How To Start A Business During A Recession

A recession can be one of the biggest threats to any business. An economic nightmare for established companies trying to support every day running costs with a shrinking client base. You’d be right in thinking a backdrop of financial hardship will make it harder to get your fledgling business off the ground. 

That doesn't mean it's impossible, though. In fact, starting a business during a recession can give new companies an advantage. With less historical overheads and a clean, fresh outlook, a new startup can be more appealing to cash-strapped customers. Especially at a time when existing businesses may have to increase their costs to counteract the negative economic downturn. 

There are steps you can take to get your business up and running during a recession. The one thing you have to be is flexible. Accept the fact your startup will need to begin smaller than you hoped, and you will already be ahead of the game.  

Following these tips will keep you aware of any pitfalls and ensure you stay focused on creating a viable business in a recession. 

Write a Business Plan 

Knowing the challenges, a business can face in a recession can help you formulate your battle plan. This is the strategy you will follow to ensure your business can survive, if not thrive, in the hostile atmosphere of economic duress. 

The best way to weather the storm of a recession is through forwarding planning. 

A business plan will describe your business and what you hope to achieve. Instead of being a jumble of thoughts and ideas in your head, planning will give structure to your budding entity. Your business plan will form the building blocks from which you can create a functional, feasible enterprise. 

You will no longer have a vague image in your head, you will outline your venture's strengths, weaknesses, opportunities, and threats. Helping you visualize what your business is and what it offers clients. More importantly, it will show you how you can deliver your service or product effectively, efficiently, and professionally. 

Your first task is to identify the positives. Write down the strengths and opportunities you and the location you are in, can offer your business. Next, you'll need to cover the negatives. The threats and weaknesses. Once you have a clearer view of the pros and cons for your business, you will be better equipped to deal with issues caused by threats and improve on your weak points. In so doing, you can expand on your strengths. All of which will improve your opportunities. A business plan really is a win-win exercise. 

Not only that, planning can also help identify the need for financial support. Your business plan can be instrumental in establishing your budget. That's the amount of capital you need to set up your business from scratch. It all needs to be financed from funding for business equipment to allowing for the costs of supply and delivery of your service. 

Can you be self-reliant, paying your own way when business is slow? Or will you need to ask for help from your bank? A bank will be more willing to assist if it can see that you have done your homework. Even if you go down the crowd-funding route, potential investors will need to see you know how much money you need to run your business. 

Your business plan is your gateway to the possibility of financial backing.

Bargain Hunt For Your Equipment

All businesses need equipment or machinery to carry out their daily tasks. Computers, printers, office furniture, and maybe even a coffee maker, all need to be procured if your business needs them. 

It can be tempting to go for the top of the range of products from high price suppliers. When your business is starting, it's essential to look the part. New, expensive equipment can give you a professional edge. However, while that is true, blowing your budget on gadgets and gizmos might leave you with a little leftover to deliver your products. 

In a recession, every penny counts. If you can save on startup costs, you'll have more of your budget for the delivery of service. It will be your ability to serve your clients that will see you through the economic hardships of recession. Not the age of your computer system. 

The early days of a new business have to be flexible. You need to limit your expectations to what you can comfortably afford without breaking the bank. 

A great way to save money and keep set up costs low is to lease what you need. Or buy a second hand. You may be able to pick up lightly used items at liquidation sales at a fraction of the brand new costs.

Your Logo and Branding

Find a cost-effective logo design to represent your new business. You don’t need to spend a ton of money to design your own logo. You can hire a logo designer or research on how to design your own logo. You can look at different logo makers online and create a logo within 10 minutes.

Keep Your Overheads Low

The great thing about being a startup in a recession is not having any losses or debt from previous trading years hanging around your neck. This gives you a financial edge over your rivals who may have been in business for some time. 

Having a clean slate will allow you to start your business cheaply. Without the need to cover any historic business debt, you can reduce your bottom line and offer prospective clients a budget-friendly option. 

To keep that edge, however, you will need to establish a sustainable spending plan. One that will support your day-to-day running costs but still allow you to offer flexible pricing to attract competitors’ clients to you. In a recession, those running costs must stay low. 

In the early days, keeping costs down will require you to take on most, if not all, the day-to-day tasks. Being a one-person band is hard work, but it will potentially differentiate between surviving the recession or going under. 

Market Your Business 

Letting people know you are in business is probably the most critical step when setting up a new business. Without marketing, no one will know you are there or what you offer. 

Some existing companies reduce marketing in a recession as part of their attempts to reduce overheads. However, an economic downturn where businesses are competing for a smaller market share is arguably the time when marketing activity should increase. 

Your new business will need as much exposure as you can afford to give it. Build a marketing strategy that encompasses online and offline promotional outlets to ensure you cover all bases. It doesn't have to cost the earth. There are plenty of free or cost-effective ways to market your business. The more avenues you utilize, the more widespread your business message will be. 

Activities as diverse as a presence on social media to postcard mailshots will get you and your business known. Be the potential name clients see the most, and it will be your business getting their patronage. 

Customer Focus is Key

Whatever the customer wants, they should get. The focus of your business has to be on the needs of your customers. True in times of plenty, it is even more so in a recession. 

Recessions are not only hard on businesses. Potential clients will also be feeling the pinch. They still need products but may no longer have the spare cash to purchase what they need. 

As a new business, this is where you can outshine your competition. By streamlining your venture to cater to your clients' needs, you will be able to offer solutions that work best for them. At a reasonable price, to your client's time frame and as close to their vision as you can possibly get. 

As a new startup, you need to prove that you can offer them a better, cheaper service than your existing competition. Remember, potential clients, don't know you, your business or your expertise. You must put them first. 

That doesn’t mean cutting corners. It's about embracing new working methods. By finding innovative ways to serve your clientele, you can make sure it's your business first.

The key to client satisfaction is the ability to be flexible enough to offer the best deal at a price that suits them. Get them through the door, deliver the solutions they need, and see them return for more. They are keeping you going through the recession and into better times.