Is This A Good Time To Start A Business?

In 2009, I asked my then boss what he thought were the most important qualities in an entrepreneur, and according to him optimism,  ranked highest.

I am inclined to agree with him. I recently started out on my own (kind of), and the journey to making that decision was filled with doubt. My biggest concern was the fact that we’re headed into an election period, in addition to the economic downturn internationally. It is however comforting to know I’m not the only optimist out there. This info-graphic by Hiscox business insurance shows that 48% of SMEs are optimistic about their businesses, 75% hope to avoid redundancies and 45% reported profits in the last 12 months. Businesses are thriving in spite of the economy!

Are these people being too optimistic? Maybe not. My light research reveals that some large corporations we have today began during the depression or after. General Electric started during the panic of 1873, Disney started during the recession of 1923-24, HP began during the Great Depression, and Bill Gates and Paul Allen founded Microsoft during the recession of 1975. This Forbes article assets that 16 out of the 30 companies that make up the Dow Jones Industrial Average were started in a recession.

There are two great reasons why this may be a good time to go into business especially if you are in service business:

1. Most businesses are cutting back on their staff, and relying more on consultants, since consulting is viewed as a definite and cheaper cost than hiring a permanent staff member. This makes it a great time to go into finance, accounting, sales and marketing and IT consulting, because not only are the services in demand, the start up cost is virtually zero.
2. There’s a lot of goodwill currently for start ups and financing that has historically been only available to big businesses. Take advantage of these resources to start and grow your business.

Once you have made the decision to start a business, you must be careful not to make the common mistakes, because during a depression, these are even more costly. Ensure that:

• Your business is low capital. Start small and build upwards, avoid borrowing at all costs.
• Hire cautiously. You don’t want to hire staff, then have to lay them off. Do not pay someone to do something you can do yourself.
• Keep your cost of living low. Remember that you are now paying your own salary, cut back as much as you can on your personal life, because now, your personal saving = business gain. Again here, if you can do it yourself, don’t pay for it.
• Find something that is really needed in the market place. This would be the worst time to start a business selling “doodads” or luxury items, because people all over the world are looking to save money. Start a business that meets a real need.