Top 10 Reasons to Start a Business in a Recession

More publicity. Less competition. Talent waiting to be scooped up. Here’s why starting in a recessed economy may give your business a better shot.

Do you have one good reason to start your business right now?

How about 10?

Regardless of what people around you (including the media) may say, right now is the best time to get into business. Just go back and look at the economic slowdowns throughout history. Most recessions in the post-World War II era last an average of 10 months, followed by growth cycles that last an average of 50 months.

What this means for the startup is there’s no better time than right now to get going and start pursuing your business dreams–in anticipation of the next period of growth.

So with a nod to David Letterman, here are my top 10 reasons you should start your business now–despite the current downturn:

1. Everything is cheaper.
   Let’s face it: There is great value right now in this and in world markets. This is the right time for fantastic deals in virtually every category, from land and equipment to commercial office space, personnel and labor. As asset prices have been knocked down, there is no better time to get into the real estate or financial markets, or even heavy equipment and construction. Some people have waited years to find value in these markets–and now that time has come.
2. You can hire more and better-qualified people.
   In an era when even Microsoft is laying off, you can find great resources at affordable rates. Thinking about getting your high-tech startup off the ground? There are plenty of engineers waiting to be hired. Thinking about forming a professional services firm? There are many accountants and attorneys looking for their next opportunity.
3. People are looking to change suppliers.
   From a cost perspective, everything is on the table for most companies. Even if your prices are higher, if you can come in with greater value, you have a good chance at winning new business. You also have the advantage of being the new kid on the block when it comes to pitching your products and services. Many companies are desperate to find new partnerships with new companies that have a different, better or more innovative way of delivering those products and services.
4. Ownership equals tax incentives.
   Business ownership offers a variety of tax benefits that aren’t available to employees. While taxes should never be the sole reason to go into business for yourself, it should be one reason to add to you “benefits of business ownership” list.
5. Family and friends don’t want to (or can’t) invest more money into the stock or real estate markets.
   That means they may be willing to finance a portion of your new venture, or the expansion of an enterprise that has proven itself over time. The main benefit is that they know you and have a relationship with you–and if you have a solid business plan that delivers real numbers, your chances of raising the capital you need increase exponentially.
6. Suppliers are giving better credit.
   Because the credit markets have virtually shut down, the B2B credit flows are keeping money circulating out of sheer necessity. That means a bullish outlook for companies looking for good terms on stock and/or inventories. The main advantage is that all parties have more incentive than ever for finding true win-win situations that allow for cash and stock flow. When everyone is looking to survive, great deals can be had.
7. You can get good PR by showing you are going against the trend.
   The media loves aberrations, and if you are optimistic by expanding or getting into business now, you would be in that category. That means you can generate some great PR by demonstrating your “alternative” view of the market.
8. You can buy everything you need at auction.
   In addition to everything being less expensive, you can find great deals at auctions, especially in terms of any large equipment and office furnishings. Auctions are also a great place to find hardly used or “gently” used restaurant and bar supplies at great prices. These days, you may even be able to get deals on fleets of vehicles and trucks for a delivery service or hauling or construction company.
9. You can find great “low money” or “no money” down deals.
   This is simply being aware of good opportunities others have buggered up, and finding deals where you could get an entire business simply by taking over a lease (along with all the equipment). Many business owners want out at any cost, meaning you can negotiate great win-win deals that allow the current owners an escape while giving you an opportunity to turn around what could be, if run right, a very viable business.

   And finally . . .

10. You’ve lost your job, and you have to do something.
    Sometimes, the best business decision is the one you are forced into, and the incentive (as well as need) for income is often enough to push those previously “on the fence” to strike out on their own. There’s nothing wrong with being in this position; it simply means there is greater urgency to do something that will start to generate income as quickly as possible.

There you have it: my top 10 reasons to start your business in a recession. After all, the odds are on your side that the expansion will be many times more robust than the present slowdown.

There’s no better time to start than the present, especially if people around you are more comfortable with their own list of reasons why they shouldn’t start pursuing their own business dreams right now. It only means you’ll be facing a lot less competition.

Brad Sugars is Entrepreneur.com’s Startup Basics columnist and the writer of 14 business books including The Business Coach, Instant Cashflow, Successful Franchising and Billionaire in Training. He is the founder of ActionCOACH, a business coaching franchise.

Source: http://www.entrepreneur.com/startingabusiness/startupbasics/startupbasicscolumnistbradsugars/article200342.html

Recession takes a toll on the cell phone industry.

By Amy Gilroy — TWICE, 4/15/2009

Scottsdale, Ariz. — The cellphone has held fast against the gravitational pull of recession, but handset shipments will start to fall this year, sinking 19 percent for North America and 20.5 percent world wide, said the research firm In-Stat.

Next year, North American shipments will drop another 9.5 percent, said the research firm.

“People that are unemployed are less likely to replace their cellphones, and businesses will not pay for cellphone subscriptions for employees they’ve let go,” said analyst Allen Nogee.

Even people who have not lost a job are more likely to ‘make do’ with their existing handset, he said.

About three-quarters of handset sales are replacements, and these are “particularly vulnerable to economic contraction,” Nogee said.

In-Stat predicted it will take until 2011 for shipments to regain healthy growth, expected to hit 9.6 percent worldwide at that time.

The cellphone market is also measured in subscriptions, which last year grew by a hefty 19.3 percent worldwide. Subscription growth this year will slow to 9 percent gains and 6 percent in 2010 worldwide, In-Stat said.

5 Tips to Survive Today’s Economy

By Joel Blakley, Business Credit Services

Everywhere you turn, you hear more doom and gloom. Believe it or not, I’m confident and upbeat. I am a firm believer that in every situation, regardless of what the news sources say, there is opportunity. I put together some tips for you to consider. Perhaps one or more of them will help you. Take a look:

1) Get up and fight!

Over the last year, many small businesses have failed. Consumer confidence is very low, and people are less willing to spend on items that aren’t a necessity. We all know this. We hear it every day. In my position at Business Credit Services, I speak to small business owners constantly. I can tell morale is low. I tell these clients that now is the time to seize the day. Your business might be down, but you have to get up and fight for it! Examine everything you do in your business and think of ways to make it more efficient and more effective and make the absolute most out of every single customer contact.

2) What differentiates you from your competition?

Now more than ever, you need a compelling reason for people to use your business. What does your business do to stand out? What single thing do you do better than everyone else? Why would it be a huge mistake for a customer to use your competitor instead of you? Those are all questions for which you need to have very compelling answers. Everything your company does, from advertising and marketing, to the quality of the services you perform, to the way you interact with your customers, needs to embody these things. Your clients need to constantly be left with the feeling they made a great decision to do business with you. If you succeed, you will have lifelong customers. Lifelong customers translate into having a business that is more resilient to economic downturns.

3) Where’s your passion level?

When you get up in the morning, do you still feel passionate about your business? If you do, what makes you love it? If you don’t, why don’t you? It is vital to clearly understand what makes you love working in your business. When you are facing difficult times, it’s easy to feel like you lost that “spark” that drove you to open your business. If it’s gone, you need to recover it. Without it, you won’t be as inspired to make the changes and be as agile with your decisions as you need to be. What changes can you make to your business, and to your personal life, to reignite that spark?

4) Think out of the box? Throw away the box!

I’m not a fan of always doing things the same way. I spent a significant length of time at a very large software company. Many times, I’d suggest ways to improve our services and increase efficiencies. The most common response I’d get was: “We’re not sure we should do that because we’ve always done it another way.” This is possibly the most toxic way for a business to think. For crying out loud, what makes entrepreneurs successful is thinking of different ways to get things done! If Apple Computers thought this way, the IPod would never have taken off. If Boeing thought this way, we’d still be flying propeller planes. If Henry Ford thought this way, we’d be riding horses to work! Worry less about changing the way you do things and concentrate on doing them well.

5) TURN OFF THE NEWS

Can it be any surprise that consumer confidence is lower than anybody can remember? Every time I read the paper or watch the news, I hear about how bad things are. Even our elected officials are telling us the economy could move into a full-blown depression. I’m a pretty calm guy by nature, but when I hear this, it REALLY TICKS ME OFF! What happens to consumer confidence when the very people we elect tell us that the sky is falling? The answer, of course, is that consumers worry more about the economy and spend less. Talk about a self-fulfilling prophecy! Imagine what would happen if our leaders came out and said, “Things are going to get better.” What if the major news services published stories telling us it’s not 1929 all over again? Guess what would happen? THEY’D SELL FEWER NEWSPAPERS! The fact is, reporting good news doesn’t sell as well as reporting the bad. Remember this fact: Fear sells newspapers!

Here are a few facts to make you feel better. According to a Small Business Administration (SBA) fact sheet:

• Half of all private sector jobs are with small businesses.
• 45% of all payroll is paid by small businesses.
• Between 60-80% of net new jobs in the last decade were created by small businesses.
• Half of our Gross Domestic Product (Less Farming) is created by small businesses.
• 52% of small businesses are home based!

Small businesses like yours are what make this economy work!