Whether it’s an official recession or not, the No. 1 news story these days, by far, is the struggling economy. We know how it's affecting us as consumers--rising grocery and gas prices and plummeting stock values are daily occurrences lately--but what does it mean for aspiring startups?
The outlook for starting a new company is not as bleak as you might think. Begin with the understanding that this is a cycle that will change--so anticipate a rosier long-term outlook. And although your personal cash flow might be increasingly tight in the short term, there are silver linings in areas you might never have expected:
New Financial Cycle, New Opportunities
True, shipping and manufacturing costs are rising. That means it might not be the optimum time to begin manufacturing expensive goods abroad. But you might be surprised at the opportunities available in other areas, such as the service sector.
For instance, large companies are downsizing departments such as marketing or sales. The upside for entrepreneurs comes with the realization that the need for these functions is greater than ever. How can you capitalize on this? If you're a sales professional, consider working on commission as an independent manufacturer's sales representative. That way you represent no fixed cost to a large company and would only add value. If you're a marketing professional, look to companies that may now be outsourcing more of these functions, based on recent downsizing or leaner internal resources.
Look for New Doors Opening
Many businesses will have new capacity as some of their existing clients close or downsize. This could include landlords, printers or business consultants, for example. For a business startup, this translates into opportunity.
A landlord might be willing to accept a lower monthly rent to fill now-vacant space, and a professional consultant might take on projects or clients she might previously have considered too small or too limited in scope. These businesses might also be willing to work with companies based on a share of equity (which can be crucial for cash-starved startups) or other future opportunities. For example, if you're launching a web-based business, perhaps that web design house you've dreamed of hiring would be willing to work for shares in your company in lieu of cash.
Do What You Know
While this is true in any economy, it rings especially true during tough times. By going back to basics, you'll ensure that you're doing something you're skilled at and that you feel passionate about.
One entrepreneur I recently met at a conference knew she wanted to start a business but was struggling to decide what it should be. While talking to a colleague she mentioned, in passing, the homemade salsa she is famous for among friends and family. Bingo, her friend said, “You just discovered your business. Your money is in your salsa.” It was something she hadn’t even considered, and it was right in front of her.
Everyone is good at something, but many of us don't recognize our strengths. Dig deep to discern where your skills and passions lie, and take into account skills that may not initially appear marketable. For example, one friend of mine is an excellent bargain shopper. She can spot great quality at bargain prices, whether it’s at a garage sale, a thrift store or an upscale department store.
She never considered this a marketable skill. In fact, she thought of shopping as the reverse of making money. But her shopping skills fill a real niche for someone in need (e.g., a company that needs a purchasing agent, a retailer that wants to employ a personal shopper, or an executive or working mom who needs a personal assistant to run errands, buy gifts, or oversee personal expenses). Everyone wants to save money--and never more than in a tough economy.
So be smart. Look for opportunities in unusual places and rely on what you do best. It’s a recipe for success in just about any economy.
, where entrepreneurs get information and inspiration to turn their ideas into successful businesses. Tamara is the author of