Starting a Successful Business in a Tough Economy
Starting a business is always a difficult proposition, especially when the economy is lagging.
After all of your preparations and business skills training a down market could doom your enterprise before you even open the doors. In addition to the regular challenges of launching an enterprise, you’ll have to clear a number of hurdles caused by a weakened economy.
With some careful money management and the right connections, you’ll be able to hold a successful grand opening regardless of the economic climate. Consider the following tips so that your startup isn’t affected by a down market.
The most important asset for opening a business is the funding. Without adequate capital you cannot afford to buy necessary equipment, hire employees and advertise your services. When the economy is down, financial institutions are usually hesitant to distribute loans to small business owners.
According to Investopedia, speaking with financial consultants can help you secure startup funding. Loan officers, accountants and associates in the financial industry can help you navigate the lending process. Ask your contacts about regulations that banks have for small business loans, so you know what to expect. Prepare your presentation and have a clear repayment plan to show that your venture will be fruitful.
When you need to stretch your budget as much as possible, The National Federation of Independent Business recommends buying used equipment. They point out that you can purchase machines and furniture from businesses that are closing. Additionally, many office supplies can be bought from second-hand retailers. Once your company has found stable financial footing, you can upgrade to new equipment.
Few businesses are successful without a target customer base. Forbes notes that you need to define your ideal consumer before you can draft a marketing strategy and find long-term objectives. Research the industry to discover what kind of person buys products or subscribes to services similar to yours. Once you have a customer model, investigate how competitors have fared during periods of economic decline. Find ways to replicate those models so your business can thrive and attract new customers. That said, you should avoid a price war with competitors because you’ll only damage your bottom line.
Stay focused on your finances
Keep a close eye on your income and expenses. According to the American Express OPEN Forum, you must account for every dollar coming in and out of your operation. Create a monthly budget and never exceed your spending limit unless there’s an emergency. Your incoming cash flow should match your spending so you can stay in the black.
A bad economy doesn’t mean you cannot successfully open and operate a business. You simply need to have an effective strategy in order to thrive financially in challenging economic climates.
Scott Murray is the Social Learning Evangelist for TrainUp.com, the web’s largest career marketplace. He is also a contributor to the Training Insights Blog, a series of blogs dedicated to career and professional development.