07/ 23/ 2008
The signs of a less-than-robust economy are all around us: Four-dollar gallons of gas, rising food prices and the slowdown of the housing sector are but a few of the challenges facing the American public. So where does this leave aspiring entrepreneurs? You may be tempted to put your business plan on hold until the economy improves.
Acquiring start-up funds and encouraging customers to spend money on your products and services will be easier when there are more greenbacks to go around. Yet this isn't necessarily a good enough reason to delay. In fact, there are even a few advantages to starting up a business when the economy is slow.
Less competition
If you're scared to open a business right now, so is everyone else. By being one of the brave entrepreneurs who commences operations during a slow economy, you could beat a number of your would-be competitors to the punch.
Less competition can help your business in other ways as well. If your bank is dealing with fewer business loan applications, yours may be approved faster. If things are slow for the business section of your local newspaper, your press release will likely be of more interest than it would during the times that the staff is swamped with similar start-up stories. A slow economy can provide many situations in which your business stands out.
Forces you to streamline operations
Sooner or later, all small businesses will face an economic downturn, and for some it will be the factor that leads to them putting a closed sign on the door permanently. By starting up your operations during a time when there aren't a lot of funds to go around, you'll look closely at cutting unnecessary expenses and stretching every dollar. If conservation is your fiscal game plan from the beginning, then you'll set yourself up to face this and future slowdowns in the economy with success.
Slowdown coincides with development phase
New businesses go through a few initial phases: the first is research and development, and the second is growth (provided that the first stage goes well). The research and development phase can last a few months or even a year, and is a time of much trial and error. You'll be making mistakes, figuring out strategies to improve, and generally getting a business education unlike any you've received in the classroom. Going through these awkward stages during a slow economy can be ideal--by the time customers have more money to spend, you'll have operations running smoothly. This is far better than being in the opposite boat with those who start up during a boom time and make their mistakes when customer interest is at its peak.
Better deals for businesses
As a small business owner, you will not only be selling products or services, but buying a lot as well. While a slow economy can make procuring funds to start your business a challenge, it might help you get a better deal on your necessary start-up items. For example, office parks in your area may be lowering rates or offering deals with free rent for the first month or two. You might be able to negotiate a better deal on ad space in some outlets. If you need a vehicle for your business, the auto industry's losses can be your gains in how much you save on the purchase. If you're currently in plans to open your business, it's important to diligently shop around, because there are deals to be had. This is not to say that you shouldn't give the economy consideration when going into business. If you're planning to offer high-end items, then you may not want to start up at a time when the majority of consumers are tightening their pocketbooks. But neither should you allow a sluggish economy to be the one factor that holds you back if all other signs are pointing to go.
