Recession Watch: You've just started a new business.. Now what?
Filed under: Entrepreneurship, Career, Recession
If you've recently started your own business, the potential for a recession may have you in a panic. But with every challenge, there is an opportunity for you to excel and show what you're really made of. Here are a few ideas that might help your new business weather the storm.Plan for tough times. Examine your company's budget and do some contingency planning. Newer businesses often have lofty goals laid out in their financial projections. Come to terms with the fact that you're probably not going to hit those targets, and could fall well short.
Take advantage of low interest rates. Along with a recession comes low interest rates, making it an ideal time to borrow money. If your business is strong enough, it might be a good time to look for financing. It's especially attractive if you're able to lock in a low rate on a loan for five or ten years.
Try to diversify. Even companies that have a narrow product or service focus can find ways to diversify what they're offering and who they're offering it to. Look for new types of customers or a new way to market your offerings. By broadening your horizons while still staying in your "sweet spot," a recession can be less painful.
Continue to market yourself. It's tempting to cut back on advertising and marketing while money is tight. That's not necessarily the answer. In fact, an economic downturn may actually require more marketing efforts for a company to remain in the game. Consider being more strategic about your marketing efforts, rather than cutting advertising dollars all together. Go with the events and opportunities that will bring you the biggest bang for your buck.
Be willing to do just about anything. When times are tough, you may have to consider taking on projects or clients that you might not normally consider. Don't go outside the range of what you're qualified to do, but consider accepting less-than-ideal projects to help create a little additional cash flow.
Have a contingency plan. What will you do if things get really bad? Will you have to shut your doors? Or do you have a plan to keep the business open but earn some money from freelancing until the economy recovers? When I first started my business, I worked with a temporary agency to bring in additional cash. This worked out wonderfully because I still had the flexibility to run my business and be available at critical times, but I was able to still put food on the table.
Some industries do better during recession. If you're in a line of business that actually does well during difficult economic times, create a plan to capitalize on this. Make the most of any selling opportunity for as long as you can, but realize that when the economy rebounds, you may have to come up with a different strategy.
Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud. This post is part of a series offering consumers advice on what to do during a recession.
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Reader Comments (Page 1 of 1)
1-28-2008 @ 9:31AM
FLIBERTINO said...
Very Helpful as Im looking into starting a small Postal/Shipping store--Its scary but I guess that all a part of it.
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1-29-2008 @ 4:18PM
Michelle Dunn said...
I am so glad to have found this post, great ideas and tips! I wanted to share a few I had as well:
If you plan ahead you can survive the recession with a positive outlook and some specific actions.
1. Invest in education: Continue to educate yourself, attend seminars, free online webinars, read books and trade magazines, keep up to date on what is happening in your industry and learn all you can.
2. Network and make contacts online and offline: Networking will keep you in everyone’s minds, also if you end up losing your job you will have a slew of business cards of others in the business that you can contact to work with during hard times.
3. Follow the market: Read the papers or watch the news, know what is happening and stay on top of it.
4. Pay off debt: If you can pay off any debt, now is the time to do it. Dealing with a recession is hard enough, but if you have a boatload of debt on top of that your stress level will go through the roof and you might not be able to pay it a few months down the line. Pay cash for anything you need, if you don’t have the cash, ask yourself if you really NEED it, or do you just WANT it? Put your credit cards in the freezer or cancel them and cut them up.
5. Cut back on extras: Seems simple, but do you need all the bells and whistles you have on your business or home phone or even your cell phone? Do you need to get Starbucks twice a day? Can you bring your lunch? Can you carpool to work?
6. Build your online presence: With a website, blog, newsletter or articles. Join online networking groups that relate to what you do, mentor someone or find a mentor, visit Craig’s list or other online portals.
7. Have your clients sign a long term contract or review their existing contacts and renew them or extend them.
8. Specialize in something: Make yourself valuable, employers are more likely to keep an employee who can do more than one thing.
9. Turn your hobby into a part time business: for example selling items on ebay.
10. If you don’t have to sell your home or any property, don’t. You won’t get top dollar and will end up losing money. If you can, work on the home or property that you want to sell so when the recession ends you can get more money for it, for example, paint the house, do some landscaping, whatever you can afford or do yourself to improve the quality of the property.
11. Update your resume now, just in case.
12. Learn more about jobs that are recession proof, industries such as food, energy, vices (tobacco), entertainment, medical services, debt collection, security or alarm services. Are any of these things something you could implement into your job or use as a part time job avenue?
13. Don’t cut prices, but reward your customers: During a recession business owners may think that cutting prices will help them and their customers. Don’t do it. Keep your prices as they are but offer your customers a coupon or a rewards program, to reward them for sticking with you during tough times.
14. Build value: Offer a buy one get one deal or buy one get something at 50% off. This increases your sales, where someone might have only purchased one item, with a deal like that it seems almost foolish to them not to take advantage of the deal and therefore purchase more from you
15. Get in contact with past customers who have not purchased from you in a while, this can activate a dormant account and possibly create more sales for you.
16. Follow up on any new leads and all old leads: Call them and see if they have a need for anything you offer.
17. Offer Outstanding customer service: To keep your customers you want to give them more than what they pay for. Keep your customers happy and they will stay with you.
18. Aggressively work on your marketing plan: send out press releases, keep yourself in the eyes of your target audience during the recession. Since you may have less work than normal, this is a great time to do this. Nothing may happen now but in six months you will see results.
19. Tighten or update and keep on top of your credit policy: now is not the time to extend credit blindly, and it is the time to collect from any customers that owe you money.
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