Is Starting Your Own Business A Good Idea In A Recession?

All you seem to hear at the moment when you switch on the TV or pick up a paper is that the world is in financial ruin – more people than ever seem to be unemployed and it doesn’t look like it’s getting better anytime soon. Surely this is not the time to be setting up a business is it?! I think there are definitely two sides to this argument as I have seen so many businesses flourish during the last few years since the Global Financial Crisis officially started way back in 2008, but at the same time, probably double that number fail – so what will it be for you?

Personally, I think it’s a great time to start a business, but you have to be smart about it. More than ever it’s so important to conduct research into the viability of your business and evaluate your competitors – if it’s already a crowded area then you may be walking down a long and painful path to defeat, but if you have a fresh idea that no one else has tapped into in your area/niche, then it may be worth pursuing. There are so many opportunities out there – whether your dream is to work online, own a cake shop or freelance from anywhere in the world – so the key is finding what works for you and then going for it.

One of my favourite entrepreneurial stories is about a guy who was made redundant a couple of years ago who had previously travelled through Mexico and fell in love with the food. He saw his redundancy as an omen as he had noticed the lack of great Mexican food in London, so decided to start-up his very own authentic Mexican ‘fast food’ restaurant along with his Mexican wife. Three years later their business has gone from strength to strength and they have just opened another branch in the city – inspirational or what?! And this isn’t the only story like this – I have read of so many people losing their jobs who have thought to themselves ‘what do I have to lose’ – and done it they have – usually in the form of a very well thought out business which has gone on to flourish.

It’s a great time for the underdog to come back fighting, and I love the spirit of people who have lost their jobs and then make it their mission to create a new career for themselves. If you have this fighting spirit and your business fits the original and feasible mold, then I say go for it.

There is however the other side – the one where businesses go to die after a few short months because their owners didn’t take the time to know their market and assess the opportunity without rose-tinted glasses tainting their view. There doesn’t seem to be any rhyme or reason about the kinds of businesses that either do well or fail because many different reasons are behind this, but if you do anything right just make sure you do your research, write a business plan and network with as many people as you can to get advice.

Another huge factor all wannabe business owners need to consider is funding, as it’s become more and more difficult to find it during the last few years. People are more cautious when it comes to investments, and banks don’t want to take a risk on the ‘new guy’. If you want to start your own business and are going to need a cash injection within your first couple of years then I would start contacting business angels, banks and everyone you know to see if you can raise funding sooner rather than later. I recently saw a start-up nearly go under because of lack of funding, and they had such a great concept, but they failed to fully understand the needs of the business before it was too late.

There is no way of knowing what is going to happen in the world financially over the next few years, but it’s so exciting to think that we all create our own destiny and we all have the opportunity to create a successful business should that be our dream. If it happens to be yours, then put in the work, and if the shoe fits, don’t stop until you’re a success. Take advantage of the market at the moment, because if you can make it work for you now then you’ll be laughing by the time things pick up and were in a boom again. If you have the dream and the determination, then you are already half way there. So yes, a recession is a great time to start a business – just make sure yours is the one I’m reading about next year for all the right reasons.

Photo Credit – Thanks to robchivers (sxu license)

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