Autumn of 2008 will be remembered as a time when many Americans faced
potential financial disaster. However, for the more optimistic entrepreneur,
it's an opportunity to build on your business goals and pursue your dreams of
self-employment.
Like everyone else, I've been touched by the credit crunch and consumer
insecurity, but part of business ownership is formulating a plan for disaster.
Whether you're in business or thinking of starting a business, know that you can
survive and, with appropriate planning, enjoy years of success as an
entrepreneur.
That said, I always err on the side of conservatism. Making good choices,
having a solid plan and maintaining financial reserves are the keys to survival.
An entrepreneur I know loved her limousines, first-class airfare, five-star
hotels, lavish office furnishings, designer suits and a different briefcase for
every day of the week. Why not? She could afford it. She now admits that she is
on the cusp of losing her business, however, and would give anything to have a
chance to rethink her flamboyant expenditures. If she could recoup the money she
spent on extravagant perks, she'd have a chance for survival in our current
economy.
On the other end of the spectrum, some individuals have tirelessly invested
in their business and find it failing through no fault of their own. They rented
offices, bought buildings and invested in office condos only to discover that
they can no longer afford the space, staffing, rent, utilities or advertising
because their client base has disappeared.
Consider a Venture's Viability
Could an enterprise's failure be prevented? Possibly. It all begins with your
idea. No idea is recession-proof, but before you add on to your business or jump
into the self-employment arena, think about the viability of your venture.
If you're selling luxury items, you might have a problem now. Similarly,
unnecessary services can and will be discontinued in a poor economy.
On the other hand, certain businesses are flourishing in this economy.
Collections agencies, moving companies, property management professionals,
career counselors and employment agencies appear to be stable as they assist
people with economic issues and re-employment.
Think longevity and diversification, and you're more likely to beat the odds.
Although you should be cautious, this could be a good time to re-evaluate your
life and where you want to be professionally.
Right now, you can probably get a great deal and carve out a solid future
with an established business, franchise or business partnership-investment, but
look carefully at the opportunity's current and future finances. A friend of
mine recently found a catering business for sale. The cost was $259,000,
including a client list, inventory and the remainder of an office lease. On
close inspection, however, this scenario offered little to the buyer. There's no
guarantee that the client list will be loyal, that the inventory is fresh or
that the office space is a good buy at the old price per square foot negotiated
some 11 months ago. If the cost were $29,000, I would still ask for an
evaluation of the deal by a professional and also request detailed financials.
Plan for the Worst
From the day you decide to begin an endeavor, security is essential. Eight
years ago, I invested in corporate CDs when times were good. I knew I would have
immediate cash if I needed it, and the investment was secure. Further, I cut out
unreasonable expenses when things looked tight and purchased only what I
absolutely needed.
I invested in a building seven years ago, cautiously renovated the structure
and rented the space to myself. I knew if things became too dismal, I could
lease out the building with the assumption that the property would eventually
regain its value.
Although I wanted to buy the best, I purchased what was reasonable,
presentable and tax deductible. Self-employment can give an individual a false
sense of security. A cautious nature will give you longevity. Appearances can
communicate success to your clients, but endurance is more valuable. I began my
business with nothing and vowed never to return to that state again.
Although the economy is suffering, I believe that with each day we are on the
mend. If you're thinking about a change, there's no reason you can't succeed if
you plan for the worst and envision the best.