows for small businesses to get retail, office and warehouse space at reduced costs. “Do your homework,” Justen advises, “and study the past rental rates and current market conditions before you negotiate.” In a tight economy, it’s also easier to negotiate for landlord build-outs, signage, and parking.
Find great used furniture/fixtures, office equipment. Take advantage of the many companies who ramp up too fast and find themselves with offices of new furniture and equipment to sell at a fraction of what they paid. This is a great time to negotiate copiers, fax machines and computer equipment.
Capitalize on less business competition. When the economy tightens, fewer people are likely to start businesses. This means that you can do a competitive regional analysis and know that your niche is protected, for a while at least. Grand openings, ribbon cuttings and ground breakings are likely to get a lot more media and general attention.
Make the most of less advertising competition and reduced rates. When you spend money to advertise your new company, you’ll have greater visibilitysince there are fewer companies advertising in a slow economy. You should also be able to negotiate advertising rates.
Benefit from reduced marketing costs. In a down economy, writers, designers, and agencies are often looking for work and are able to offer reduced rates.
Pursue available media coverage. Local press will be more likely to cover a start-up when it’s one of just a few. When business slows down, it’s more difficult for reporters to find good stories. Send story ideas and pitches to your local business reporters.
Take advantage of greater loan availability. With fewer start-ups there are fewer companies vying for start-up loans from banks and Small Business Administration grants. While a tighter economy means tighter lending too, less competition should make it easier to get money from lending institutions, assuming you have stellar credit.
Scout out bank rates and services. Shop your local banks for the best rates and services. You can often negotiate lower interest credit cards and corporate accounts.
Profit from an enhanced employment pool. In tough times, businesses lay off good employees who are often willing to accept pay cuts for employment with a company that offers other benefits—improved commute, improved lifestyle, interesting work, etc.
Network harder than ever. All start-ups require hours of long, hard work. A down economy is no exception—quite the opposite. The advantage though, as one of only a small number of start-ups, use this period of downturn to get out and network with all of the companies and executives who can be mutually beneficial to your business. You have a window to take advantage of the down time and fully maximize your efforts. For instance, in a slow economy, you may find that executives, bank officers, etc. you wouldn’t normally have access to are attending local chamber breakfasts and business receptions. Use this to your full advantage.