What’s the upside to losing your job during an economic downturn? The freedom to start your own business. It might seem counterintuitive, but half of the businesses on the Fortune 500 list began during a recession or bear market, according to a study by the Kaufmann Foundation.
When money’s tight it might be more challenging to open an affordable business and get the small business funding you need for your startup, but it’s not impossible. You always need a thorough business plan to get small business funding, but when money’s tight make you must include contingency plans.
Make sure your business is recession-proof by offering an alternative to similar, more expensive services or products. For instance, the average cost of a wedding has dropped from an all-time high of nearly $30,000 in 2007 to around $17,000. Why not be the wedding consultant who specializes in elegant, scaled-back weddings?
Lenders appreciate that franchisees benefit from training, management support, name recognition and shared marketing, so they might be more likely to approve small business funding for the right franchise business. Lenders will be more likely to provide small business funding to applicants who have built cost-saving measures into their startup’s business plan. For instance:
• If possible, start with an in-home operation. Even if your home needs minor renovations to accommodate your new workspace, that’s less expensive than new construction or a commercial lease.
• Consider sharing space with another business if you can’t operate your business from home.
• Rent your office furnishings and equipment or buy them used.
• Tap into the talents of unemployed friends and relatives to save money. Once you’ve acquired small business funding, how can you improve your chance of success?
• Network through your local chamber of commerce or professional association.
• Barter services with other businesses.
• Customer service is more important than ever when people are pinching pennies. You need their referrals.
• Offer first-time customers discounts or gifts. Give them additional discounts for each referral.
• Take advantage of free or low-cost classes through the Small Business Administration, or local community colleges or technical schools.